Retiring abroad

Good article in the Sunday Times Money section this week (I don't often say that) about QROPS - Qualifying Recognised Overseas Pension Schemes. These are pension plans that may be suitable for those retiring abroad. You can transfer in the benefits from an existing UK pension scheme (even after you've left the country) and then take your benefits, once you've been out of the UK (other than short visits) for five complete tax years you can then take benefits is a variety of formats to suit the tax laws of the country you've retired to.

So, for example, you can get up to 40% tax relief on pension contributions made on UK earnings and then receive your pension income (from age 60) completely tax free in Australia. Other benefits can include a wider investment choice and the ability to pass on any unused fund to your chosen beneficiaries on your death, generally speaking at a more favourable tax rate than the likely 82% payable if you'd died in the UK.

Care is needed as some of these schemes are not, in my view, bona fide so expert advice is essential. Generally the extra costs of a QROPS make a transfer uneconomic unless your pension fund is worth at least £100k. Run a mile from any adviser telling you you be able to get your hands on all of your pension fund in cash form - highly unlikely!

Investment Risk Warning

The value of your investments and any income from them can fall as well as rise and investors may not get back the amount invested.