QROPS Pension Transfer
Since 2006 UK non residents have been able to transfer their UK pensions to a jurisdiction of their choice. Affording them reduced tax rates, higher returns, higher pension income, and larger cash lump sums, and many other benefits. However this has not been the case for US residents. To a great degree this has been due to the Patriot Act. George W Bush's legislation to help fight the war on terrorism criticised at the time for ignoring civil liberty concerns. This has had a profound impact in how a US resident can conduct their financial affairs.
The effect of this legislation has stopped US residents transferring their UK pensions to a QROPS. If you consult the current HMRC list of registered QROPS providers, you find fifteen listed in the USA. The majority of which are 401k pension plans. However the IRS has indefinitely blocked transfers to these schemes. And things will not get better. The implementation of FATCA comes into force 1st Jan 2014.
The Foreign Account Tax Compliance Act, stops most long established QROPS Trusts taking on US Nationals outside the USA, and also nationals and expats of any nationality resident in the USA.
What was required was to construct QROPS trusts specifically from a US perspective. QROPS providers realised that they were missing out on a vast potential market, and in 2009 started to construct QROPS trusts from the ground up that were IRS friendly. These QROPS trusts are based outside of the USA and were put together in consideration with IRS tax reporting, and the benefits contained within preferential Double Taxation Agreements (DTAs). Allowing them to comply with all current IRS regulation and reporting. Importantly they also comply with the proposed Foreign Account Tax Compliance Act 2014.
As a company we have worked closely with QROPS providers and investment vehicle providers enabling us to offer USA residents IRS compliant QROPS transfers at a low cost. A QROPS transfer undoubtedly is of great benefit to anyone who is eligible to do so. Particularly given the latest wave of pension reforms proposed by the UK coalition government. Which include measures to allow Final Salary (Defined Benefit) pension scheme trustees, to reduce transfer values at their discretion?
Given this you seriously need to consider taking action sooner rather than later. Take the first step to financial freedom, contact us now for Free no obligation advice on your UK pensions.
Please note that there is no minimum transfer value to a QROPS by a USA resident, however in some cases it is more beneficial to transfer to a low cost SIPP. We will advise you on the most appropriate course based on your own circumstances.