Are QROPS Still An Option Post-Brexit?

Retirement – what about a post-Brexit QROPS?

The freedom to choose another country for your retirement years is a romantic notion, but it’s now become far more popular due to ease of travel and a wide choice of destinations to suit all pockets. The excitement of a whole new environment is hard to resist, especially as many Western countries are mired in political chaos and instability. Sadly, for would-be British expats, Brexit is almost certain to slash their options as regards choice of a new homeland, but it’s also providing an excellent reason for leaving. For Britons with private pensions coming due in addition to their state pensions, financial decisions are the most important, as the British state pension is frozen in the vast majority of favoured expat destinations overseas.

Pension freedoms give a good way out but, for many, QROPs are confusing and HMRC and the media’s constant warnings about dodgy, illegally working IFAs is scary at best. British banks don’t help as many are now disallowing UK bank accounts to expats living permanently overseas. Worse still, there’s no information as to the effect of Brexit on QROPS rules, giving would-be retirees no real information as to whether the notorious overseas transfer change will apply to them. QROPS rules state those living within the European Economic Area are not liable for the overseas transfer charge, but Britain’s membership of the EEA isn’t even being mentioned in the daily Brexit articles churned out by the British media as the dread date approaches.

Basically, the rule is that expatriates and their QROPS must both be based in EEA member countries in order to escape the draconian 25 per cent penalty. British pensioners living outside the EEA can still transfer to a QROPS, but it must be based in their present country of residence. For example, should the retirement destination of choice be Australia, the only option in order to avoid the transfer charge is an Australian QROPS. Other world countries which have their own QROPS include New Zealand, South Africa, the USA, Switzerland, India, Barbados, China including Hong Kong, Kenya and Mauritius, with only Australia and New Zealand seen as hubs for British expatriate retirees.

Advice for those about to make the major decision to retire overseas is thin on the ground, but at the present time Cyprus, Spain, Italy, France, Greece and Portugal, all popular Brit expat destinations, are EEA members, along with a slew of other states. As regards the UK’s re-joining the EEA after leaving the EU, it’s anyone’s guess, implying the decision to transfer a pension pot to a QROPs is best left on the burner for now. Pundits believe the UK will fall out of the EEA at the same time as it exits the EU.