A final Question…….
List of Frequently Asked Questions
What is a QROPS (Qualifying Recognised Overseas Pension Scheme)?
A Qualifying Recognised Overseas Pension Scheme (QROPS) is a non UK based scheme recognised by UK HMRC as an overseas pension scheme into which UK pension rights can be transferred. This permits anyone with a UK registered pension who is living outside the UK, or is intending to leave the UK, to transfer their pension offshore.
- When you have been a non-tax resident for over 5 complete tax years, there may be more flexibility and many of the limiting restrictions and obligations will no longer apply.
- Benefits (Cash Lump Sum and Income) can be taken in line with regulations in force in the country where the QROPS is located.
- Reporting requirements to HMRC continue for ten years after the transfer is made.
When was QROPS introduced?
In April 2006 – known as “A” Day - the UK government introduced the concept of QROPS to simplify the administration of transfers from a UK scheme to one in another country. Prior to this each transfer had to be individually approved and this had become impractical with the large number of people settling permanently outside the UK.
Who Qualifies for a QROPS?
Broadly anyone who has worked in the UK and earned income that has been paid with tax relief into a Registered Pension Scheme.
What UK pensions can be considered for a transfer to a QROPS?
- The following recognised pensions can be transferred:
- Personal Pensions
- Final Salary Pensions
- Money Purchase
- Section 32 and Section 226
- Civil Service; Armed Forces
- Protected Rights/GMP
What are the key benefits of QROPS?
- Tax efficiency
- Tax free growth
- Possibility of reduced or no tax deducted at source (jurisdiction dependant and double taxation agreements in force)
- Ability to manage one single pension fund versus multiple pensions
- Freedom to set your own investment parameters
- You can ask the scheme Trustees to consider your investment wishes
- No requirement to buy an annuity
- Live where you like in the world
- Hold investments or receive benefits as you wish within the rules
- Hold any major currency
- Inheritance tax free – pass on the whole of your pension free of UK tax if not UK resident
- Estate planning simplification – express your wishes to the Trustees
What other benefits are there?
Lump sums taken as a commutation of pension (including up to 30% initial, 25% if a QROPS) can be made without Malta Tax deducted.
Income can be paid without tax being withheld so long as you are living in a country with a Double Taxation agreement that covers pensions. Malta has around 70 DTAs and the list is growing all the time. For example, pension income will be paid without Malta tax withheld for popular countries such as the USA, Spain, France, the UAE, UK, Germany, Italy, etc. If Malta tax is withheld it can usually be offset against your local tax bill.
What are the key advantages of a MC Trustees QROPS?
The various advantages are heavily advertised on websites, but here are the ones we think are most important to our clients:
- Consolidation and simplification
- Investment and taxation
- Currency choice
- No Inheritance tax
- Flexible Benefits
- Value for money – cost versus personal service
- Peace of mind that the scheme and company are regulated in Malta
- Removal of concerns about historic Pension Fund problems
- Malta is part of the EU
Which kinds of pension could I not transfer to a QROPS?
- You can transfer a “Final Salary” Defined Benefit employer scheme but only before you have started to draw benefits and with suitable advice
- State Pension “National Insurance Pension” cannot be transferred into a QROPS
- Pensions where no tax relief has been granted, for example non UK pensions or special kinds of UK pension. These funds could go into an alternative arrangement – contact us for more information.
When should I not transfer my pension?
- You may be considering your move as a temporary expatriate
- The costs of a transfer may mean it is not viable for a smaller fund
- If you have a defined benefit pension it is unlikely that a transfer to a QROPS would be beneficial. You should take advice from a qualified adviser before considering this.
- Your preferred investments may not be compatible with Malta Law and practice
What are the alternatives to QROPS?
What are the tax implications of moving my pension?
- The transfer to a QROPS is tax free if the value is below the Lifetime Allowance (see below)
- Transfer to a QROPS is not subject to taxation unless it exceeds an individual's lifetime allowance. In the UK, this lifetime allowance is currently £1,073,100 (2020/2021 tax year). If your pension exceeds this amount you would be best to discuss this with us as you may be able to transfer a larger amount with no tax implications if you have ‘Protection’ in place.
How will withdrawals from a QROPS be taxed after the initial period?
This depends on where you are tax resident and whether there is a Double Taxation Treaty in force with Malta to prevent the taxation of the same income twice. Please contact us to discuss.
There is a list of current Malta Double Tax Agreements (DTA) on the Malta Financial Services Authority website. Link http://www.mfsa.com.mt/pages/viewcontent.aspx?id=196
Is my plan subject to EU savings tax directive for European citizens?
A QROPS is not subject to the EU Savings Tax Directive, but will be part of the Common Reporting Standards directive.
Does HMRC in the UK require the QROPS pension fund to report payments?
HMRC requires that all QROPS providers notify them of any payments from transferred pensions for the relevant member. This does not apply after ten complete tax years from when the transfer took place.
Will the QROPS declare any payments made from the scheme to HMRC?
Why shouldn’t I leave my money where it is?
- To consolidate multiple existing pension arrangements into one pot as that is easier to manage
- To reduce overall charges
- To match the investments to your attitude to risk
- To put your pension fund in the currency of your country of residence
What considerations should I take into account when considering a jurisdiction for my pension?
- It should also have strong investor principles such as the UK
- The jurisdiction should offer significant improvement in investment and benefit options available
- You should ensure that it is a tax-efficient and secure jurisdiction
How do I know this isn’t a scam?
A list of QROPS is published by the UK HMRC on their website and our retirement scheme is on there under the Malta list of entries. You can see how short the list is compared to other countries which reflects the difficulty of meeting the Malta requirements. Also you can check us out on the Malta register of companies and the MFSA website. If you require assistance in locating us please contact us.
What is your QROPS Number?
The current list of eligible QROPS schemes can be found on the HMRC website. MC Trustees’ HMRC QROPS acceptance number for the MCT Malta Private Retirement Scheme is 503166. For the MCT Malet International Retirement Scheme it is 505031.
But is Malta safe?
Malta has some of the toughest regulations in Europe, with a local regulator, modelled on the UK style of regulation. English is the language for business and the laws and regulations closely match the style and substance of familiar UK rules, especially for pensions. Malta is a stable economy, largely escaping the impact of the recent financial and banking crises. Banks are solid and well capitalised. The government is forward thinking and complies with EU regulations. Malta has a large well established Financial Services Industry. Malta is not an offshore jurisdiction; it is a full member of the EU. There have been no failures of pension funds in Malta.
Where can I get more detailed, technical information?
But I want to know more about the safety of my pension before I send it off to someone I do not know.
If you wish you can visit us in Malta – a great place for a short holiday, our Head of Operations would be happy to meet you for a coffee and reassure you and answer any questions, he is English! Or simply call and chat through your concerns. Our business has been built on personal service and trust.
How long are you going to be in Malta?
Our Staff are all Maltese residents. Our administrators are either Maltese or UK nationals married to Maltese. We intend to be around for a while!
Why is Malta one of the best options?
- Malta is an independent, well regulated and internationally accepted jurisdiction with a firm framework of legislation in the financial services sector
- Pension providers on the island have worked closely with HMRC to ensure a robust QROPS offering for both its resident and international clients
- It is a European Union country which allows tax-efficient structures. This means that income and capital gains from the assets within your plan are not subject to Malta tax. Therefore, the assets within your plan grow in a tax efficient environment
- Your QROPS fund can be denominated in a common currency (British Pounds, US Dollars or Euros etc)
Malta is in the EU, is protected by EU laws and a QROPS in Malta is very much more protected than in a non EU country. A full audit is required every year. In our case this is carried out by Griffiths and Associates. Regulatory Supervision is carried out by the Malta Financial Services Authority and there is regular contact.
But why is Malta a more efficient place to have my pension than elsewhere?
Malta regulations allow you to take up to 30% of your funds as a lump sum, and your pension from age 50 (age 55 and 25% if a QROPS). In addition, larger funds may take advantage of the Programmed Withdrawals provisions and take further lump sum payments or flexible benefits.
What is the minimum age I can draw benefits and how much?
- You can start drawing benefits from age 55 for a Malta Retirement Scheme that is a QROPS.
- You can take the lump sum of your fund without deduction of Malta Tax.
- Remaining funds need to provide an income for life or can be drawn flexibly.
- We can provide a quotation showing the income you can draw from your fund on request.
- The possibility of further cash lump sums through “Programmed Withdrawal” for larger pension funds.
What if my circumstances change?
Please contact us to discuss your personal position.
What happens if I have a QROPS and return to the UK?
If you are returning to the UK, then you will be subject to income tax on the income taken in the UK. Although your QROPS can remain in Malta, it will fall under domestic rules and regulations.
What happens if I move around the world?
- No matter where you move in the world, or how often you may move, your Retirement Scheme will remain in Malta.
- You can receive income in any currency.
- You could transfer your QROPS to another country, but this would not be with MC Trustees, and there may be exit charges.
- If you return to the UK your income will be subject to UK tax.
What will happen to my QROPS upon my death?
The Trustees will distribute the fund, or pay a pension from it, having taken into account your wishes as notified to us in your Expression of Wishes Form which is part of the application form that can be downloaded here. The UK rules for taxation of pensions on death are changing.
What is the minimum value I can transfer to a QROPS?
The minimum transfer value we will take is £50,000. This is to try to guard against costs and investment movement eroding your fund too quickly.
Do I have to first liquidate my assets held within my UK registered pension scheme before transferring them into a QROPS?
- If the pension scheme is a SIPP or a SSAS, it may be possible to transfer the existing assets 'in specie' to the QROPS. In this case please contact us.
- For most other pension schemes you will need to liquidate your assets before transferring to a QROPS.
If I transfer my UK pension to a QROPS can I access my fund as a 100% lump sum?
No. If you are persuaded by someone that this is possible you will be the victim of a scam and heavy penalties may follow. However, if you move to our QROPS you could access flexible benefits and have a taxable payment of up to 100% of the fund, subject to Double Tax arrangements.
Can I purchase residential property with my QROPS fund?
Not directly, although there are retail collective investments that would be permitted.
What investment flexibility and choice will I have with a QROPS?
The Trustees can invest your fund in a wide range of assets. Please contact us to discuss your requirements.
You could invest in a lower risk portfolio with charges as low as 0.5% initial cost.
Can I manage my own QROPS assets directly?
No, you must appoint an investment advisor or a discretionary fund manager. If you are recognised as a professional member you may be able to direct investments yourself, but please contact us to discuss this option.
What if I want to make some other investments that you cannot arrange on one of your fund platforms?
This can be done but you will probably have to pay more for them as we will not have negotiated such low charges. If you want to hold a large number of different non standard investments then we would suggest you use the MCT Malta Private Retirement Scheme. The MCT Malet International Retirement Scheme is really only for investments via our reduced cost arrangements.
What investments are permitted?
We can invest in anything mentioned in Section 7 of the Key Features Document, which can be downloaded here. Certain illiquid or risky investments are not permitted and with others we may restrict the percentage a fund can hold.
What are the costs associated with a pension transfer to a QROPS?
- There are generally four costs that you need to be aware of in most QROPS schemes:
- Setup cost; costs of calculating benefits
- Annual management charge
- Investment Management cost
- Adviser charges
- If you look at the costs in terms of a percentage of the fund value, then the larger the fund value, the lower the charges
Do you have any hidden fees?
No - all our charges are clearly laid out in the Key Features Document.
The Investment Manager, Advisor and Audit Fees are not ours and can vary.
The selected investment manager will make you aware of their charges and we can provide these to you as well.
How do you take charges?
Charges are deducted from your pension fund and we deduct them from the cash held in the bank account. If there are insufficient funds we will make arrangements to sell investments. The charges for investments are handled through the investment platform itself and details can be provided. The bank will charge for transfers etc. and all costs are laid out in the Key Features Document which can be downloaded here.
How do I go about starting a QROPS?
Just contact us and we will guide you.
How do I apply?
You can start by filling out the application form which can be downloaded here. We will check this on receipt and we will send to you any other forms we need to have completed. Please follow the requirements for verification of identity and address carefully. Anti Money Laundering and combating terrorism requirements are taken extremely seriously in Malta and your help in assisting us with this will smooth the process. If you would like to find out what forms you need to complete, just give us a call or email. Of course we are here to help you with the forms.
Is it possible to set up a QROPS Pension Transfer myself?
Yes but you must appoint an investment advisor or a discretionary fund manager before commencing the application process.
How long does it take to set up a QROPS?
The length of the process varies. It can be two to three weeks or it can take a few months - depending upon complexity and number of pension Trustees involved.
What happens then?
Once we accept you as a client, we make an application for the pensions in the UK to be transferred. Sometimes the UK schemes ask you to fill out more papers to confirm the transfer. When the money arrives, you inform us of your wishes for the investment. We then decide to invest on your behalf. The whole process can be done within a month if all goes well, but this can take over two months and sometimes longer.
How do I find out how my pension is doing?
We provide annual audited Performance Certificates and if it is permitted by your investment manager, online access to view the portfolio can be provided.
Can I get out?
Yes you can, although there are exit charges for doing so. This reflects that we discount the set-up fee in the expectation that you shall hold your pension with us for many years. You may have to pay further set-up fees when you transfer to another provider.
What is MC Trustees doing that other providers of QROPS are not doing?
MC Trustees has been running only pensions for many years. This is all we do. We do not get involved with Tax schemes, other types of trust or tax planning. We do not have a sales team. We are in business for long term gain and long term reputation. We pride ourselves on personal care and service; we do not employ call centres or automated telephone answering systems.
We expect you will find us Professional, Reliable and Trusted.