QROPS Glossary

  • Annuity: A pension bought from an insurance company payable for life. Previously compulsory by the age of 75 for UK personal pensions, but now under review. Cannot be transferred to QROPS once bought.
  • Domicile: Very basically, a person’s domicile is where they were born or live permanently. E.g. an individual is not UK domiciled if they were born outside of the UK or do not intend to remain permanently.
  • Finance Act 2008: Key changes to UK taxation, granted royal assent on 21 July 2008. It included lowering of the basic rate of income tax to 20%, a single CGT rate of 28% and changes in the taxation of ‘non-doms’ (those living in the UK but based overseas). It also gave greater powers of inspection to HMRC inspectors.
  • HMRC: Her Majesty’s Revenue and Customs (www.hmrc.gov.uk ). Responsible for UK-based revenue collection.
  • IHT: Inheritance tax, payable by beneficiaries on the pension-holder’s death.
  • Lifetime allowance: Maximum pension fund allowed free of tax. Currently £1.8m (in 2010/2011 tax year). Funds greater than this should have obtained protection.
  • Lump sum: you can take up to 25% of your pension fund as a tax-free lump sum under HMRC regulations.
  • Member payment: payment made by the QROPS to a member in “drawdown”.
  • Multi-jurisdiction: STM operates in several jurisdictions so can advise you on the QROPS that will best suit your needs.
  • Occupational pension: a pension operated by an employer.
  • Pensions ‘A’ day:6 April 2006, when the British government radically overhauled its pensions system. Since then, people with UK pensions who are, or will become, non-resident in the UK for tax purposes can move their pension benefits out of the UK to a QROPS.
  • QROPS: Qualifying Recognised Overseas Pension Scheme – an overseas pension scheme into which UK pension rights can be transferred. Approved by HMRC. The scheme must meet certain criteria set out and act as if it were a UK scheme for QROPS members who have been resident in the UK at any time in the previous five tax years.
  • Residency: In most countries, residence (for tax purposes at least) is defined as spending more than 183 days per year there.
  • Residential property: pension funds transferred from UK-registered schemes cannot be used to buy residential property. Commercial property is acceptable.
  • SIPP: Self Invested Personal Pension – a pension plan under your control, affording greater flexibility than a standard plan. Also known as ‘wrappers’ because you can have several different investments within it, treated in the same way.
  • STM QROPS: QROPS offered by STM Group, offering a range of multi-jurisdictional options when you transfer your pension fund overseas. Offering QROPS in Gibraltar, Guernsey, Malta. Luxembourg Switzerland and New Zealand to follow. Recognised in the UK by HMRC.
  • Tax efficiency: can help you substantially reduce the tax that you would have to pay when accessing your pension.