Qualifying Recognised Overseas Pension Scheme (QROPS)
A QROPS is a non-UK pension scheme which meets certain conditions laid down by Her Majesty’s Revenue & Customs (HMRC) of the UK to enable an individual resident anywhere in the world to transfer his or her frozen UK pension benefits overseas, to provide pension benefits to the individual in retirement, under the terms of that scheme and in accordance with the law of the country where the scheme is established.
Generally significant tax and practical benefits can arise to those who no longer live in the UK and who do not plan to return to live there permanently by transferring their accumulated UK pension benefits overseas.
The Lutea Hong Kong QROPS enables you to move those benefits and enhance them to provide you with a more flexible retirement plan avoiding unnecessary tax in the UK.
A list of QROPS that have notified HMRC of their existence and status where the trustee has agreed to be publicly listed can be seen on their website here.
Lutea Hong Kong is trustee of numerous QROPS’ funds in Hong Kong which have been registered with HMRC since 31 May 2008. These are a mix of occupational, individual and multi-member personal pension schemes. The only Hong Kong schemes open to new transfers from the UK since March 2014 are occupational schemes due to various changes in HMRC rules and guidance over the years, those other plans established prior to that date being now closed to new transfers but continuing to operate under the QROPS rules over the funds held.
An Occupational Scheme in Hong Kong must be registered under the Occupational Retirement Schemes Ordinance (ORSO) with the Governing Pension Body of Hong Kong, MPFA.
Lutea can establish private ORSO schemes which are open to members admitted by the relevant employer of the scheme resident and not-resident, in Hong Kong.
Hong Kong is unique because it is one of the few countries which operate a territorial basis of taxation.
There is no tax relief in Hong Kong on contributions paid to the Plan and both residents, and non-residents of Hong Kong, are subject to taxation in Hong Kong in the same manner. Salaries tax is payable in Hong Kong on that part of any resulting pension income which is derived from employment or self-employment in Hong Kong.
Pension income which is derived from non-Hong Kong employment or self-employment is not subject to tax in Hong Kong.
Lump sum pension benefits are not subject to tax in Hong Kong.
There is a 10-year reporting period under QROPS whereby the trustees of a QROPS undertake to notify HMRC of member payments beginning with the later of the date that the UK tax relieved benefits were transferred overseas, and 6 April 2012.
Unauthorised payments from a QROPS will be subject to a combined 55% Member Payment and Scheme Sanction Charge, which can also apply to death benefits if the member dies resident in the UK.
Lutea as trustee has discretion as to how the fund is invested and how benefits are provided in retirement for the Contributor.
Benefits must begin to be taken by the Contributor’s 75th birthday.
If you have left the UK, have a frozen UK pension and you do not plan to return to live permanently in the UK then there is probably benefit in you considering whether you should transfer your pension to the Lutea Hong Kong QROPS.
If you live in or around Asia and have your own business or your employer would consider sponsoring a scheme for you then it may be worth considering a Hong Kong ORSO Scheme to protect and grow your pension and provide flexible benefits in retirement.