A QROPS is a Qualifying Recognised Overseas Pension Scheme.
In 2012, Gibraltar became a HMRC approved QROPS jurisdiction this led to Gibraltar becoming one of the most popular QROPS jurisdictions. An important aspect has been the role played by the Gibraltar Financial Services Commission in the regulation of firms operating in the pensions sector.
There are currently over 30 Gibraltar based pension schemes that have notified HMRC they meet the conditions to be a Qualifying Recognised Overseas Pension Scheme (QROPS) and have asked to be publicly listed on the HMRC website.
From 9 March 2017, HMRC introduced an overseas transfer charge of 25% on pension savings transferred from a UK register pension scheme to a QROPS apart from three specific exemptions as follows
- The individual lives in the same territory as that in which the QROPS is established; or
- The individual lives in a European Economic Area (EEA) country, and the QROPS is established in an EEA country (does not need to be the same country); or
- The QROPS is a scheme in which the individual’s employer participates, and that scheme is an occupational pension scheme, or a public service scheme, or a scheme set up by an international organization.
As a result the number transfers to QROPS schemes has fallen significantly across all QROPS jurisdictions.
Nevertheless in specific circumstances, a Gibraltar QROPS still offers an excellent product for individuals who have contributed to a UK pension as follows
- A pragmatic operating framework
- Permits up to a 30% lump sum on retirement subject to the individual having been non-UK resident for a minimum of 5 tax years and
- Withholding tax on pension income is a relatively low rate of 2.5%.