A QROPS is a pension scheme that must be established outside the UK. It must meet other requirements, including the requirements of pension schemes in the country in which it is established. It must also be recognised for tax purposes as a pension scheme there. Additionally the scheme must be established in a country or territory prescribed by HMRC or it must meet further requirements.
A major incentive for individuals transferring their pension is to move the funds they have built up over years of employment away from a tax regime that has, particularly over the last eight years, eroded many of the benefits attaching to UK-based pensions. The draft UK Budget published last December proposed reducing the annual allowance for pensions tax relieved savings from £50,000 to £40,000 and the standard lifetime allowance for pensions tax relieved savings from £1.5 million to £1.25 million. Any excess in the value of your pension benefits over the lifetime allowance limit will, if paid to you as a lump sum, incur a lifetime allowance charge at a rate of 55%
