Benefit from the abolishment of the UK Lifetime Allowance Limits

When used effectively, a QROPS may provide generous benefits to clients who have built up UK pensions over their working lives, and have now moved abroad or are considering doing so.

Even for those who are and intend to remain UK resident, QROPS may still be a viable option if the value of their UK pension fund is approaching or has exceeded the UK Lifetime Allowance Limit (LAL), which was set at £1,073,000, before it was abolished. In this scenario, your client would have used up the maximum permitted amount into a UK-registered pension scheme. Therefore, the QROPS would serve as an additional vehicle for any pension funds above the LAL. Transferring the UK pension into a QROPS would be a crystallisation event for tax purposes, so normally any tax on the fund value surplus to the LAL would be paid to the HMRC before the transfer is made. The abolishment of the LAL creates a superb opportunity to eliminate this tax liability on transferring out. Whilst at face value it also means that someone could remain invested in the UK there is a real risk that a change of UK government could reinstate the LAL. This has already been publicly discussed. 

A QROPS could be a good way of safeguarding clients’ pensions against this.