Please note that as of 5 April 2015 transfers out of the NHS pension scheme are no longer permitted, and the content on this page is no longer current. If your transfer paperwork was submitted before this date, the transfer will still proceed. For more information, please contact us.
NHS Pension Transfers to India
When you leave the NHS, if you are not yet entitled to draw down your NHS pension (which is usually at 60 or 65 years old), your pension rights effectively become frozen. What this means is that you cannot do anything with the pension until you reach your official retirement age.
As a result, many returning NRI’s and British expats choosing to retire in India are transferring their NHS pension rights into a QROPS to give them more flexibility.
Advantages of transferring my NHS pension into a QROPS pension plan
There are several benefits for Indian residents of transferring their NHS pension into a QROPS scheme:
Early Access to Your Pension
You are only able to draw down your NHS pension from the age of 60 or 65, depending on the specific NHS pension scheme that you are a member of (ie the ‘1995 section’ or the ‘2008 section’). Therefore, if you retire early at the age of 50, for example, you will have to wait 10, or even 15 years, to start your NHS pension.
With a QROPS pension, however, you can in some circumstances start to draw down your pension, and take up to a 30% tax free lump sum from the age of 50.
Pass on Your Wealth to Future Generations
One of the biggest benefits of a QROPS pension is that it enables a member to pass on your remaining pension fund to your loved ones after you have passed away. This is especially relevant for NHS pensions – when you die, your wife or spouse (if they are still alive) only receive 50% of the pension income. And when your spouse passes away, there is nothing to pass on to your children or grandchildren.
With a QROPS pension, 100% of your remaining pension fund can be left to your loved ones.
Protect Yourself Against Potential Reduction in Your Pension Value
As life expectancies increase, and we start living longer, this has a serious effect on how the government can afford to keep on paying the pensions to retired employees of the NHS. There is now a very serious risk that the NHS pension that you think that you may be receiving, will in fact be much less. In addition, the global crisis has affected government finances, and in the future, the value of your NHS pension may be at risk.
This fact has been recognised by the UK government itself – in an article published as recently as 2012, the government accepted that the NHS pension reforms of 2008 didn’t go far enough, and that further reductions to NHS pension benefits are needed. For the full article, please read here.
The problems of the funding the NHS pension scheme have been well publicised – for further articles, please click on this link for an article in the Daily Telegraph, for example.
By transferring your NHS pension today, Indian residents can avoid any potential future pension deficit problems, and take the full, cash equivalent of their pension, and place it into a QROPS scheme, where it cannot be touched by the UK government.
Receive Your Pension Gross, Without Deduction of UK Income Tax
Your NHS pension will be paid net of any income tax payable in the UK. With a QROPS pension, depending on the QROPS jurisdiction, your pension income will usually be paid gross, without the deduction of any tax. In addition, pensions from income earned overseas are not taxable in India, and so you can enjoy all of your income, tax free.
Further Information on NHS Pension transfers to India
For further information about transferring your NHS pension into a QROPS scheme, please read the following articles:
What is the Process of Transferring my NHS Pension into a QROPS?
The QROPS transfer process for an NHS pension is broadly similar to the transfer process of any other pension scheme. The first step will involve a QROPS Adviser obtaining ‘Cash Equivalent Transfer Value’ (‘CETV’) from the NHS – this will tell you the latest transfer value of your pension.
Once we have obtained a transfer value for your NHS pension, we will carry out a detailed analysis on your personal and financial circumstances, enquire into your financial goals and objectives, in order to assess your suitability for a QROPS transfer.
If we conclude that a QROPS transfer is suitable, and you agree with our advice and recommendation, then we will proceed with the paperwork, including the discharge forms to transfer your NHS pension into the new scheme , and the QROPS pension application paperwork. Once the QROPS plan has been established, and the funds received by the QROPS scheme, your funds are invested as per our recommendations.
For more information about transferring your NHS pension into a QROPS scheme, please contact us.
Have you returned to India and still have your NHS Pension? From 2015 you will no longer be able to transfer your NHS pension to a QROPS plan – meaning you will have to wait until you are at least 60 before you can draw an income or take a tax free lump sum – as opposed to 50 under a QROPS pension.
For a free consultation on how you can still transfer your NHS pension into a QROPS pension plan before the deadline expires, please contact us immediately.