QROPS Pensions – Pass on Your Wealth to your Loved Ones
One of the biggest benefits of a QROPS pension transfer is the ability to pass on your wealth to your loved ones after you pass away. Whilst no-one wishes to think about financial matters in the context of death, many people find peace of mind knowing that they have arranged their financial affairs in a manner which maximises the benefits for their loved ones. Transferring your UK pension into a QROPS can mean that you leave a legacy to pass on to your loved ones.
No Need to Purchase an Annuity with a QROPS
A big advantage of a QROPS pension is that there is no obligation to purchase an annuity with your pension pot (if you have a money purchase pension scheme), unlike the rules in India. With an annuity, after you and/or your spouse passes away, the annuity ends, and there is nothing left to pass on to your family.
Instead, with a QROPS in India you can draw down an income, and when you pass away, all the remaining funds are available to pass on to your loved ones.
This is why so many Indian residents who have acquired UK pension rights have chosen to set up a QROPS in jurisdictions such as Malta, to avoid the strict UK and Indian pension rules.
Final Salary Pensions
In addition to the uncertainty over whether your final salary pension will be still be paid when you are eligible to receive it, another factor to consider for Indian residents with final salary/defined benefit pensions is that when you pass away, your spouse (if she is still alive) is only entitled to half of the value of the pension.
And then when she dies, the pension payments stop, and there is nothing left to pass to your beneficiaries. Therefore, if it is important for you to leave a legacy for your beneficiaries, you may wish consider transferring your final salary pension, such as a civil service pension or a teachers or NHS pension into a QROPS pension scheme which can offer you significantly more flexibility.
Avoid the UK Death Tax Charge
If you leave your UK pension in the UK when you retire to India, a tax charge of up to 45% may apply on your remaining UK pension fund (if you die after the age of 75), which will not apply with a QROPS pension. Thus if avoiding this tax charge and protecting and passing on your wealth for future generations is important to you, then a QROPS pension can offer significant benefits.
For more information about transferring your pension into an overseas QROPS scheme, please contact us.