FAQs
What are the benefits of a QROPS?
A transfer to the Liberty QROPS removes the requirement to purchase an annuity. Annuities are extremely unpopular in the UK with both pensioners and the press. They are perceived to offer investors extremely poor value. Additionally, in the UK the income from an annuity may be taxed at source even if the individual is not resident there.
If the QROPS is established in Guernsey, any distributions from the QROPS will be free of Guernsey income tax (although tax may be applied in the country of residence). For many expatriates, this means a tax-free retirement income - and an increased net income from the amount that they would have received if they left the pension in the UK!
On the policyholder’s death, the residual value of the pension passes to their selected beneficiaries rather than the annuity provider. For a typical annuity this means there are no payments on the death of the policyholder to any beneficiaries regardless of when the annuity was purchased.
Who can move their pension into a QROPS?
If you are moving or are already residing abroad, with no intention of returning to the UK, then a QROPS may well be the best course of action.
It is not necessary for the member to be resident in the country where the QROPS is established.
However, if you have no intention of residing abroad but are simply trying to circumvent the rules that apply to a UK pension, then the Liberty QROPS is not for you.
How is a QROPS structured?
The Liberty QROPS is structured in a similar manner to a UK pension. There is master trust of which Cogent Limited is the trustee and the individual assets of each pension are held separately by the trustee.
Each segregated trust account can access a wide range of investments including cash, bonds, equities, property, mutual funds, including commodity and hedge funds - and switch between these investments as market conditions change.
Where is the trustee resident?
A QROPS trustee should be based outside the UK and obtain HMRC approval. Cogent Limited is based in Guernsey, the Channel Islands, and has the approvals from HMRC and Guernsey Income Tax.
Guernsey does not withhold taxes on investment growth or benefits paid from pensions where the member is not a resident of Guernsey and has not received tax relief on contributions made whilst resident of Guernsey.
Which types of pension can be transferred into a QROPS?
(i) Most types of personal pensions including SIPPs and Stakeholder Pensions.
(ii) Most types of occupational pensions including Final Salary Schemes, SSASs and those containing ‘protected rights’ money.
Should I transfer protected rights benefits to a QROPS?
It is possible to transfer protected rights to the Liberty QROPS. However, you will forfeit the protection afforded by the UK pension regulations.
We recommend that you seek advice from a suitably qualified financial adviser before making your decision to transfer.
What happens if I transfer to an international pension that isn’t a QROPS?
There are serious tax implications for transfers to a scheme that is not a QROPS including unauthorised member payment and surcharge, as well as a scheme sanction charge.
The scheme sanction charge is 40% of the transfer value payable by the pension scheme. The unauthorised payments surcharge is 15% of the transfer value and would be payable by the individual.
What is the minimum transfer I can make into a QROPS?
There is no minimum level; however it is not efficient to transfer smaller pensions below £250,000 into a QROPS.
Can I transfer my UK pension when benefits are already in payment?
It is possible to transfer a pension to the Liberty QROPS where benefits are in payment provided that they are not from an annuity or certain company pension schemes.
Can I invest in residential property?
Investment in residential property is permitted provided that you have not been resident in the UK for tax purposes at any time during the last five years. The investment may need to be made using a corporate structure, which can be arranged by the Liberty QROPS trustee, Cogent Limited.
If you have been resident in the UK for tax purposes during the previous five tax years then the current UK rules apply: i.e. if the investment is not made using a genuinely diverse commercial vehicle a prohibitive tax charge will be levied.
Can my existing UK pension transfer investments “in specie” rather than selling 
them and transferring cash to the QROPS?
It is possible for the Liberty QROPS to accept assets transferred from a UK scheme. However, both the transferring and receiving pension trustees must be willing and capable of doing so.
Can I transfer commercial property held by a UK pension?
A UK pension can make an in specie transfer of commercial property to the Liberty QROPS. Such a transfer should not attract Stamp Duty unless the property is mortgaged, in which case duty is payable on the value of the debt.
What level of income can be paid from the Liberty QROPS?
If the member was not UK tax resident in any of the previous 5 years then the level of income is determined by the standard actuarial valuation for their circumstances.
If the member has been UK tax resident in any of the previous 5 years then the income would be subject to the more restrictive UK regulations.
How is the Liberty QROPS taxed?
So long as the member is not resident in Guernsey there is no Guernsey tax on either the lump sum or the regular benefit payments. It is important that tax advise is obtained as to how the pension payments will be treated in your country of residence.
What happens if I return to the UK?
A QROPS is only suitable for those who live or intend to live outside the UK on a permanent basis; should you return to the UK then UK pension regulations would once again apply to the pension fund.
Will a transfer to a QROPS result in any immediate tax charges?
In circumstances where pension payments have not commenced, tax will be assessed at 25% on the value of the pension transfer less the current Lifetime Allowance (which are shown below).
| Tax Year |
Lifetime allowance |
| 2008/09 | £1.65m |
| 2009/10 | £1.75m |
| 2010/11 to 2015/16 |
£1.80m |
Where pension payments have commenced, tax may be payable depending upon the type of UK pension arrangement that is in place. For example, an ASP – Alternatively Secured Pension – should not be subject to tax nor should unsecured pensions where draw down commenced before 5th April 2006.
Liberty QROPS is HMRC approved.