Transferring UK pension to a QROPS in India

If you are moving abroad or have a job overseas you may want to transfer your UK pension rights normally the value of your pension fund, to an overseas pension scheme. There are conditions that must be satisfied at the point of transfer and restrictions on accessing the fund afterwards to which tax charges may apply.

Transfers to an overseas pension scheme that is not a QROPS are treated as ‘unauthorised payments’ and are subject to tax charges.

A QROPS is an overseas pension scheme that can receive a transfer of the value of your rights from a UK registered pension scheme without you incurring tax charges. HM Revenue & Customs requires a QROPS to broadly mirror a UK pension scheme. This means that if you transfer your pension fund to a QROPS you can still receive a lump sum and pension when you retire, much as you would expect if you had kept your pension savings in a UK registered pension scheme. This is subject to any local laws & tax treatment in the country where the QROPS is established or the country where you become resident.

You must give certain information to the scheme administrator of the UK scheme before the transfer can be made. One can use certain prescribed forms such as APSS263 Qualifying Recognised Overseas Pension schemes-Member information to give this information to the scheme administrator or if you prefer you can give the same information in a letter. The above mentioned prescribed form can be downloaded from HMRC website.

The information is needed to enable HMRC to monitor transfers to QROPS more closely. Transfers should be made for genuine reasons consistent with providing pension benefits when you retire. HMRC expects you to be aware of and have fully considered, the possible tax charges that may arise from a transfer. This is why you are asked to sign an acknowledgement confirming you understand that a transfer overseas may result in you having to pay unauthorized payment tax charges to HMRC after the transfer is made. You should be aware that such charges can still arise long after the transfer is completed.

The value of your UK registered pension scheme will still have to be tested against the lifetime allowance that is 1.5million pounds for 2012-13 when you transfer your rights overseas. The lifetime allowance is the maximum value you can build up in UK registered pension schemes without incurring tax charges. Your UK pension scheme administrator will tell you what percentage of the lifetime allowance has been used up by the transfer.

If the amount transferred is more than your lifetime allowance the excess will be taxed at 25%.

UK tax charges can still apply even after you have transferred your pension fund value to a QROPS. Certain payments made out of the QROPS may be subject to UK tax charges. The same charges apply to similar payments made out of a UK pension so you will not avoid tax simply by transferring your pension fund value to a QROPS.

Contact For advice &  Start up of the process

Ravi Kumar
Senior Manager- Branch B-21
Exide Life Insurance Company India Ltd
# 28, 6th floor, Centenary building, MG Road
Bangalore-560001. Karnataka- India
Cell: +91 9844519872
 Email 2: ravi.sampige@gmail.com

Note: The service to the customers in transferring their pension fund will be given irrespective of the locations where ever they stay, like any parts of India or Abroad.

Equity Market Review

Domestic equity benchmarks, S&P CNX Nifty and BSE Sensex, gained around 5% in November following positive developments in domestic and international markets. On the domestic front, markets cheered up following moody's investors service's decision to retain its stable outlook on India's soverign  rating supported by the high household savings rate and a relatively competitive private sector which will push up economic growth. Sentiments got another booster dose after Goldman sachs upgraded India to 'overweight' from 'market-weight', seeing growth recovery and inflation moderation ahead. The government's strong confidence in getting parlimentary clearence for foreign direct investment in the retail sector supported the markets.

On the international front, the Eurozone finance minister's and the International Monetary fund's consent on a plan aimed at reducing Greece's debt provided relief to the market. Encouraging economic data from the US, China and Germany further improved market sentiments. The market was also supported by continued and strong foreign institutional investor buying. 

Some gains were, however, capped on worries over the looming US fiscal cliff after Moody's downgraded France's government bond rating to Aa1 from Aaa. Back home, sentiments are also dented after GDP growth declined to 5.3% in july-september as compared to 5.5% in the previous quarter. Gains were also limited due to an unexpected Contraction of the Index of Industrial production in September 2012 and record high trade deficit in October 2012.

BSE sectoral indices ended mostly higher for the month except the BSE Oil & Gas Index, which fell 1.23% due to rise in crude oil prices during the month and on worries of subsidy clearence by the government for the oil marketing companies. The BSE Consumer Durables Index gained the most, up 15.76%, as investors preferred to take defensive bets amidst volatility in the market. The BSE Realty Index rose 12.80% due to renewed buying in the sector shares due to stock specific action. The BSE Auto Index ended up at 4.92%.

The markets are expected to be driven by policy announcements by the Indian government and the investors will closely watch as the policy related to reforms. The markets will also be driven by developments in the US and Eurozone.

Disclaimer: The information given above are the result of personal readings of related genuine documents and personal understanding of the subject matter. This  is written to make the readers understand, about recent developments in the equity market . However, this blog is not responsible for any error or inaccuracy in the same.