Overseas Pension - QROPS

Hi

What is the best way to transfer overseas pension fund? I have an EPF account in India active until 2006. Last four years I've been working outside and have an overseas pension account. I plan to return to Indian in 2012 and hence transfer overseas pension to my Indian account.

I know that this overseas pension amount can be transferred to QROPS (Qualified Recognized Overseas Pension Schemes). However, how will this affect my existing EPF funds in India? If I need to create a new pension account, do I have to wait for 15 years to withdraw this pension? Since I've been holding this pension account for last 4 years in overseas PF account, will this period also be considered?

Thanks for your help.

What is QROPS?
Qualifying Recognised Overseas Pension Schemes (QROPS)

Following funds are qualified for transfer -

1. Aegon Religare Pension Plan India
2. Birla Sun Life Insurance Freedom 58 India
3. Birla Sun Life Insurance Secure 58 Plan India
4. Birla Sun LifeInsurance Flexi Secure Life retirement Plan II India
5. Flexi Secure Retirement Plan [Birla Sun Life] India
6. IDBI Fortis Retiresurance Pension Plan India
7. LIC's Jeevan Akshay - VI India
8. Life Maker Pension India
9. Max New York Life Smart Invest Pension Plus India
10. Max New York Life Smart Invest Pension Super India
11. Met Advantage Plus India
12. Met Pension Plus India
13. Quantum Solutions Employees Provident Fund Trust India
14. Smart Invest Pension India

Source - http://www.hmrc.gov.uk/pensionschemes/qrops.pdf

This is total new for me so better get in touch with some expert.

Got following articles in google – may be helpful for you -
http://www.articlesbase.com/insuranc...n-1861436.html
http://www.gerardassociates.co.uk/co...ions-and-qrops
http://www.qropsworld.com/qrops-benefits.html

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Originally Posted by Rahul

Got following articles in google – may be helpful for you -
http://www.articlesbase.com/insuranc...n-1861436.html
http://www.gerardassociates.co.uk/co...ions-and-qrops
http://www.qropsworld.com/qrops-benefits.html

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Thanks for your help. To be honest, I've already gone through these links.

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Originally Posted by amogal

Hi

What is the best way to transfer overseas pension fund? I have an EPF account in India active until 2006. Last four years I've been working outside and have an overseas pension account. I plan to return to Indian in 2012 and hence transfer overseas pension to my Indian account.

I know that this overseas pension amount can be transferred to QROPS (Qualified Recognized Overseas Pension Schemes). However, how will this affect my existing EPF funds in India? If I need to create a new pension account, do I have to wait for 15 years to withdraw this pension? Since I've been holding this pension account for last 4 years in overseas PF account, will this period also be considered?

Thanks for your help.

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Hi,

I know that this thread is quite old now, but this in might help you, if you haven’t already transferred your UK pension into a QROPS.

To transfer your UK pension into a QROPS, you’ll have to set up a new scheme, you can’t transfer the UK pension into an existing scheme you have in India.

I would also add that there is no requirement for an Indian resident to transfer their UK pension into a Indian based QROPS. In fact, depending on the client’s circumstances, a transfer to a QROPS based in another jurisdiction may be more appropriate.

The biggest benefit for many clients of transferring their UK pension into a QROPS is to avoid the need to purchase an annuity with a pension – and in India, the rules are the same as in the UK – when you retire, you must purchase an annuity with your pension fund (after taking out your tax free lump sum).

And with annuity rates at all time lows, this will severely restrict the income you are able to take from your pension when you retire.

Most clients want as much flexibility as possible in relation to their pension – what to invest in, when to take their pension, how much to take etc. So if a client wants to invest in the Indian stock market he can. Or if he prefers to invest in the UK or US stock market, again the choice is his/hers. A QROPS outside India offers much more flexibility in these respects.

I would add a couple of points here to be aware of:

HMRC’s list is updated every 2 weeks, and then posted on their website. So it is important that if you are considering a QROPS transfer, to check the latest version of the list directly from the website – and not rely on a copy of a PDF document which might be several months old and shown to you by the agent selling you the policy to prove the scheme is legitimate, when in fact it’s not (and yes, this actually happened to a client of mine!). For example, the LIC Jeevan Ashkay VI Scheme has been banned from the HMRC list of approved scheme for several months, yet there are still some agents who are promoting it as a viable option for transferring UK pensions.

The consequences of transferring a pension into an unauthorised scheme are very severe. When HMRC find out, they will impose a 55% penalty based on the value of your pension at the date of transfer.

It is not possible to make a withdrawal from the QROPS pension, or take a tax free lump sum before the age of 55. If there are any schemes out there which promise withdrawals at the age of 40, then these are not legitimate schemes, and will be banned by HMRC as soon as they find out about them.

Hope this helps
Andrew

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I would also add that there is no requirement for an Indian resident to transfer their UK pension into a Indian based QROPS. In fact, depending on the client’s circumstances, a transfer to a QROPS based in another jurisdiction may be more appropriate.

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Can you please elaborate what do you mean by "a transfer to a QROPS based in another jurisdiction may be more appropriate"?

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Originally Posted by Rahul

Can you please elaborate what do you mean by "a transfer to a QROPS based in another jurisdiction may be more appropriate"?

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Hi Rahul,

Happy new year, and sorry for the delay in responding to your question.

The first point to make is that, for returning Indians who have a UK pension, there is no obligation to transfer their UK pension into an Indian QROPS scheme (such as HDFC Life, ING, SBI, ICICI Pru, etc). There are several other jurisdictions which can offer benefits and features not available to Indian schemes.

Indian QROPS schemes are subject to Indian pension regulations, which oblige a member to use their pension fund to purchase an annuity. With pension annuity rates offering very low incomes, and with the associated high charges imposed by the insurance companies, many clients prefer an alternative solution - and for this they must look for a QROPS solution outside of India.

The first thing a pension adviser must do when discussing pension transfers and QROPS with their client, is to understand their financial goals and objectives, as this will have a significant impact on advising on the most suitable QROPS solution for them.

For example, some clients want much more control over their pension investments, and to have a say in the allocation of their investment portfolio. For these clients, we may recommend a QROPS solution with a specialist investment account, where the client can select from over 6,000 different investment funds, including funds which invest in India.

For clients who want a more ‘hands off’ approach, and who want a very low risk, stable investment we may recommend their pension be managed by a professional fund manager based in London.

For clients who are relatively young – say in their 30’s or early 40’s, who want to maximise the tax free lump sum they can take at retirement, we may recommend a solution whereby they are allowed to withdraw, at retirement, 100% of the growth that the fund has made since the transfer.

Thus a QROPS plan is not a ‘one size fits all’ solution. Each client is different, with different transfer values, financial goals and objectives – and it is the role of the adviser to find the right QROPS solution which matches those individual requirements.

I hope this helps, but let me know if you have any further questions.

Andrew