Overseas Pension - QROPS

[MRQROPS]

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.

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