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Introduction A QROPS pension scheme is an excellent vehicle for people who are living or planning to live overseas,


but who retain UK pension benefits. A QROPS offers excellent flexibility, significant taxation and investment advantages and the opportunity to pass on your pension funds tax efficiently to your nominated beneficiaries in the event of your death.


In the UK the government has set a limit on the amount of tax relieved pension savings any individual can accumulate. This limit is known as the Lifetime Allowance (LTA) and, as at 6th April 2012, is set at £1.5 million.


Unless you have applied for protection, funds in excess of the LTA are subject to a recovery charge of 55%. Furthermore, funds may be tested against the LTA more than once, giving rise to the possibility that, in retirement, you could be penalised for achieving good investment performance or drawing less than the maximum permitted pension.


Whilst funds transferred to a QROPS are tested against the LTA at the point of transfer they have the advantage that after a five year qualifying period they will not be subject to any further testing.


Comparing a UK pension with The Westerby International Retirement Plan The tables below will give you an indication of some of the most important differences between a UK pension scheme and a pension transferred to The Westerby International Retirement Plan.


UK PENSION SCHEME


Fund from which no benefits have been taken (Uncrystallised)


Funds in capped or flexible drawdown (Crystallised)


Schemes which exceed the LTA but have applied for protection


Schemes which exceed the LTA but have not applied for protection


Tax on Death before age 75


Tax Free up to the LTA Scheme Recovery Charge of 55% Nil


Tax charge of 55% on the excess above the LTA


Tax on Death on or after age 75


Scheme Recovery Charge of 55% Scheme Recovery Charge of 55% Scheme Recovery Charge of 55%


Tax charge of 55% on the total value of the fund


WESTERBY INTERNATIONAL RETIREMENT PLAN


Fund from which no benefits have been taken (Uncrystallised)


Funds in capped or flexible drawdown (Crystallised)


Schemes which exceed the LTA but have applied for protection


Schemes which exceed the LTA but have not applied for protection


Tax on Death before age 75


Tax Free up to the LTA Nil Nil


55% on the excess above the LTA on transfer to QROPS


Tax on Death on or after age 75


Nil after 5 years Nil after 5 years Nil after 5 years Nil after 5 years


It is important to note that whilst there is a scheme recovery charge of 55% on the excess above the Lifetime Allowance on transfer to a QROPS, all the profits made thereafter on the investment of the fund will not be subject to a scheme recovery charge following five complete tax years after qualifying for UK non residency.


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