Gregory John Gutfeld, American television-host and author, was quoted stating “Youthful impatience obscures the endless potential for joy that’s standing right in front of you.” That endless potential for joy here refers to your pension being transferred to India through QROPS, the youthful impatience would be the act of withdrawing your pension before the age of 55. Any withdrawal of your QROPS pension before the age of 55 is automatically deemed an unauthorized transfer by HMRC (Her Majesty’s Revenue & Customs) and is liable to be taxed up to 55% with the potential for additional penalties. While trusting an agent who says it’s ok to withdraw your pension before time is a simple mistake, the penalty is more than half your life savings.
This is why it is important to choose your financial advisor wisely when transferring your pension to India through QROPS. While India is undoubtedly a better economy for your pension fund to grow in, navigating through HMRC parameters and matching them with Indian QROPS schemes is a task typically not suitable for beginners. What further complicates matters is the fact that in spite of there being a list of QROPS schemes on the HMRC website, none of them are endorsed by HMRC. This can be misleading and also leaves the task of checking which schemes are compliant to you, the person looking to transfer their pension to India. Additionally, agents looking for a quick commission may mislead you into transferring to a scheme that allows you to withdraw your pension before age 55, these schemes must be ignored at all costs.
If you do manage to transfer to a legitimate QROPS pension scheme, however, the sky’s the limit for your pension fund. In terms of investment opportunities, India has 23 stock exchanges, including the BSE, the largest stock exchange in the world with over 5,500 listed enterprises. There are also guaranteed schemes for the more cautious with fixed interest rates of up to 10.5%. Investors looking to invest through a QROPS can invest in equity through ULIPS, which are typically in the form of equity funds or mutual funds issued by insurance companies.
What is the penalty if a transfer proceeds and the new scheme turns out not to be a QROPS?
If the transfer proceeds and the new scheme is not HMRC-compliant you will be charged a minimum of 40% on the transfer plus an additional 15% for unauthorized withdrawal.
How do I know which schemes are HMRC-compliant?
Our team of financial experts are well-versed in HMRC compliance and even provide training to a number of private institutions on the subject. Please contact us to find the best compliant plan for you based on your age, vesting age, and risk profile.
How do I know if I’m eligible?
The following types of pension schemes are transferable from the UK to India:
- Occupational
- Final salary
- Defined benefit
- Defined contribution
- Self-invested personal pension (SIPP)
- Small self-administered scheme (SSAS)
How long does the process take?
While most websites and “agencies” claim it can take up to six months to complete the transfer, we can get the job done in a matter of 30 days.
For further details, get in touch with our team of financial advisors at QROPS DIRECT where we have been helping people transfer their pensions from the UK to India since 2008 and to the tune of over 2.5 billion INR.