All QROPS schemes must meet the minimum rule requirements laid down by the UK taxman – but the scheme managers can fine-tune their products.
Think of a QROPS in the terms of a car – the HM Revenue and Customs framework of regulations is the chassis, but the scheme managers can add shiny bells and whistles to differentiate their products.
These could be fund self-management options, like those provided by an onshore self-invested pension plan (SiPP) or small self-administered scheme (SSaS).
Other options would cover the scope of investments, generally covering cash, bonds, property, hedge instruments, equities, and commodities.
The regulators for the offshore financial centre where the QROPS is based sign off these rules.
Who does what in the QROPS structure
Most QROPS follow a similar structure:
A master trust has overall control of the QROPS. This trust appoints a corporate trustee, which is in effect the QROPS provider that manages the pension scheme.
QROPS rules mean the master and corporate trustees must have a base outside of the UK
The corporate trustee holds the QROPS investments on behalf of the pension investor. This trustee often appoints an investment manager who has the day-to-day responsibility for switching investments.
The corporate trustee pays all pension benefits to the scheme member.
Where applicable, the corporate trustee must report the details of any benefit payments to HMRC – this is often referred to as the ‘five-year rule’ as any payments in the five years from the establishment of the QROPS must be relayed to the taxman.
Making sure QROPS rules are applied
The checks and balances to make sure the QROPS scheme complies with HMRC rules place responsibility on the provider to run the trust properly.
In financial jurisdictions where tax rules are tougher than those laid down by HMRC, those rules apply.
In jurisdictions where the tax rules are not as strict as those required by HMRC, the HMRC minimum standards apply.
Qrops transfers are notoriously difficult and proffesional advice must be taken. To find out more about a Qrops pension contact the leading company