QROPS... If at any point in time you have worked in the UK and have accumulated a pension fund there, in all probabilities you would know about this term. In layman's term QROPS is an option provided by HMRC (Her Majesty Revenue & Customes - the UK based regulator), to facilitate funds transfers for expats when they are moving out of UK, either back to India or anywhere else across the world. It stands for Qualifying Recognised Overseas Pension Scheme. The key advantages of QROPS lie in tax efficiency *, mobility it offers you to take your funds where you go and gaining from an upside by investing in countries like India which offer a higher yield.
Lets imagine a scenario where you do not have an option of transferring your accumulated funds to a QROPS? The options left to you are:
Withdraw accumulated fund when you move out and end up paying a tax surcharge in the UK as which at times are as high as 55% on the entire corpus
Wait till you attain pensionable age, and utilize your funds either through annuity or in the form of income draw down as per limit defined by HMRC
Once you attain pensionable age you also have an option to withdraw 25% of your corpus as tax free amount
However, if we look at options offered by QROPS, it definitely comes across as a good option which is allowed by Her Majesty Revenue & Customs
Not withdrawing your funds in the UK and and transferring the same through QROPS, provides you with a tax efficient method to transfer your funds
You tend to gain from higher annuity rates and more options vis-a-vis what you would get in the UK
You also have an option of utilizing your funds to further enhance your corpus and hence gain from the higher cost of capital vis-a-vis what you get in the UK
With a large no of products, QROPS also offers you a wide range of products to choose from, and to choose products that best serve your requirements
Broadly, for any individual, the QROPS comes across as an excellent option to not tax efficiently manage the funds but also in terms of deciding where exactly the fund should be utilized
QROPS in India
QROPS in India remains largely an untapped market and less known of an option. This is primarily on the ground of lack of awareness about QROPS and its process, availability of suitable and qualified product for such transfers, and seamless process flow right from the time the customer thinks of QROPS to the time funds are transferred. Tackling the issues of awareness, product and seamless processing, this is a huge opportunity for QROPS market in India, given the number of NRIs who either have already come back to India or are planning to come back and have a pension corpus lying in the UK.
At HDFC Life we launched QROPS transfers in the 2013-14, and the response we received has been very encouraging. The key customer needs that we have identified and addressed are product and support.
Having a suitable and qualified product is a must. Historically also, HDFC Life has been a strong promoter of retirement products. With all our 5 Retirement Solution products registered with HMRC as QROPS, we have the capability to offer the customers a wide range of products to choose from.
One of our values being Customer Centricity, any process we design is keeping the customer in mind, with an endeavor to offer a seamless, hassle free experience. With a dedicated team handling QROPS transfers, its our attempt to give customised attention to each customer.
*Tax laws are subject to change, we advice you to consult your tax advisor for details.