UK Pensions transfer to a QROPS in India- LTA an important factor to Consider

While transferring  UK pensions to a QROPS in India or to any other OFF Shore QROPS outside UK, having look at Lifetime allowance (LTA) is an important factor to avoid serious tax implication .The lifetime allowance is a limit on the total value of retirement benefits one can build up in all of his/her pension arrangements. The lifetime allowance is £1.5 million for the 2012/2013 and subsequent tax years.

While considering the transfer of UK pensions to a QROPS to India or any to any other OFF-Shore QROPS outside UK, the UK pension member should consider the percentage of the lifetime allowance used that will be usually shown on the illustration. The value of these benefits is the percentage given multiplied by the current lifetime allowance. For instance, a figure of 7.5%  in the 2012/2013 tax year would be £1.5 million  multiplied by 7.5% giving £112500.

Any pensions (apart from State pensions and any widow's/widower's/surviving civil partner's/dependant's pensions) that you are already receiving, that started before 6 April 2006. The value of these benefits is the yearly pension multiplied by 25. As an example, a pension of £450 per month would be £5,400 per year. £5,400 multiplied by 25 is £135,000. If this is the first time you have taken retirement benefits since 6 April 2006 then you should use the current amount of pension you are receiving. If this is not the first time you have taken benefits since 6 April 2006 you should use the amount of pension in payment at the time the first benefits were taken. 

The maximum income from any pension fund withdrawal that started before 6 April 2006. The value of these benefits is the maximum yearly income multiplied by 25. As an example, a maximum income of £450 per month would be £5,400 per year. £5,400 multiplied by 25 is £135,000. If this is the first time you have taken retirement benefits since 6 April 2006 then you should use the current maximum income. If this is not the first time you have taken benefits since 6 April 2006 you should use the maximum income at the time the first benefits were taken.

Any retirement benefits (apart from State pensions and any widow's/widower's/surviving civil partner's/dependant's pensions) that you have taken since 5 April 2006. The company paying you the benefit  should have given you a statement showing you in percentage terms, how much of your lifetime allowance was used by this benefit. The value of these benefits is the percentage given multiplied by the current lifetime allowance. As an example, a figure of 5% in the 2012/2013 tax year would be £1.5 million multiplied by 5%, giving £75,000.

Any other retirement benefits you are planning to take at the same time as this one, including any other benefits you have with existing UK pensioner . Again, the illustration you are given should show you in percentage terms how much of your lifetime allowance will be used. The value of these benefits can be calculated as in the example above. Any other retirement benefits that you are not planning to start taking until a later date can be ignored at the present time. These will be tested against the lifetime allowance when you take them.

Transfers to a QROPS in excess of the lifetime allowance will be subject to a tax charge of 25%. The UK pensioner will take off this tax before benefits are paid and pass this to the trustees of the pension scheme to pass to HMRC.

There are three main types of protection:

Primary.

Enhanced.

Fixed.

To know more about LTA & many other important factors & to start up of transfer of UK pensions to India, please do contact us with below mentioned Contact details

FOR STARTING UP OF THE TRANSFER PROCESS CONTACT :

Anusuya .R

Financial Advisor

SBI Life Insurance Company Ltd, # 23, Yamuna Complex,

1st Floor, 7th Cross, Malleswaram, Bangalore: 560003. 

Bangalore: 560001.

M +91  9980927393

Email:  qropstoindia@gmail.com