UK based Indian pension investors (expats) can consider QROPS schemes in India for better tax advantages on their UK pension savings & get their UK pensions transferred to a QROPS scheme in India

India based UK expats should understand that they can no longer depends on the financial favors from UK Government anymore irrespective of whether they are in or out of the UK tax system. It looks UK Government is making clear on this part to UK expats.

For the information of UK expats there would be a consultation to consider scrapping the personal income tax allowance for expats.

When it comes to a question that who receives the allowance, it totally depends on the definition of an expat. From the tax point of view, an expat is no longer a UK resident & the member settles in another country & pay taxes there itself. Even though it does looks like UK Govt has liberated pensions, they are still decided  to collect for Treasury.

So switching one’s  Onshore pensions to an OFF Shore QROPS jurisdiction like india is the solution to get out of this tax trap. On switching UK pensions to a India based QROPS the member pays income tax on the pension payments in the country where he/she is tax resident , not at UK tax rates. India as a QROPS jurisdiction is the bested suited one for India based UK expats to get their UK pensions transferred. So that the transferred UK Pension Corpus will grow tax free @ 8 to 9 % CAGR & the Member will be able to make provision to pass on the entire grown corpus as tax free lumpsum to the family on his demise. Till death the Member would have received Pension income also from age 55 onwards as per the conditions of HMRC.

UK based Indian expats can transfer their UK pensions to a  Capital Guaranteed pension scheme in India, in which they  need to buy a Pension policy by paying minimum premium  initially. This minimum premium need to be paid for next 5 or 10 years depending on one’s age. As a policy feature one can make additional investments into the policy accountant  in the form of Top-ups. So, UK  pensions will be added as extra investments in the form of Top-up to the existing pension policy. On transferring the UK pensions, after deductions of few applicable charges the net remaining Corpus in the Account is called Capital & this capital is will not fluctuate  unlike in unlit linked pension scheme. That means the investment portfolio is not linked to any capital market.

On this capital every year Bonus is being declared. Once the bonus is declared & added to the base transferred capital both Bonus & base transferred Capital in the Account will become capital & the same is will not fluctuate. In the subsequent year, on the total accumulated capital the bonus will be declared. So it’s a cumulative bonus & not simple revisionary bonus. More over the bonus declared is a tax free bonus. Hence, the investment portfolio will grow tax free till the completion of  Member’s age 55. (As per UK HMRC rule your vesting age is 55)

The Fund Composition in the Capital Guaranteed Pension Policy is mainly Govt. Securities, Govt. Bonds and Approved Corporate Bonds.

All premiums including top-up premiums(transferred UK pension fund)  paid are guaranteed to grow at minimum 1% compounded per annum.(all premium  means Gross Premium before deduction of charges & Top up premium means Gross UK pensions added ). So whatever Gross investments one  made plus 1% compounded Growth of the same is guaranteed. That means, the fund value can never go down & the investment can only grow up year on year and Invested Capital is Completely Guaranteed.

Also, Following interest rates will be credited to the IPA(Individual Pension Account)  at the end of the policy year:

1)  Minimum Floor Rate: Your IPA will earn 1% p.a. compounded for the entire vesting term

2)  Additional Interest Rate: In addition to the above rate, 4% p.a. 

compounded will be credited in your IPA for the first 5 years &

0.5% p.a. compounded for the remaining year

3)  Residual Addition: In addition to the above two rates, this interest will be credited at the end of each year starting from policy year 5.

On completing  Member age of 55,  he/she can take upto 30% of the total grown corpus as tax free lumpsum & On remaining 70%  corpus, the member will start receiving pension income till Member's lifetime. On demise of the Member, the entire 70% corpus will be given as tax free lump sum to the Nominee.

FOR MORE DETAILS & 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.

M +91  9844519872

Email:  qropstoindia@gmail.com