What’s The Difference Between A ROPS And A QROPS?

Qualifying Recognised Overseas Pension Scheme (QROPS) have led the way as offshore pensions for expats since April 6, 2006 – but now a new pension is taking over.

A Registered Overseas Pension Scheme (ROPS) has suddenly taken the place of QROPS on most HM Revenue & Customs (HMRC) guidance.

So what is a ROPS?

Offshore pensions for British expats come in a number of formats –

  • overseas pension schemes
  • recognised overseas pension schemes (ROPS)
  • qualifying overseas pension schemes (QOPS)
  • qualifying recognised overseas pension schemes (QROPS)
  • relevant non-UK schemes (RNUKS)
  • qualifying non-UK pension schemes (QNUPS)

ROPS were established on April 6, 2015 when HMRC introduced a new qualifying test for all pensions in the UK and overseas – the pensions age test.

The test bars any pension from paying out benefits to any retirement saver aged under55 years old except in exceptional circumstances, such as terminal illness.

This test was introduced as part of the government’s flexible access pension rules that lets anyone aged 55 years old or over draw down their pension to spend as they wish.

This option is not only available in the UK, but to pension providers in the European Economic Area.

Outside of the EEA, ROPS providers have to ring fence 70% of any cash transfer in from a UK fund to pay a pension in retirement.

ROPS also have to pass a benefits tax relief test, which essentially requires a non-resident pension saver to pay tax on pension payments at the same rate as a resident receiving payments from the same scheme.

ROPS also have to pass some extra technical tests.

HMRC published a QROPS list until June 2015, when this was changed to the ROPS list.

Confusingly a ROPS can also be a QROPS, providing:-

  • All the ROPS rules are met
  • The scheme administrators have self-certified this to HMRC
  • The administrators agree to report information about pension payments
  • Tell HMRC if the scheme fails to meet ROPS rules at any time


QOPS, RNUKS and QNUPS explained

A QOPS is an offshore pension that is not a ROPS but has self-certified overseas pension scheme rules have been met and where the administrators have agreed to tell HMRC certain information about pension payments and the scheme status.

RNUKS are overseas pensions which have received UK tax relief on contributions.

QNUPS are similar to QROPS but with some important differences. A QROPS can only be based in a country with a double taxation agreement with the UK, but a QNUPS does not. The scheme managers do not have the same reporting requirements as imposed by a QROPS either.