What Is a QNUPS?

When working on retirement planning, it’s easy to land yourself in a seemingly permanent state of confusion. There are so many complex regulations, exceptions and acronyms to keep track of. Needless to say, you can easily find yourself with more questions than answers.

Fortunately, the team at Knightsbridge Place are here to assist. In this section, we’re going to look specifically at one of the most common acronyms: QNUPS. If you’ve been exploring your options for international retirement planning, you’ve probably already come across this. This retirement planning scheme offers some attractive features, the number one being that a QNUPS is exempt from UK IHT on the member’s death.

There are several types of people who could potentially benefit from a QNUPS – from UK residents to non-residents who are exposed to UK Inheritance Tax (IHT). If you fall under either of those categories, then QNUPS is certainly worth your attention.

Understanding QNUPS

The QNUPS regulations were introduced in 2010 by Her Majesty’s Revenue & Customs (HMRC). This legislation has provided British nationals with significant saving and investment opportunities – regardless of whether they live abroad or are still residents of the UK.

QNUPS is particularly useful for topping up an overall pension scheme, allowing individuals who don’t have enough capital in their existing scheme to build a more comfortable cushion on which to retire. In other words, it’s an effective means of ensuring that you’re able to save what you need for retirement without being encumbered by burdensome taxes and regulations.

If you’re thinking of transferring all or a portion of your pension into a QNUPS, you’ll need to charter the assistance of an actuary. This person will work with you to establish the level of benefits required to maintain your standard of living once you retire. Once that is established, you can determine what a reasonable level of contribution to your QNUPS should be.

What Are the Benefits of a QNUPS?

There are many reasons to consider setting up a Qualifying Non-UK Pension Scheme, most of which have to do with extracting and, ultimately, gaining access to your wealth in a tax-efficient manner.

Here are a few examples of how you may be able to benefit from a QNUPS:

Depending on your circumstances, you may be able to contribute to a QNUPS after you have retired.

You’ll have access to your pension fund for the remainder of your lifetime, and any remaining balance can be passed on to your chosen heirs upon your death.

You are not required to be employed (or to have an income) in order to make contributions to your QNUPS.

There is no maximum contribution set for a QNUPS; rather, the only requirement is that your contributions are sensible compared to your standard of living. This is why the approval of an actuary may be necessary.

A QNUPS is specifically intended for retirement purposes and should only be used to that end. However, we should also note that any funds remaining in the QNUPS do not attract UK Inheritance Tax (IHT). Instead, they can be passed as inheritance or distributed to beneficiaries of the member’s choice. This is yet another strong selling point for this type of scheme.

Who Benefits Most from a QNUPS?

UK retirement rates are at near-record lows. This is because today’s would-be retirees – even those with a fully funded UK pension in line with the current lifetime allowance limit – are finding that their retirement nest egg is not sufficient for them to maintain their lifestyle after they stop working.

That’s a terrible position to be in, especially when you have spent your adult life working and saving responsibly so that you could retire on time. This is where a QNUPS comes into play. It’s an ideal vehicle for enhancing your retirement provisions in a way that is suitable for your projected lifestyle needs after your career ends.

The fact that there are no lifetime allowance limits on a QNUPS means that you won’t incur the same severe tax penalties that you incur had you funded your UK-registered scheme over the lifetime allowance limit. In this scenario, this retirement scheme can be useful for just about any UK resident planning to retire one day.

The largest benefit to a QNUPS is that if you have assets of a high value, and you have a significant IHT liability, you can move a large proportion of these assets in to a QNUPS and this will reduce your tax liabilities, and enable you to pass on those assets set aside to your chosen beneficiaries free of tax, and at the same time accessing those funds, if you wish, until you die, taken as a pension income.

If you are interested in setting up a QNUPS to enhance your retirement prospects, please contact Knightsbridge Place. One of our advisors will be happy to assist.