What conditions must be met in order for me to transfer my UK pension fund to IS&P – as a UK citizen but non UK resident and as a non UK citizen and non UK resident?
Citizenship and residence are generally irrelevant for this purpose.
The condition which must be met in order to transfer a UK registered pension fund to a foreign scheme is that the foreign scheme must be a Qualifying Recognised Overseas Pension Scheme – a QROPS. 

How can I be sure that IS&P qualifies as a QROPS?
Because the scheme manager can provide you with a copy of the letter of acceptance from HMRC and the QROPS reference number for the scheme.  A list of QROPS is published on the UK Revenue website.

Can such a transfer be made by a person who is resident in the UK?
Yes.  Residence is generally not relevant to the tax treatment of the transfer of the UK registered pension fund to the QROPS. 

Will a transfer to the QROPS give rise to any charge to tax?
No.  A transfer to a QROPS will be a recognised transfer and will not give rise to an unauthorised payments charge.

Can a UK resident but non UK domiciliary have contributions made to IS&P once it is accepted as a QROPS?
UK tax relief for contributions by a UK resident member to the QROPS (and protection from tax on the member in respect of contributions by his employer) only applies if the individual is a "migrant member".  This means broadly that he must have been non UK resident when he joined the scheme and he was entitled to tax relief on contributions in the country in which he was resident immediately before coming to the UK.  Special rules apply to people who come from a country which does not relieve pension contributions, but such persons can still qualify as migrant members.

Can I receive a lump sum from the QROPS?  If so, how much and when?
A lump sum can be received from the scheme but it is limited to 25% of the total amount of UK tax relieved funds within the scheme.  The lump sum and any other pension benefits cannot be paid before the member reaches normal minimum pension age unless an earlier age is permitted on grounds of ill health.

A member could receive more than 25% of the UK tax relieved fund, but the excess would be subject to an unauthorised payment charge of 55%.  However, the charge and the requirement to notify the payment only arises if the member is UK resident or has been UK resident in any of the previous five years.  The lump sum could be increased to 30% after the member has been non resident for more than 5 years without any charge to UK tax.

Do I need to be a defined age to get access to the funds in the QROPS?
You have to be of minimum pension age unless you are able to retire early on the grounds of ill health.

Why would I want to transfer my UK pension scheme to IS&P?
In comparison with the UK, it is likely that a slightly larger tax-free lump sum may be withdrawn from the QROPS.  There would be no requirement for the fund to be used to purchase an annuity at age 75 as in the UK and the fund would be able to be invested in more wide ranging investments than would be permitted in the UK.  No UK tax would be payable on payments out of the fund in retirement although local tax may be payable in the place of residence of the member when the pension benefits are received.

If you die, your QROPS fund becomes part of your estate and can devolve without the penalty tax and surcharge which would arise in a UK scheme. However, if you are UK domiciled you will be subject to UK IHT on the value of the fund unless the QROPS satisfies the requirements of section 615(3) Taxes Act 1988 enabling the exemption from IHT to be available (which will normally be the case), the funds transferred would be subject to UK IHT on your death if you are UK domiciled at the time.

Are there any UK inheritance tax implications on a UK domiciled person in transferring the UK pension fund to a QROPS?
The transfer is not itself chargeable to inheritance tax.  However an IHT implication does arise because whereas the members former interest in the UK fund is exempt from IHT, the QROPS will not necessarily qualify for the exemption unless it satisfies the conditions set out in section 615(3) Taxes Act 1988, a key condition being that the sole purpose of the QROPs is the provision of pension benefits in respect of an employment exercised wholly outside the UK.  Otherwise, if a UK domiciled individual dies while drawing a pension from the QROPS, a charge to IHT may arise on the fund.  If the fund were to be discretionary (which will not be the case with a QROPS) it will be regarded as relevant property for IHT purposes to the extent that the assets have UK source, and subject to a charge to IHT every ten years.

What happens if a UK registered pension scheme is transferred to a non QROPS overseas?
Such a transfer would not be permitted by the UK trustees, but if inadvertently one was made, an unauthorised payments charge would arise on the member and a scheme sanction charge would arise on the UK scheme.  No charge would arise on the trustees of the overseas scheme.

What happens if the QROPS ceases to qualify as a QROPS?
No further transactions from UK registered pension schemes could be made – at least not without an unauthorised payments charge on the member and a scheme sanction charge on the UK scheme.  Existing scheme members for whom authorised transfers had already been made would be unaffected.

I have existing UK pension funds in excess of the Lifetime Allowances on which I have notified a claim to Enhanced Protection.  Can I transfer the whole or part of the protected funds to a QROPS without forfeiting the protection?
Yes.  A transfer to a QROPS of protected funds does not result in a loss of protection.  Following changes in the UK Finance Act 2007, partial transfers arise also now permitted.

I have already started to draw down my UK pension.  Can I still transfer the fund to IS&P?
No.  Once drawdown has commenced you can no longer transfer the fund.

This advice is provided by Squire Sanders & Dempsey in connection with the specific issues raised in connection with UK taxation. This advice is of no further application and does not represent a general explanation of the issues or a full review of the subjects covered. The advice should not be relied upon in any other context by any person. Professional advice should always be sought before any action is considered based on the above and no liability is accepted by Squire Sanders & Dempsey or any of its partners consultants or employees in respect of any action which might be taken or refrained from being taken by any person as a result of the contents hereof. No reproduction of the whole or any part of the contents of this advice is permitted without the prior written consent of Squire Sanders & Dempsey.