Published on Tuesday, the data, which reports the number and value of transfers to Rops each year since they were launched in 2006, shows that the number of transfers plummeted to 13,700 in 2015/16 from 20,100 in 2014/15.
Larger pension pots
Despite the significant fall in sales, the value of Rops transfers fell by just 15% to £1.5bn in 2015/16 from £1.76bn in 2014/15 – implying that a smaller number of people are transferring larger pensions pots into Rops.
HMRC figures show that Rops numbers have increased five-fold since their launch in 2006 to 2012/13, going from 2,500 in 2006 to 13,400 in 2012.
Between April 2013 and April 2014, the figure then dipped slightly to 11,300 after HMRC changed the requirements that schemes had to meet to qualify as a Rops in April 2012.
Advice safeguard
John Batty of Isle of Man-based Boal & Co, an actuarial consultancy firm specialising in international pension schemes, said that last year’s tumbling Rops figures were expected after the UK introduced the ‘advice safeguard’ for expats as part of the pension freedoms in April 2015.
“The drop last year was understandable with the requirement for UK FCA advice being introduced, together with the reduction in the number of Australian Rops due to the pension age test,” Batty told International Adviser.
Under the requirement, individuals, including those living outside the UK, must take financial advice from an Financial Conduct Authority (FCA)-regulated adviser for all transfers out of final salary or guaranteed annuity rates (GARS) pension schemes for pots over £30,000 ($39,631, €35,126).
The UK’s Department for Work and Pensions is currently consulting on whether to scrap the ‘advice safeguard’ for expats, allowing them to use locally-authorised financial advisers instead.
Batty has previously admitted that the advice requirement as well as pension freedoms were dampening sales of Rops, while insurance giant Old Mutual International (OMI) also reported a sharp drop in overseas pension transfers.
Australian Rops removal
The sharp decline in overseas transfers out of the UK also reflects the thousands of Australian Rops that were removed from the HMRC list in July 2015.
The schemes failed to meet the conditions of the pension age test, brought in with the pension freedoms, requiring Rops schemes to ensure savers are not able to access funds before the age of 55 in line with UK law except for in cases of “serious ill health”.
Australian Rops allow for early pay outs in cases of “serious financial hardship”.
Last month, HMRC also removed nearly a hundred Canadian Rops from its list – also for failing the pension age test.
In Canada, Rops primarily ‘registered retirement savings plans’ can be cashed in partly or fully at any time, regardless of age, while Australia allows for access in cases of serious financial hardship.
