Following HMRC’s announcement yesterday that it has suspended the recognised overseas pension schemes (ROPS) list for “reformatting” until 1 July, James McLeod, head of pensions at AES International, said it is “essential” that advisers and trustees of transferring pension schemes check whether schemes meet the Qualifying Recognised Overseas Pension Scheme criteria.
“We suggest exercising some caution when considering a transfer,” he said.
“We do not anticipate the removal of any of the so-called ‘third country’ schemes, such as those based in the Isle of Man, Malta, or Gibraltar. The action from HMRC of late suggests any transfers which were deemed to have been made to a non-compliant scheme will likely be subject to the punitive unauthorised payment charge.”
Requirement of satisfaction
Following the announcement, an HMRC spokesperson confirmed today that when the list returns it will reflect responses to a letter it sent to all scheme operators in April requiring them to confirm that they meet the “pensions age test”, which states that benefits can only be paid out before the age of 55 in the event of ill health.
Many schemes are expected to drop off the list as a result of not meeting the requirements of this letter, particularly those in Australia and Ireland, as they allow benefits to be paid early on the grounds of “serious ill health”.
The HMRC spokesperson said those making a transfer will “need to satisfy themselves that the scheme receiving the transfer is a QROPS”.
“One of the reasons HMRC removes schemes from the ROPS notification is if it becomes clear they do not meet the requirements to be a ROPS,” they added.
Strongly recommend
Gary Boal, managing director at Boal & Co, said he would “strongly recommend” that advisers seek confirmation of a QROPS status before the new list comes out on 1 July.
“That would be the prudent thing to do,” he added. There will of course be significant changes to the list, as a result of the widely publicised pre-55 benefit issues associated with certain Australian and Irish Qrops. Many of those schemes will fall off the QROPS list.
“There will also undoubtedly be contraction of the list in other centres too, as a result of housekeeping. For example, a scheme, such as an offshore SIPP, might have been set up to receive a single transfer in 2008, when the minimum benefit age was 50, and if no further transfers are expected for that sort of scheme it could make sense for the provider to take the scheme off the list, as there is no continuing purpose to be on it. So you may well see a number of 1-member schemes come off the list for this reason.”
