Last month, 11 French and 19 Italian pension schemes were on the Rops list, published monthly by the UK tax office.
However, in the latest update, released last week, no schemes were listed for either of these countries.
Many of the schemes removed from the French section were operated by well-known insurance companies such as Swiss Life, Axa and the UK-listed Aviva.
Pension age test
It’s likely the Italian and French Rops were scrapped for failing the UK’s pension age test, introduced with the pension freedoms in April 2015, which requires 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”.
“All French qualifying recognised overseas pension schemes (Rops) have been removed from the British taxman’s official list of offshore pensions because French legislation allows scheme members to access scheme funds before age 55 in a variety of exceptional circumstances, such as unemployment,” said Swiss Life told the Financial Times.
The move could affect the estimated 190,000 Brits currently living in France – the EU’s second most popular destination for UK expats after Spain – who are looking to move their UK pensions abroad.
A further 60,000 British expats also reside in Italy.
Canadian Rops
It comes a month after all but three Canadian Rops were also removed from the HMRC list for failing to comply with the conditions of the pension age test. In Canada, Rops are primarily ‘registered retirement savings plans’, which can be cashed in partly or fully at any time, regardless of age.
In July 2015, thousands of Australian Rops were also dropped from the list for allowing early pay outs in cases of “serious financial hardship”.
“Transfers to France and Italy are now effectively blocked,” said Geraint Davies, managing director of Montfort International, which advises on overseas pension transfers.
“Unless these countries change their pension rules so they match the UK’s, then this is permanent.”
Davies added that HMRC was getting particularly “worried about pension money flowing out of the UK to offshore schemes which weren’t compliant with its rules.”
Recent data published by HMRC found money transferred from UK pensions in to Rops has increased five fold since the products were launched in 2006 and reached £1.5bn (€1.8bn, $1.9bn) for 2015/16.
UK reforms
The move to bar French and Italian schemes also coincides with a number of wide-ranging reforms, unveiled earlier this month, to the way Rops are taxed and regulated to bring them in line with the pensions freedoms.
From April 2017, the UK government will now require all Rops outside the EU to be regulated in their country of origin or such schemes face being struck off HMRC’s approved list.
As part of a crackdown on pension scams, which have spiked since the freedoms came into effect, the UK is looking at giving greater powers to existing pension providers to block suspicious transfers to a personal pension scheme, including Rops.
