Released today after a period of suspension, the list shows that the total number of schemes has fallen from around 3800 to 663.
Australian schemes dropped from 1,600 to one, with the local government superannuation scheme – which is only open to local government employees – the only one left remaining.
Schemes in the Republic of Ireland were also considerably affected, dropping from 797 to 56, while Swiss schemes fell from 100 to one, Spanish ROPS from 16 to two, and South African schemes from 29 to seven.
HMRC suspended the list on 17 June after sending a letter to all scheme providers asking them to confirm that their QROPS met the conditions of the ‘pensions age test’, which states that benefits can only be paid out of a scheme before age 55 in cases of “serious ill health”.
Many schemes did not meet the requirement, which became active on 6 April, as they also allow early payments to be paid out in cases of “serious financial hardship”.
Transfers into non-compliant schemes made after 6 April risk a transfer penalty fee of up to 55%.
“Those that have transferred their pension funds before 6 April shouldn’t have a problem,” said James McLeod, head of pensions at AES International. “But those in the process of transferring are well advised to stop the transfer because they may incur tax penalties.”
McLeod suggested schemes were removed because they were either dormant, had chosen not to respond to HMRC’s request for QROPS confirmation, or were allowing pension holders to access benefits before 55.
The removal of thousands of Australian schemes comes as no surprise to some financial advisers.
“As expected it has been confirmed that the Australian Superannuation funds are not QROPS,” said Justin Harris, managing director at Chase Belgrave. “However, it is important to understand that Australian residents are still well catered for with many options available within other jurisdictions.”
Harris said the list has made HMRC’s position clear on the accessibility of pension benefits before the age of 55, and said he expects that interest in QROPS from Australian residents and elsewhere to increase as uncertainty has now been removed.
Seems sensible
Roger Berry, managing director of Concept Group, said it seems sensible that HMRC would have updated its list in the wake of new pension rules which came into force in April.
However, he said these new rules will have made it difficult for some schemes to remain compliant, particularly large superannuation schemes like those in Australia.
“It seems clear the Australians are seeking exemptions and, as there has been no obvious abuse of these arrangements in the past, it’s possible HMRC will be accommodating.”
Berry said, unlike Australia, other smaller jurisdictions have been able to make amendments to their pension rules more easily to accommodate recent QROPS rule changes.
He also pointed out, however, that while it is necessary to have a public list for transferring schemes to check the receiving schemes is a QROPS, HMRC also makes it clear that the list isn’t a list of approved QROPS, but a list of schemes that they believe to be QROPS.
“Therefore the responsibility lies with those transferring, who must do their own due diligence and check the tax consequences,” said Berry.
A spokesperson for HMRC said: “As always, those making a transfer will need to satisfy themselves that the scheme receiving the transfer is a QROPS. Appearance on the list does not make a scheme a QROPS.”
Although the pensions age test became a QROPS requirement from 6 April, the date of the pension reforms, HMRC has already announced that it will waive the fees for transfers made up until 17 June for many New Zealand-based KiwiSaver schemes, and is considering the same allowance for Australian super annuation schemes.
