On 15th December 2009, the UK’s Her Majesty’s Revenue and Customs (HMRC) updated on their website the latest updated list of QROPS (Qualifying Recognized Overseas Pension Schemes). The update is published by the PSS (Pension Scheme Services).
As with previous updates of the QROPS list, this is not a definitive list. In other words, there are QROPS schemes that have been approved by HMRC that have chosen not to appear on the list.
More importantly for those individuals looking for QROPS advice, they should not look at that list and assume that it is a recommendation by HMRC to use any of the QROPS stated. HMRC have emphasized that the publication of the list is for information purposes only and that they are not responsible for any overseas pension transfer from a UK scheme to an overseas scheme based on the clients choice of the scheme coming from the list.
As mentioned in previous news updates by Global QROPS Ltd, there are a number of schemes that feature on the list, as QROPS, but are actually unable to receive transfers in because their local rules do not allow this. An example for this is the USA – IRAs (individual retirement arrangements) and 401K’s are not permitted to take UK pension transfers in under USA legislation – despite appearing on the QROPS list.
It is also worth noting, that there are schemes that have been approved by HMRC but may have obtained their approval with incorrect information.
Please find link to HMRC latest news page. Latest QROPS list under 15th December: http://www.hmrc.gov.uk/NEWS/INDEX.HTM
Posts Tagged ‘QROPS Adviser’
Latest HMRC QROPS list
Tuesday, January 26th, 2010QROPS Advice from Experienced UK Authorized and Regulated Advisers
Tuesday, January 5th, 2010When taking financial advice, in all aspects of financial planning, individuals generally feel more comfortable with advisers who are experienced, authorized and regulated. This is no different for people who are seeking advice on QROPS (Qualifying Recognized Overseas Pension Schemes).
QROPS have been an essential part of retirement planning, especially for people who are migrating, since 6th April 2006 – when they first came into effect.
QROPS are essentially overseas pension schemes that are approved by the UK’s Her Majesty’s Revenue and Customs (HMRC) for receiving UK pension transfer funds. The Global QROPS Ltd advisory team have been advising on UK pension transfers to overseas schemes since before QROPS were first introduced, in the Finance Act 2004, and have been advising clients and assisting other financial advisers on QROPS from their launch to the present.
Global QROPS Ltd was established with the specific purposes of providing QROPS advice and our launch has been covered in the international financial press: http://issues.lastwordmedia.com/1N4a71b86ba6a89012.cde/page/8
Global QROPS Ltd are based in the UK and authorized and regulated by the UK financial services authority (FSA).
Transfers to QROPS and the Pension Special Allowance Rules
Saturday, December 19th, 2009Many of Global QROPS Ltd’s clients, that fall into the high earner category, look to maximize the funding in the their UK pension before they migrate and potentially transfer those funds to a QROPS (Qualifying Recognized Overseas Pension Scheme).
Before a change in the rules, introduced in the Finance Act 2009, a high earner could contribute up to their earnings into a UK pension scheme, subject to the annual allowance (£245,000 in tax year 2009/10), and receive full tax relief on the contributions. However, a temporary measure introduced by the Finance Act 2009 placed a restriction on the amount that could be contributed.
What changes do Global QROPS Ltd’s clients, that are high earners, need to be aware of?
The temporary measure (mentioned above) is the ‘pension special annual allowance’ and is a tax allowance that restricts the tax breaks on UK pension contributions for high income individuals with relevant income of £150,000 a year and over. This temporary measure commenced on 22nd April 20009 and is expected to be in place until 5th April 2011 – at which point the Government intends to finalize the rules.
The basic allowance is set at £20,000 (although an individual may qualify for an enhanced allowance of up to £30,000). Should a high income individual contribute in excess of the pension special allowance, then a tax charge on the individual would be generated.
High earning individuals, looking to top-up their UK pensions before transferring to a QROPS, should be aware of the potential restrictions.
Receiving Regulated QROPS advice
Monday, October 26th, 2009For people looking for advice with transferring their schemes from an existing UK pension scheme to an overseas pension scheme, approved as a Qualifying Recognized Overseas Pension Scheme (QROPS), there is always the question of who should you approach for advice?
Who can provide Regulated QROPS Advice?
There are many overseas advisers (and QROPS schemes) that are more than willing to speak to an individual interested in transferring their UK pension benefits to a QROPS. In many cases a UK pension member would be receiving advice from someone who is acting in good faith but are they receiving the same protection from the regulators for UK pension to QROPS advice as they would be receiving if they were being advised on a UK pension to another UK pension, transfer?
In most cases an overseas adviser (or scheme administrator) will not be authorised and regulated by the UK Financial Services Authority (FSA) and therefore could not be subject to any complaint to the FSA ombudsman if the advice to transfer out of a UK scheme was incorrect.
Receiving regulated advice from a UK based adviser is a very important advantage for a UK pension member, particularly for a UK pension member looking for QROPS advice pre-migration, as this offers the customer a degree of protection they would not necessarily get from a non-UK based adviser.
Anyone looking for QROPS advice should check, with the adviser that they are speaking to, that they confirm they are FSA authorised and regulated.
Global QROPS Ltd are able to confirm this.
Guernsey’s QROPS Stance
Saturday, October 24th, 2009Since the introduction of QROPS (Qualifying Recognized Overseas Pension Schemes) in April 2006, the Channel Island of Guernsey has introduced many schemes that are available to accept UK transferred pension money.
As QROPS have evolved Guernsey, as a reputable financial centre, has been involved in discussions with the UK’s Her Majesty’s Revenue & Customs (HMRC). These discussions have taken place to ensure that Guernsey QROPS can continue as approved schemes, with HMRC, for accepting UK pension transfers.
With jurisdictions, such as Singapore, removed form the HMRC QROPS list in 2008 and other countries reviewed, Guernsey want their QROPS to be viewed favorably by both the customer and the authorities.
One of the first steps that the Guernsey tax authorities took was to restrict the maximum tax free cash lump sum payments to 25 per cent of the QROPS fund, applying to residents and non-residents of Guernsey alike. This applies to pension members outside of the QROPS reporting period as well as those within it.
Another major step was to ensure that any transfer from a Guernsey QROPS, made to a scheme outside of Guernsey, can only be made to another registered QROPS that, broadly speaking, imposes the same restrictions as Guernsey QROPS – such as 25 per cent tax free cash at retirement.
The main concern for Guernsey is that they do not want to be seen as a jurisdiction that encourages 100 per cent cash commutation from their schemes. The Guernsey tax authorities see that as something that could damage their reputation and potentially lead to Guernsey QROPS being removed from the HMRC list.
Global QROPS Ltd can advise people on the benefits of Guernsey QROPS as well as the flexible benefits of QROPS in other countries.
Transferring UK Pensions to Isle of Man QROPS
Wednesday, October 21st, 2009When migrating overseas many UK pension members investigate the possibility of transferring their UK schemes to overseas pensions. Since 6th April 2006 the overseas scheme would have to register and be approved by the UK’s Her Majesty’s Revenue and Customs (HMRC) as a QROPS (Qualifying Recognized Overseas Pension Scheme) in order to be able to accept UK pension transfer money.
Many jurisdictions, throughout the world, have QROPS. One such jurisdiction, that is close to home, is the Isle of Man. What are some if the considerations that someone would need to take into account with Isle of Man QROPS?
Amongst the main points to consider will always be how pension funds, transferred to a QROPS (anywhere in the world) would be treated for tax and what level of retirement benefits can they provide?
An Isle of Man QROPS will pay to it’s members income at UK Government Actuary Department (GAD) rates within the QROPS ‘reporting period’ – which is 5 complete tax years of the member’s overseas residency. This income will be taxed at source at a rate of 18% – although there is an allowance for the first £2,120 per annum (for tax year 2009/10) on this income for Isle of Man non-residents. (Although a non-resident may have to pay further income tax on receipt of QROPS income in their country of residence).
As far as the payment of tax free cash is concerned, a member can receive 25% of the fund as a tax free lump sum if this is paid out within the (QROPS) reporting period. If the member waits until after the 5 year reporting period – and they haven’t drawn any tax free cash previously – 30% of the fund is available as a lump sum.
Can I Transfer my Unsecured Pension to a QROPS?
Sunday, October 18th, 2009For many individuals, that have yet to draw on their UK pension funds, a transfer an overseas pension is an option – providing the scheme is registered as a Qualifying Recognized Overseas Pension Scheme (QROPS).
However, what are the QROPS options for those people migrating who are already drawing on their UK pension funds?
Global QROPS Ltd are UK based independent financial advisers that specialize in providing QROPS advice. Many migrating individuals, that we have spoken to, are unsure as to whether taking benefits from a UK pension scheme prevents a transfer to a QROPS.
The answer to the above question depends on how the benefits are taken. For the migrating pensioners that have already purchased an annuity (secured pension) with their UK pension funds or have benefits paying directly from their employer’s final salary scheme, a transfer to a QROPS is no longer available for those funds. For people that are taking their benefits in the form of drawdown (unsecured pension) QROPS is very much still an option.
Since 6th April 2006, UK pension funds that are drawing down can transfer to another UK registered pension scheme, including QROPS. Indeed, since April 2006 the option to take tax free cash from these funds (at pension age) and deferring income benefits has been available.
However, if a migrating pension member is still within the 5 year QROPS reporting period, the benefits that an individual can take from their QROPS – in respect of the unsecured pension transfer in – would have to be in line with the UK pension income rates or the member could face an unauthorized payment charge.
GMP Transfers to QROPS
Saturday, October 17th, 2009GMP (guaranteed minimum pension) are ‘contracted out’ rights built up in a final salary (defined benefits) scheme between 6th April 1978 and 5th April 1997. QROPS (Qualifying Recognized Overseas Pension Schemes), on the other hand, are a more recent concept – introduced on 6th April 2006.
For UK final salary pension schemes, an employer would make the choice as to whether their employees national insurance contributions (NICs), that were earmarked to contribute to the second tier of the basic state pension, would be re-directed into the final salary scheme or not. If the NICs were redirected to the scheme, the scheme would then be considered a Contracted Out Final Salary Scheme (COSR). The benefits built up in this fashion (between April 1978 and April 1997) would provide GMP for the member at retirement.
As Final Salary schemes are gradually phased out, and as time passes, the amount of people with GMP benefits will become rare. Their will be, however, some people migrating that will have GMP in their pensions and will look for advice as to whether this benefit can transfer to a QROPS.
Although GMP transfers to QROPS are possible in the majority of circumstances, an individual has to be aware of the benefits that they would be giving up from their final salary scheme by transferring. Most QROPS are likely to be money purchase (defined contribution) arrangements and would be unlikely to match the guarantees.
There are, of course, other considerations – such as tax and flexible benefits – when using a QROPS, therefore an individual with GMP must take suitable advice from a QROPS specialist in the UK when weighing up their options.