Posts Tagged ‘QROPS transfer’

« Older Entries

QROPS and the Proposed UK Annuity Changes

Saturday, August 28th, 2010

As a result of the Emergency Budget, on the 22nd June 2010, the UK Treasury published a consultation document with the proposals for the abolition of compulsory annuities and the new drawdown rules (effective from 2011/12 onwards).

These proposals are very interesting for those people looking to transfer their UK pensions to QROPS (Qualifying Recognized Overseas Pension Schemes).

The new proposals look to remove the requirement to purchase an annuity from a UK scheme, abolish ASP (Alternatively Secure Pension) and introduce two types of drawdown – all affective from 6th April 2011.
All these changes add additional considerations for potential QROPS transfers.

As with all changes to UK pension legislation, QROPS trustees have to be aware because their schemes have to follow the UK rules, and report any payments made to the member, for the first 5 complete UK tax years of a member’s overseas tax residency (known as the QROPS reporting period). Generally speaking, the methods and amounts that can be paid from a QROPS, within the reporting period, have to be broadly in line with what UK schemes permit.

The consultation paper asks for views from the industry (and interested parties). These views will be expressed until 10 September 2010.

Global QROPS Ltd will explain ‘Capped’ and ‘Flexible’ drawdown in later news items.

In the meantime, the pension commencement lump sum will still be tax free, with pensions in payment taxed as income (from UK schemes) – this has not changed in the proposals – and benefits will still be tested against the Lifetime Allowance at the normal Benefit Crystallization Events (BCE’s), such as on transfer to QROPS.

Tags: , , ,
Posted in Advice, News | Comments Off

Transfer delays for members’ of public sector pension schemes

Thursday, August 5th, 2010

Members’ of Public sector pension schemes wishing to transfer to QROPS and to other UK registered schemes, are currently unable to request transfer value quotation following a Government decision to link final salary pensions to the Consumer Prices Index.

The Chancellor George Osborne announced in the emergency Budget that the indexation applied to public sector pensions would change from the Retail Prices Index to CPI. The implementation date has not yet been confirmed but it is anticipated that guidance should be published within then next few months.
Over time CPI is generally 0.5% lower than RPI mainly because it does not include housing costs. As such, the change is likely to reduce government pension liabilities but is likely to result in lower transfer values for members’.

Individuals in receipt of a guaranteed transfer value for public sector schemes, wishing to transfer to a QROPS, should act swiftly before the guarantee period expires.

Once Public Sector schemes have received guidance from Treasury on how to apply CPI we are expecting long delays while the schemes deal with the backlog of transfer value requests that have accumulated during the transfer embargo.

If you are a member of a public sector pension please do not hesitate to contact Global QROPS for further advice.

Tags: , , ,
Posted in Advice, News | Comments Off

A UK Pension Transfer to Australia – The latest HMRC QROPS list

Friday, January 29th, 2010

The UK Pension Scheme Services (PSS) have updated the QROPS (Qualifying Recognized Overseas Pension Scheme) list on the HMRC (Her Majesty’s Revenue and Customs) website on 15th December 2009. Individuals looking at a UK pension transfer to Australia, would observe that there are over 450 Australian QROPS schemes currently on the list.

For full details of the HMRC update see link: http://www.hmrc.gov.uk/NEWS/INDEX.HTM

If an individual does want to complete a UK pension transfer to Australia, they may be tempted to look at the list and work from there. However, HMRC stress that the QROPS list is not a recommendation or advertisement for any particular scheme, it is merely for information purposes for an individual to check that an Australian QROPS that they have received professional QROPS advice on is indeed approved.

Global QROPS Ltd advise many people migrating to Australia on their pension options. It is not, in all circumstances, best advice to transfer pensions to Australia and people need to be aware of all of the advantages and disadvantage before making a decision.

Many of the Australian QROPS on the HMRC list are either Australian employer’s pension schemes or Self Managed Super Funds (SMSF). These schemes may be available for an employee of a company or to an individual that has set up a SMSF but someone looking down the QROPS list could not simply pick out a scheme and apply to become a member.

For advice on a UK pension transfer to Australia, speak to an adviser at Global QROPS Ltd.

Tags: , , , ,
Posted in Advice, News | Comments Off

Latest HMRC QROPS list

Tuesday, January 26th, 2010

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

Tags: , , , ,
Posted in News | Comments Off

Changes to Tax on Short Service Refunds for UK Occupational Pension Members

Wednesday, January 20th, 2010

In the pre Budget Report, changes were announced (on 9th December 2009) to the tax that is charged when an individual leaves an occupational pension scheme within 2 years of joining and takes a refund of their contributions.

Global QROPS Ltd will explain the impact to UK occupational pension scheme members in this position and if there is any QROPS advice that may be affected by this.

What is a Short Service Refund?

Lump sums paid to members who leave an occupational pension schemes within 2 years of joining (known as short service refund lump sums), are permitted by the UK’s HMRC (Her Majesty’s Revenue and Customs) in order to ease the administrative burden for a scheme and reduce the cost of providing an extremely small pension for life for a member.

 The pre Budget Report declared that changes are being made to take into consideration the new 50% upper rate of income tax – coming into force from April 2011.

Short service refund lump sums, made on or after 6 April 2010, will now be taxed at a rate of 20% on the first £20,000 of the refund and 50% on the remainder. (Previously this was 20% on the first £10,800 and 40% on the amount above this).

For potential migrants, taking QROPS advice, there may be little option but to take the refund. Occupational scheme administrators will not always provide a transfer value for members with less than 2 years membership and therefore a transfer to QROPS may not be an option.

Tags: , , ,
Posted in Advice, News | Comments Off

UK Pre Budget Report 2009 – Tax Changes Affecting Annual Allowance

Sunday, January 17th, 2010

There are many circumstances, when a potential UK migrant is looking to transfer their UK pension funds to QROPS (Qualifying Recognized Overseas Pension Schemes) where it may be beneficial to boost their UK pension funds by making contributions first.

This would not only increase the transfer value, by the amount of contribution, but there is tax relief available on the contributions too.
Pre Budget Report Announcement Affecting Potential QROPS Clients

Already, for high earners looking to make fully tax relievable pension contributions, to a UK pension scheme, the new rules that were introduced in the Finance Act 2009 have a limiting affect on the amount that can be contributed above £20,000 per annum that would receive higher rate tax relief.

From April 2011, those with income of £180,000 and above would only receive basic rate tax relief on pension contributions. Those with income between £150,000 and £180,000 would get tax relief somewhere between basic rate and higher rate on a sliding scale.

However, the Pre Budget report has determined that the definition of relevant income (used in determining whether an individual is affected by these changes) will include employer pension contributions therefore affecting those with incomes of £130,000 per annum upwards (rather than from £150,000 upwards).

(However, the Government has said that those with incomes of £130,000 or less before the  inclusion of employer pension contributions will not be affected).

High earners looking for QROPS advice should, therefore, speak to UK QROPS advice specialists (such as Global QROPS Ltd) before making decisions on increased contributions to UK pensions.

Tags: , , ,
Posted in Advice, News | Comments Off

QROPS and In-specie Transfers

Friday, January 8th, 2010

Like any UK registered pensions scheme, Qualifying Recognized Overseas Pension Schemes (QROPS) have rules and regulations regarding permitted investments.

For many UK expat pension members, pension funds are often left in the UK because of the nature of the investment within the pension scheme. For example, UK Small Self Administered Schemes (SSASs) and UK Self Invested Personal Pension Plans (SIPPS) can have more diverse investments than a UK personal pension or standard employer’s scheme could have.

It would not be uncommon for a SSAS or a SIPP to have commercial property or shareholdings as an investment within the scheme. UK expat pension members with these types of schemes and investments may be deterred from transferring out of their UK scheme to a QROPS because it may require the investment to be cashed in first and, with the property or equity market at a low, this could lead to an overall loss for the fund.

What is an in-specie transfer to a QROPS?

In-specie transfers could be an alternative solution to divesting a pension investment in order to affect a transfer. Under this method, assets are transferred directly from one pension scheme to another. This means that any legal ownership of the assets, such as property, can be transferred from the transferring pension scheme to the receiving pension scheme.

Theoretically, at least, the same principle can apply for transfers from UK pension schemes to QROPS – however, additional points need to be considered. 

As you would be dealing with a different jurisdiction for QROPS, would that particular regime allow investments such as property or shares? Furthermore, would those types of investments receive the same tax breaks in overseas schemes as they would in the UK?

Global QROPS Ltd can provide advice and guidance on QROPS matters.

Tags: , ,
Posted in Advice, News | Comments Off

Can my Child’s Pension Transfer to a QROPS?

Monday, December 28th, 2009

From 6th April 2006, just about anyone with a UK pension can transfer to an overseas pension scheme – providing, of course, the overseas scheme is an approved QROPS (Qualifying Recognized Overseas Pension Scheme).

Since the Defined Contribution regime was introduced in the Finance Act 2000, an individual could make a UK pension contribution, on behalf of another individual, from 6th April 2001. These were known as Third Party contributions.

Also introduced in 2001 was the removal of the minimum age that an individual needed to be to become a member of a UK personal pension (or stakeholder).

Often taking advantage of these rules were grandparents or parents looking to make a contribution on behalf of a child. As a result, since 2001, there are many minors who have accrued pension funds.

It is often the case, that when a family migrates, all family members (including the children) would have accrued pension funds in the UK. Therefore, when Global QROPS Ltd are asked to advise about UK pension transfers to QROPS, the question arises about whether a child’s pension plan can transfer to a QROPS?

Theoretically, the answer to this question is ‘yes’. Her Majesty’s Revenue and Customs (HMRC) have not applied any restrictions on such a transfer (providing the receiving scheme is QROPS). However, there are plenty of considerations first.

For example, do overseas pension schemes have their own minimum age restrictions for pension membership? Is there value for the UK fund in being transferred to a QROPS (now or in the future)? – The answer to this could depend on factors such as the overseas pension scheme charges or the fund size.

Global QROPS Ltd are able to provide advice on all aspects of overseas pension transfers.

Tags: , ,
Posted in Advice, News | Comments Off

Transfers to QROPS and the Pension Special Allowance Rules

Saturday, December 19th, 2009

Many 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.

Tags: , ,
Posted in Advice, News | Comments Off

Global QROPS Ltd – Clients with Contracting Out pensions (2)

Thursday, October 29th, 2009

As well as employer and employee contributions, an individual could have built up an entitlement to an employers or personal pension through ‘contracting out’. Global QROPS Ltd have established, in previous news items, that these benefits are both transferrable to a QROPS (Qualifying Recognized Overseas Pension Scheme) and not detrimental to the Basic state pension. Having said that, what affect does contracting out have on the State pension overall?

What impact does contracting out have on my state pension entitlement?
When an individual is contracted out, some (or even all) of their entitlement to additional state pension (S2P) or State Earnings Related Pension (SERPS) would be reduced or even lost.
 
The affected on an individual’s overall benefit depends on whether they are contracted out under a stakeholder/personal pension plan or their employer’s Occupational pension scheme (such as a contracted out salary related pension scheme (COSR) or a contracted out money purchase occupational pension scheme (COMP).

Some of the national insurance contributions (NICs) paid by an employer or an individual, contribute towards their state pension.  If an individual is contracted out, they lose some or all of their entitlement to the additional part of the state pension over and above the Basic State Pension. (Global QROPS Ltd can help their clients obtain a State Pension forecast in order to determine their State pension entitlements).

As a result of this, the State reduces the NIC liability on earnings between the lower earnings limit and the ‘upper accrual point’ for these individuals and their employers.

The method used to reduce the NIC liability depends on whether the individual is contracted out under a COSR, COMP or personal pension. For Global QROPS Ltd’s clients, that are looking to transfer to QROPS from a contracted out scheme, they can conceivably transfer from all of these schemes regardless of the method of contracting out.

Tags: , ,
Posted in Advice, News | Comments Off

« Older Entries