Alternatively Secured Pensions And QROPS

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Alternatively Secured Pensions (ASP) was introduced in the UK Pension Simplification Legislation at A-day on 6th April 2006. Qualifying Recognised Overseas Pension Schemes (QROPS) also came into effect at the same time.

ASP is a form of drawdown direct from a UK pension member’s scheme that is permitted after the member attains the age of 75. Prior to April 2006 an individual would have to purchase an annuity once they reached that age.

The maximum that an individual can take from their fund, in the form of income, at the age of 75 is 90% of the Government Actuary Department (GAD) limits. The minimum amount is 55% of the GAD limits. If an individual has transferred their UK pension benefits to a QROPS and are continuing to take their benefits directly from the QROPS scheme after the age of 75, they would be expected to receive these benefits at the same UK ASP GAD rates – if they are still within the 5 year QROPS reporting period.

Any payments made to a QROPS member that is in excess of the permitted limit, would be treated as an unauthorised payment under the QROPS legislation and be subject to tax.

Migrating UK pension scheme members approaching the age of 75, that are thinking about transferring to an overseas pension scheme approved as a QROPS, should consider whether the receiving scheme can still make payments directly from the funds or whether the QROPS only allows for annuity purchase options.