Prior to the introduction of UK Pensions Simplification and the Qualifying Recognised Overseas Pension Scheme (QROPS) regulations – on 6th April 2006, UK pension schemes could be set up with early retirement ages to accommodate occupations where the member would retire earlier than the standard 50 or 60.
Typically, the members concerned would be sports people who, by the very nature of their occupation, would be retiring from their sport in their mid-thirties. Prior to April 2006, if an individual wished to transfer their scheme benefits to an alternative arrangement, it may have been possible to keep the early retirement age with their transferred benefits (if the receiving pension scheme permitted this).
In the April 2006 Simplification rules, the minimum age that an individual could retire would be 50 (changing to age 55 in April 2010) – unless they were already members of a scheme that allowed for an earlier retirement age, in which case they could apply for transitional protection for their sportsman’s pension. However, even with transitional protection on sportsman’s pensions, the early retirement age would be lost on transfer – including transfers to QROPS.
Therefore sports people in the footballer’s pension scheme, the rugby player’s pension scheme or any other type of scheme, would have to think carefully when given the option of an offshore pension to transfer their benefits into. Ultimately, QROPS may provide more flexible or tax efficient benefits for those who are migrating and wishing to transfer to an offshore pension, but for a member of a sportsman’s pension, the wait to get your hands on the benefits could be longer within a QROPS.
With the correct QROPS advice, sports people could make the right decision for their pension.