The QROPS industry was anticipating that the UK Government’s Autumn Statement, on 3rd December 2014, would clarify some of the questions being asked, by UK and QROPS pension members, on how some of the changes to UK pensions (that were announced in the Budget on 19th March 2014) will affect QROPS (Qualifying Recognised Overseas Pension Schemes).
Amongst the questions that are being asked is the question of whether the flexibility on payments of benefits, that is being offered to UK defined contribution pension members, from 6th April 2015, will be extended to QROPS members. Disappointingly this was not fully clarified in the Chancellor of the Exchequer’s Autumn Statement.
For many QROPS in most jurisdictions, a condition of being granted QROPS status by HMRC (Her Majesty’s Revenue and Customs) – which then allows pension transfers from the UK to be completed into the overseas pension – is that at least 70% of the UK transferred fund has to provide an income for life from the QROPS.
However, the QROPS industry has been keen to know, since the Budget in March 2014 and the subsequent Freedom of Choice in Pensions paper (published by HM Treasury) -where it is stated that UK defined contribution (money purchase) pensions members are permitted to take out their entire pension fund at age 55 – as to whether the same flexibilities on payments will be available from QROPS, post 6th April 2015.
HMRC Pensions Newsletter
The latest HMRC Pensions Newsletter (number 66) that was published on the HMRC website, on 17thDecember 2014, contained the following interesting paragraph:
“The conditions a scheme has to satisfy if it is to be a QROPS are under
consideration in the light of the increased flexibility in taking benefits available to
registered pension schemes. Any changes are due to take effect from 6 April 2015.”
Although this does not clarify the position at this stage, it does at least confirm that HMRC are looking at this and hopefully the QROPS industry will have some key questions answered soon.