HMRC has temporarily suspended its list of recognised overseas pension schemes (ROPS) until 1 July 2015. The suspension is intended to allow time for the list to be reformatted and to remove from the list all schemes which no longer meet the requirements to be a ROPS. This follows the introduction on 6 April 2015 of the ‘pension age test’ for all ROPS.
Background – QROPS and ‘pension age test’
The tax payable on any transfer to an overseas pension scheme will depend on whether that transfer constitutes a recognised transfer. In order to be a recognised transfer the receiving overseas scheme must meet HMRC’s requirements for a ROPS and, in turn, the requirements for a qualifying recognised overseas pension scheme (QROPS).
From 6 April this year all QROPS must not be permitted to pay out any benefits transferred from a UK pension scheme before the normal minimum pension age of 55. The prohibition on payments before that age can be either as a result of legislation in that country or the rules of the relevant overseas scheme. HMRC refers to this requirement as the ‘pension age test’.
HMRC suspension of ROPS list
HMRC has confirmed that it is now aware of some pension schemes which have appeared on previous ROPS lists which do not in fact meet the ‘pension age test’. Those schemes which do not meet the test will not be included on the list when it reappears on 1 July and pension schemes are therefore warned not to rely on any previous inclusion on the HMRC list when considering whether an overseas scheme is in fact a QROPS. HMRC has also confirmed that a previous appearance on the list will not allow a scheme to qualify as a QROPS if it does not meet the relevant requirements, including the “pension age test”.
When considering whether a scheme is a QROPS, HMRC recommends that pension schemes should seek confirmation from the manager of the overseas scheme that it meets all of the requirements to be a QROPS, including meeting the ‘pension age test’ from 6 April 2015. Where a scheme has ceased to qualify as a QROPS as a result of the ‘pension age test’, any member who transferred their pension funds prior to the date on which the scheme ceased to qualify will be subject to UK tax in the same way as if the scheme had remained a QROPS.
Comment
The temporary suspension of the list by HMRC indicates that a number of previously listed schemes no longer meet the requirements to be a QROPS following the introduction of the ‘pension age test’. Pension schemes should therefore ensure that appropriate diligence checks are carried out before proceeding with any overseas transfers and they should also ensure that they do not place any reliance on a previous inclusion on the HMRC list.