US returns to HMRC’s QROPS list
The latest edition of HM Revenue & Customs’ official “Recognised Overseas Pension Schemes Notification List”, published this morning on the Gov.uk website, sees a US scheme appear for the first time since March.
Four schemes were removed and sixteen schemes added today to the much-watched list, which is updated every two weeks, and which many see as an insight into the UK pension transfer industry.
In total there are currently 1,076 schemes on the list, according to Montfort International, a UK-based advisory business that specialises in advising clients on pension transfers.
As reported, the last American ROP scheme vanished from the updated list published on 1 March, just two weeks after the last three Canadian ROP schemes had disappeared.
As recently as April 2015, there had been 13 US ROP schemes on the HMRC list.
The new American scheme is the Transform Group Simplified Employee Pension Plan, which was not one of the ones that disappeared in March, nor was it one of the ones on the list in April 2015.
Geraint Davies, managing director of Montfort International, said anyone considering transferring a pension into the newly-listed Transform Group ROPS should check with HMRC that it is, in fact, a ROP scheme, and is otherwise a properly-regulated entity, as little if any information about the company seems to be easily available.
“What is curious about this scheme is that although it’s listed as a US scheme under the [HMRC ROPS] country list, when you go to the list of countries that offer ROPS, there are no countries that begin with the letter ‘U’,” he noted.
“My advice to the Transform Group is to go straight back to HMRC and ask for HMRC to correct this. And my advice to a consumer is to take advice as per the ROPS warning on the HMRC website, which urges consumers to ‘check that the scheme you’re transferring to…meets the new requirements’, particularly if they are expecting to avoid having to pay tax on their pension savings as a result of the transfer.
“Consumers really do have to take on board that being on the list is not the end of the checking process as to a scheme’s suitability, but just part of the beginning.”
Asked about the list stating at the top that it had no countries beginning with the letter “U” having ROPS, only to list one below, a spokesperson for HMRC said this was an oversight and would “be updated” to reflect the fact that there is now a US scheme.
Davies added that he was “certain” that the next installment of the ROPS lists will show a revised listing for the Transform Group.
As reported, the ROPS transfer industry – known until recently as the QROPS industry, before HMRC removed the word “qualifying” from its official name for the type of pension transfer, first created in 2006 – was stunned in March when UK Chancellor Phillip Hammond announced in his Budget speech that there would be a 25% charge targeted at “those seeking to reduce the tax payable by moving their pension wealth to another jurisdiction”, effective immediately.
Exceptions to this charge would be allowed where the individuals looking to transfer their pensions were able to show a genuine need to transfer their pension, including those cases when the individual and their pension both happened to be located within the European Economic Area, Hammond said.
Also in his Spring Budget speech, the chancellor said the government would extend, to ten tax years from five, the period of an individual’s non-UK residence during which UK tax charges can apply to payments out of pension savings, in overseas pension schemes that have had UK tax relief.
Even before Hammond’s shock announcement of a 25% charge, the numbers of UK pensions being transferred overseas, and the amounts being transferred, had begun to slow, official data published in July revealed.
In the 12 months to 5 April, some 9,700 pensions were transferred out of the UK, worth a total value of £1.22bn. This was 29% fewer than the same period a year earlier, and 52% fewer than in the peak year of 2014-2015, when some 20,100 were transferred, HMRC data showed.
The total value of the pensions transferred in that year to 5 April was also 20% less than the same period a year before and 30% lower than the total value of the amount transferred in that peak 2014-2015 year, when the value of total transfers hit £1.76bn.