Last three Canada ROPS schemes vanish from HMRC list

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The last three Canadian ROP schemes on HM Revenue & Customs’ official last have vanished, as of this morning.

All three of the remaining schemes were BMO (Bank of Montreal) entities, (see excerpt from the previous list, published on 1 February, below), and had been the only ones to remain on the list of Canadian schemes last November, when HMRC took an axe to 49 other schemes.

The removal of the last three schemes means that Canadians who have been paying into British pensions while working in the UK are now effectively unable to transfer these pensions to Canada when they return to their home country.

Asked about the disappearance of the last three Canadian schemes, an HMRC spokesperson said: “We don’t comment on individual cases.”

BMO officials couldn’t immediately be reached for comment this morning.

As reported, industry sources have said it is understood that the reason the Canadian schemes ceased to be considered acceptable by HMRC for Britons to transfer their pensions into is because the UK authorities were unconvinced that UK pension scheme members who transfer their UK pensions to Canada would not be able to access their pensions before the age of 55 – which, under new rules HMRC brought in in 2015, is no longer permitted.

Last November, a BMO spokesperson confirmed to International Investment that it was “true for all three BMO ROPS” that they would accept only the UK pensions of 55-year-olds-and over.

The three ROPS schemes that disappeared as of today were:  BMO Nesbitt Burns RSP 527-010; BMO Private Banking Retirement Savings Plan; and BMO Retirement Savings Plan (ADVISOR).

Falling numbers 

The number of Canadian ROPS schemes – which used to be known as Qualifying Recognised Overseas Pension Schemes – on HMRC’s online ROPS list began to tumble last year, in the wake of the new “Pension Age Test” for overseas pension schemes. There had been 68 schemes on the list last July.

UK advisers first began to sound the alarm over the vanishing Canadian schemes last April.

According to Geraint Davies, managing director of Montfort International, a Guildford, Surrey-based firm which specialises in helping Britons and others with UK pensions to transfer them to such countries as Australia and New Zealand as well as Canada, the problem is that under Canadian law, Canadians, unlike Britons, are able to take their pensions before the age of 55 without a problem.

But Canadian pension fund administrators who maintain ROP schemes have asserted that they are able to meet the UK’s age requirements by introducing their own in-house rules prohibiting such pre-age 55 pay-outs.

However, neither the Canadian authorities nor HMRC have ever provided ROPS providers with specific guidance on this matter, Davies and others say.

Today, Davies said that although it wasn’t immediately known why the Bank of Montreal schemes had disappeared from the HMRC list, “one can only conclude that when push came to shove, that BMO failed to satisfy HMRC’s standards” in some way.

He added: “Overseas schemes seem to think that being on the list makes them compliant, but it doesn’t.”

For this reason, he noted, companies like Montfort have to determine, in advance, whether a particular scheme “is in our opinion compliant or not”, rather than relying on the HMRC list.

1,653 schemes removed

HMRC first stunned the UK and international pensions transfer industry in April 2015  by ruling that that all but one Australian scheme had failed to meet its new Pension Age standard. Previously,  the HMRC list had showed some 1,653 Australian schemes that were prepared to take UK pension transfers.

But then, evidently concerned that some people might be looking to move their pensions to jurisdictions that permitted such early withdrawals on purpose, with the intention of gaining early access to their money, HMRC moved quickly to implement the new standard, which resulted in the de-listing of those 1,653 Australian schemes.

To see the latest official HMRC ROPS list, published this morning on HMRC’s website, click here.