ROPS providers hanging on, latest HMRC list shows

clock • 3 min read

Predictions of the pending demise of the overseas pension transfer industry appear to have been somewhat premature, to judge by HM Revenue & Customs’ latest published list of recognised overseas pension schemes. 

While it’s true that several jurisdictions that disappeared entirely from the list last year, including Canada, Italy, France, the Czech Republic and Greece, have not returned, one has – Sweden – with a single scheme.

In total, the number of schemes on the list has risen by nine from the last time the list was published at the beginning of the month, to 1,035.

In addition to seeing Sweden return to  the much-watched list,   with its Nordea Pension Plan, the list grew by four schemes from Australia, two from Ireland, five from the Isle of Man and three from Jersey,   according to Andrew Osborne, a paraplanner and ROPS list observer with Montfort International, a UK-based advisory firm which specialises in pensions advice.

A total of five schemes were removed, including two from Australia, one from Guernsey, one from the Isle of Man and one from Jersey, Osborne noted.

Nevertheless, the UK’s pension transfer industry saw a 29% fall in the number of UK pensions transferred overseas in the year to 5 April, as reported, as the UK government moved to crack down on what it said was the mis-use of pension transfers to enable people to access their pensions before the age of 55, and other concerns. And, in a surprise move, the government announced a major change in the QROPS regulations, effective from 9 March of this year, which involves a 25% charge on so-called third-country transfers, except when the individual and their pension remain within the European Economic Area.

Third country transfers are when a someone transfers their UK pension out of the UK to a country other than the one in which they are living – such as Gibraltar or Malta, for example, if they are living in the United Arab Emirates.

QROPS still seen as ‘area of concern’

Montfort International managing director Geraint Davies doesn’t think the net gain of nine overseas schemes to HMRC’s list means that the overseas pension transfer industry is stablising, given how aggressively the government has been targeting it recently — as recent media reports have noted.

“It is very clear that [the] Treasury has got the message that all is not well with the world of QROPS advice,” he said, noting that the government has made reference to such schemes remaining “an area of concern for pension scams”.

While the oversight is welcome and even, some would argue, overdue, he added, there is now a danger that ” those that engage in international financial planning [will begin to be seen as being] guilty by association” merely by being involved in an industry that is now undergoing such public and often, negative, scrutiny.

“Those who deliver advice in this area must be certain of the intricate and highly bespoke needs of their clients with cross-border tax consequential and product needs, and have the technical prowess necessary to “deliver” savings and investment and retirement products and solutions that suit their clients’ needs,” he added.

As reported here in March, UK Chancellor Phillip Hammond also announced in his Spring Budget that 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.

In the 12 months to 5 April, there were some 9,700 pensions transferred out of the UK, worth a total value of £1.22bn. This is 52% fewer than in the peak year of 2014-2015, when some 20,100 were transferred, and a 30% plunge in the total value of the amount transferred from that peak year, when the value of total transfers hit £1.76bn.