Once again the rules that govern the Qualifying Recognized Overseas Pension Schemes (QROPS) are about to change and if you already have your retirement savings invested in a QROPS plan or plan to start one in the near future, it is important that you understand how the new rules will impact you are your pension.
Changes to the QROPS Regulations
The UK government have announced changes to the QROPS regulations in a bid to ensure that all funds transferred out of the United Kingdom for the purposes of pension investments will remain available to an expatriate to fund their retirement. At present, many expatriates transfer their pensions to a QROPS account before moving it to an unregulated financial product that bypasses HM Revenue & Customs (HMRC) rules for QROPS. However, in a few months time, new regulations will be introduced that require QROPS managers to notify (HMRC) of any accounts from which unauthorized withdrawals or transfers are made.
An additional change is related to the benefits relief test.
Commenting on the new changes, David Retikin, Director of operations at Pryce Warne International Group, commented: “We fully approve of and support these new regulations by HMRC, as they will make it far more difficult for unscrupulous advisors to try and bend the rules. This will in turn provide the industry as a whole with greater security and legitimacy, making it easier for more expats than ever before to reap the benefits of a QROPS overseas pension.”
A penalties regime for non-compliant former QROPS and a system for scheme managers to re-notify HMRC that they meet the conditions of QROPS are also being proposed. It is envisaged that this could impact over 300 of the QROPS that were delisted in Guernsey in April 2012 as a result of failing the benefits relief test.
The new rules will impact people who have retirement savings in a QROPS account, British pension savers and international workers with UK pension rights who are planning on transferring their money to a QROPS.
At present the new regulations are still at the proposal stage and have yet to be passed into formal law. HMRC is inviting comments from QROPS investors and professionals and this should be submitted to HMRC by June 21, 2013 at the latest. All comments will be reviewed before the proposals are passed into law. The changes will be retrospective to April 6, 2012.
Full details of the new regulations are available on the HMRC website.
Read the full article: http://www.hmrc.gov.uk/news/draft-qrops-regs2013.htm