QROPS Update - 17 June 2015
The last few days have seen QROPS in the news again and as is often the case, there have been some sensational headlines. This brief summary note is intended to give some clarity and perspective as to the current situation.
What is The Pension Age Test?
On 17 April HMRC sent out a letter to all QROPS trustees, with a deadline for response of 17 June. The QROPS Bureau have seen the letter as we had been asked to do some analysis for some of the trustees we work with. The letter asked scheme managers to confirm that they complied with the new "pension age test" which was introduced on 6 April and requires all QROPS to have a minimum retirement age of 55.
Some jurisdictions, namely Australia, New Zealand, Ireland and Isle of Man currently allow retirement from age 50 and so trustees will have to change their scheme rules to restrict the minimum pension age to 55 to comply with the QROPS rules post 6 April 2015. This may take some time and not all trustees will have been able to confirm that they comply with the pension age test by the deadline.
Trustees in the more commonly used QROPS jurisdictions such as Malta and Gibraltar are not expected to have a problem as a minimum retirement age of 55 is already in place.
Why have HMRC suspended the QROPS list until after 1 July?
There are thousands of schemes on the QROPS list and all schemes had to respond by the 17 June deadline. This will give HMRC a lot of work to do in terms on confirming which schemes meet the Pension Age Test and which do not.
This is likely to cause some delays to pension transfers as UK ceding schemes are obliged to check the QROPS list to ensure an overseas scheme is on it before they transfer to it .
Should I concerned about my clients who are transferring to QROPS?
As always, whether or not a client should transfer to a QROPS and which QROPS jurisdiction is most suitable for them depends upon their individual circumstances and objectives.
If advisers have any doubt over whether a particular scheme will remain on the QROPS list post 1 July, they should not recommend a transfer to it. In reality this is only likely to be an issue for the jurisdictions which currently have a minimum retirement age below 55 and which cannot meet the pension age test. Advisers should consult a specialist if they are unsure.
Please see the attached PDF for a downloadable version of this note.