QROPS And Important UK Drawdown Clarification
Posted by Paul Davies on 31/08/10 14:22
The major problems for members of UK pension schemes, between the ages of 50 and 55, in UK drawdown, who were looking to transfer to QROPS post 6th April 2010, could have been resolved by HMRC in their July pension’s policy document.
The problem came when the retirement age for members of UK pension schemes and members of QROPS (who are within the 5 year QROPS reporting period) increased from age 50 to 55, on 6th April 2010.
As the rules stood, there was a restriction for those who had taken pension benefits through USP (unsecured pension – previously referred to as drawdown) prior to 6 April 2010, when over age 50 but under 55. As long as the USP payments continued to come from the member’s original scheme, as pre 6th April 2010, there was no issue. However, if a UK pension member in USP (between the ages of 50 or 55) was to transfer to another UK pension arrangement or QROPS (for example) the problem arose that HMRC indicated that further income payment from the new scheme would be classed as an unauthorized payment.
The latest HMRC document on this matter states that regulations will be brought in to allow transfers from USP to USP (drawdown to drawdown) to continue without the member incurring the HMRC unauthorized payments charge on any income taken.
This is both a logical step and good news for people whose UK pension is in USP, that are in between the age of 50 to 55, who are looking to transfer to QROPS, even if they are within the QROPS reporting period. Any continuing payments from the new scheme should not be subject to an HMRC charge.
Anyone in USP (or drawdown) looking to transfer to QROPS, should seek specialist QROPS advice from an expert QROPS adviser, such as Global QROPS Ltd, to ensure the process runs smoothly.