As most people, looking to affect a pension transfer overseas from their UK scheme will be aware, a transfer can only take place if the receiving scheme is a Qualifying Recognized Overseas Pensions Scheme (QROPS). QROPS came into effect with the introduction of Pensions Simplification in the UK. The QROPS legislation was set down in the Finance Act 2004 and in Statutory Instrument 2006/206.
On ‘A-Day’ (6th April 2006), UK Pensions Simplification was launched and with it QROPS.
Although the QROPS legislation addressed many points, such as permitted retirement levels, tax free cash levels, overseas scheme criteria and QROPS reporting requirements – the QROPS rules did not cover the UK IHT (inheritance tax) situation with funds held in overseas schemes. In other words UK pension funds, transferred to an overseas scheme (approved as a QROPS), could be subject to the UK’s IHT rules.
On 15th February 2010, Statutory Instrument 2010/051 – The Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 – was introduced to confirm that UK pension funds, transferred in to an overseas scheme, would not be subject to IHT. Furthermore, these rules were backdated to 6th April 2006.
As a result, all QROPS can be considered QNUPS (Qualifying Non-UK Pension Schemes) for UK IHT purposes. However an overseas scheme can meet the QNUPS criteria without being a QROPS.
Although a QNUPS (that is not a QROPS) can not receive transfers in from approved UK schemes, it can provide IHT planning opportunities.
The article attached, from leading UK overseas pension transfer specialists Global QROPS Ltd, explains the introduction of QNUPS:
