QROPS Rules Affecting UK Pension Transfers To Australia
Posted by Paul Davies on 17/08/09 14:29
UK overseas pension transfer specialists, Global QROPS Ltd, are a UK based firm of financial advisers that specialise in advising migrants to Australia, with UK pension schemes, the options available for their funds.
UK pension transfers to Australia have been a big topic, even before the introduction of Qualifying Recognised Overseas Pension Schemes (QROPS) in April 2006, however the UK’s Her Majesty’s Revenue and Customs (HMRC) introduction of the QROPS legislation has meant that advice is crucial.
From April 2006, if an individual wished to transfer their UK pension to an overseas pension scheme, the scheme would have to be registered and approved as a QROPS with the UK HMRC. In doing this, the overseas pension scheme that received the UK pension transfer, would have to agree with the UK reporting requirements. The QROPS requirements were, essentially, for the first 5 UK tax years of the former UK pension member’s overseas residency, the overseas pension scheme would be restricted to paying pension benefits broadly in line with that of a UK scheme ie restricted to 25% tax free cash lump sum and the rest of the fund to provide income. The QROPS administrators would have to report as and when these benefits were paid.
As the Australian pension system allows for their members to take a lump sum benefits at retirement, pension transfers to Australia were appealing for UK retirees, prior to the QROPS rules, as they could get a 100% lump sum out straight away. Since the QROPS reporting requirement were introduced however, retirees migrating to Australia now need to take specialist advice about when they take the 25% tax free lump sum and what to do with the balance of their fund.