Rule Changes For Pension Transfers Overseas
Posted by Simon Harvey on 14/08/09 14:48
On 6th April 2006, the UK Her Majesty’s Revenue and Customs (HMRC) introduced new rules to be followed for a UK pension to be transferred overseas – The Qualifying Recognised Overseas Pension scheme (QROPS) regulations. Prior to 6th April 2006 a UK pension could be transferred abroad providing the individual could produce the relevant documents.
These documents included a UK P45, a letter confirming overseas employment and evidence linking the overseas pension scheme to the member’s new employment in the new country. The individual would also have to make a written declaration that they had no intention to return to the UK.
Once all of the requirements were received by the transferring UK scheme, the pension transfer overseas could take place. After the transfer was completed, the member’s pension funds were immediately subject to local rules, which, depending on the jurisdiction of the scheme, could mean early retirement or 100% immediate encashment.
Post 6th April 2006, the HMRC rules changed the emphasis from the individual to provide the evidence, on the day of transfer, to the overseas scheme to provide reporting requirements for at least 5 years of the individual member’s overseas residency. The overseas scheme would have to register and be approved as a QROPS by HMRC, in order for the transfer to take place in the first instance, thus removing all of the responsibility for the individual to provide any evidence.