Qualifying Recognized Overseas Pensions Schemes (QROPS) came into effect with the introduction of Pensions Simplification in the UK. Originally set down in the Finance Act 2004, pensions simplification was introduced in order to remove much of the complication the many different regimes were giving the industry.
On 6th April 2006, commonly known in the industry as A-Day, Pensions Simplification was launched and with it Qualifying Recognized Overseas Pensions (QROPS).
The purpose of QROPS was, in order to successfully transfer a UK pension overseas, the responsibility for the migrating individual, to make specific declarations and provide certain documents, was removed and instead the responsibility was placed upon the receiving overseas scheme to register with Her Majesty’s Revenue and Customs (HMRC) as a QROPS. Without that registration and approval of HMRC an overseas pension scheme would not be permitted to accept a transfer in from a UK pension scheme.
The primary objective of the QROPS legislation was for HMRC to be able to monitor the UK pension funds post transfer. Prior to A-Day, the individual did not have to make any declarations to HMRC – other than those required on the day of transfer. As QROPS are required to report back to HMRC, payments made to their members, the UK tax authorities can monitor the situation a lot easier.
