HMRC suspends ROPS list following early access rule change

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HMRC has suspended the publication of its list of recognised overseas pension schemes because of recent changes that exclude funds allowing early access.

A new requirement for qualifying recognised overseas pension schemes, introduce on 6 April, means access to funds pre-55 is only allowed where the member is in ill-health.

An HMRC spokesman says the list – normally published twice a month – has been suspended “so that it can be reformatted”.

He says: “An updated ROPS notifications list will be published on 1 July which will reflect the information that has been reported to HMRC following the recent letters sent to scheme managers about the Pension Age Test.

“One of the reasons HMRC removes schemes from the ROPS notifications list is if it becomes clear they do not meet the requirements to be a ROPS.

“In the meantime transfers can be made but, as with any transfer, those making a transfer will need to satisfy themselves that the scheme receiving the transfer is a QROPS.”

Schemes that do not respond appropriately to HMRC’s letter by 17 June will be removed from the list, Money Marketing understands.

Expat advisers AES International head of pensions James McLeod says advisers and trustees should “exercise some caution” when considering a transfer.

He says: “We do not anticipate the removal of any of the so-called “third country” schemes, such as those based in the Isle of Man, Malta or Gibraltar, but, as ever, it is essential to check whether a scheme meets the QROPS criteria.

“The action from HMRC of late, suggests any transfers which were deemed to have been made to a non-compliant scheme will likely be subject to the punitive unauthorised payment charge.”

In April, HMRC replaced its QROPS list with a list of recognised overseas pensions schemes.

Aries Pension & Insurance Systems director Ian Neale says: “The ramifications of the dramatic action taken by HMRC on 15 April to ‘downgrade’ the QROPS list to a mere ROPS list have yet to fully emerge.

“We know that further amendments to the overseas pension schemes regulations are being drafted, for publication in the summer.

“For example, the “70 per cent rule” – requiring 70 per cent of funds that have received UK tax relief, either in connection with contributions or as a result of a tax-free transfer, to be designated to provide the individual with an income for life – remains in place temporarily at the moment; the forthcoming legislation will replace the 70 per cent rule in order to target it more precisely.

“It is quite possible that an opportunity will be taken at that point to address issues of alignment with the UK ‘pension freedoms’.”