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Treasury to close public sector pension transfer loophole

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The Government will close a loophole created by the pension reforms that allow members of unfunded public sector schemes to transfer their savings overseas.

Under regulations that introduced the new flexibilities, members of unfunded public schemes – such as the NHS and Teachers’ funds – are not allowed to transfer out.

However, the transfer ban does not apply if a transfer is made to a non-occupational scheme which are in the European Economic Area.

A note on the Teachers’ scheme website says: “Teachers’ Pensions are writing out to members whose application to discharge their benefits to such a scheme was received by Teachers’ Pensions on or after 6 April 2015.

“The letter will include new discharge forms and will ask members to complete and return the discharge paperwork if they still wish to proceed with the transfer.”

The note adds that if members still want to proceed with a transfer, they must do so before the Treasury takes action to close the loophole.

A Treasury spokeswoman confirms it is working on rule changes to extend the transfer ban.

It says: “We are clear that the transfer restrictions from unfunded public service pension schemes should apply to transfers to qualifying recognised overseas pension schemes, including those based in the European Economic Area.

“We are currently consulting with pension schemes ahead of introducing legislation to enforce this.”

In July HMRC cut thousands of schemes from its Rops list of overseas plans, following rule changes that disqualify schemes with early access mechanisms.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. peter mulholland 5th August 2015 at 3:30 pm

    Slowly the noose tightens

  2. A bit too slowly really. I never quite understood how you could transfer a fund that didn’t exist.

  3. Even an unfunded scheme has a CETV.

    So if you leave work at a State School and went to work at Eton you could take your pension with you.

    The same applies to any Final Salary scheme. The CETV is based on your scheme benefits.

    Just that George has taken fright at the idea of those Civil Service people getting a big wedge of cash.

    Would not look good in the Daily Mail.

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