Potential and existing QROPS will apply to HMRC using a form APSS251
Whilst this appears complex there are largely three outcomes of the type and regulations a QROPS will have to adhere to:
1. First are jurisdictions such as Guernsey, Gibraltar, and Isle of Man:
- In the event of a recognised transfer, at least 70% of the funds transferred will be used to provide an income for life.
- The pension benefits payable to the member are not payable before the member reaches normal minimum pension age unless the ill-health condition is met.
- The scheme is open to persons resident in the country or territory in which it is established. <!--break-->
2. Secondly are wider jurisdictions such as:
3. Thirdly - member states of the European communities, Norway, Iceland or Liechtenstein.
The latest list of QROPS can be viewed at http://www.hmrc.gov.uk/pensionschemes/qrops.pdf
What rules will a QROPS adhere to:
A QROPS provider will be in the country where it is authorised. Some administration may be carried out elsewhere but ultimate responsibility will be through its country regulator and the undertakings it has given HMRC.
The QROPS can be arranged in several ways. This will depend on that country’s existing legislation relating to Pensions or Superannuation funds:
1. Established outside the UK by an international organisation
- This stipulates At least 70% of a member’s UK tax-relieved funds will be used to provide an income for life.
- The pension benefits payable to the member are not payable before the member reaches normal minimum pension age unless the ill-health condition is met.
2. Regulated Occupational scheme & Other regulated pension scheme
- Recognition for tax purposes: primary conditions
Primary condition 1: The scheme is open to persons resident in the country or territory in which it is established.
Primary condition 2: The scheme is established in a country or territory with a system of personal taxation as required.
3. Unregulated pension scheme
- The scheme is established in a member state of the European Communities (other than the United Kingdom), Norway, Iceland or Liechtenstein, or
- at least 70% of a member’s UK tax-relieved funds will be used to provide an income for life.
- The pension benefits payable to the member are not payable before the member reaches normal minimum pension age unless the ill-health condition is met.
All QROPS applications will stipulate notification of whether the scheme is
- Approved by, or
- Recognised by, or
- Registered with the relevant authorities as a pension scheme in the country or territory in which it is established.
Or where no system exists for:
- Approved by, or
- Recognised by, or
- Registered with the relevant authorities as a pension scheme in the country or territory in which it is established then:
-
- at least 70% of a member’s UK tax-relieved funds will be used to provide an income for life
- the pension benefits payable to the member are not payable before the member reaches normal minimum pension age unless the ill-health condition is met.
The rules relating to QROPS typically boil down to two categories which the QROPS provider will adhere to:
- An agreement that 70% of funds will be used to provide a lifetime income and benefits are not payable before minimum retirement age.
OR
If there is a double taxation agreement in force that contains provisions as to exchange of information and non-discrimination then the QROPS can adopt the rules of that country’s Pension or Superannuation legislation. In many cases affording greater flexibility.
Pension and investment values and income arising from them can fall as well as rise. This information does not constitute advice and we cannot accept responsibility for its interpretation or any future changes to UK or international law. Any advice and recommendations will be given in writing.
Gerard Associates Ltd is authorised and regulated by The Financial Services Authority
Authorised and Regulated by the Financial Services Authority
