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QROPS Blog – Is QROPS changing?

Is QROPS changing?
JULY 26, 2013
June 2013 brought a major shockwave in the QROPS industry, as the HM Revenue & Customs has been forced to deliver a policy statement that reviews its policies in selecting and handling qualifying recognised overseas pension schemes.

This policy statement was then delivered on the 12 July – but has not been made public yet.

Experts warned that the delay could be a sign of a major shake-up in the way QROPS will be operated.

We have put together a list of what impact HMRC’s new review may have:

1. Nothing could change

HMRC could simply restate its aims – since it is not technically required to do anything beyond publishing a review of policies. HMRC could simply justify its policies in the public domain and where necessary, provide additional clarification for confused UK pension holders.

2. HMRC may become more selective in QROPS providers

HMRC may become more rigid in the way offshore pension schemes like QROPS are designated.

Fewer schemes could mean better relationships between HMRC and QROPS providers, ensuring that misunderstandings happen far less often.

3. HMRC may try to make QROPS unattractive to savers

HMRC may deliberately make QROPS less attractive to expats by increasing the minimum level which must be set aside to provide savers with an income for life, which is currently set at 70%. The remaining 30% can be taken as tax free lump-sum.

4. HMRC may try to make QROPS unattractive to providers

HMRC could impose charges on providers to maintain their QROPS status, in order to reduce the attractiveness of QROPS.

The option for QROPS providers would be to either pass this cost to their customers, resulting in lower returns, or end their involvement with QROPS all together.

5. HMRC may cancel QROPS all together

The notion of HMRC drastically rebranding the scheme to make it unrecognisable, or removing the UK pension transfer ability altogether, is not beyond the realm of possibility – according to experts. Especially when considering the amount of hassle HMRC faces to maintain QROPS.

Sources: International Adviser