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QROPS picture still murky

It may be several more weeks before it becomes clear how tough new regulations on UK pension transfers have affected New Zealand’s QROPS market.

Tuesday, April 17th 2012, 6:49AM 4 Comments

by Niko Kloeten

QROPS (Qualifying Recognised Overseas Pension Schemes) allow the transfer of tax-advantaged UK pension funds to approved providers in other countries, for expat Brits who want to move their funds with them to their new home.

On April 6 new rules specifically targeting New Zealand QROPS providers kicked in, requiring those who transfer to a New Zealand provider after that date to hold 70% of the transferred amount as an “income for life”, with only 30% allowed to be withdrawn at the age of eligibility.

As reported by Good Returns, this left providers in a tough position due to New Zealand law making it difficult to make such changes to their trust deeds.

The UK tax department, HMRC, has released a revised list of QROPS providers, which appears to show the number of listed New Zealand providers has fallen from about 50 before the changes to just over 20.

However, QROPS adviser David Milner said it would be a while before an accurate picture of the new shape of New Zealand’s QROPS market could be drawn.

“It appears that all non-Kiwi Saver schemes have been temporarily removed from the QROPS list (an updated list will be published towards the end of the month) - but there are valid reasons why schemes are not on the list at the moment:

  • The Scheme Manager has notified HMRC the Scheme no longer qualifies as a QROPS under the new regulations and has requested delisting
  • The Scheme Manager has not yet advised HMRC that the Scheme’s trust deed has been amended to accommodate the new regulations
  • Neither of the above, and the Scheme Manager is awaiting HMRC’s review of the Scheme’s rules to see if they still qualify.”

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« KiwiSavers unaware of scheme changesManagers warn against more KiwiSaver regulation »

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Comments from our readers

On 17 April 2012 at 7:43 pm Phil said:
The big problem I have is that my pension was transferred to Superlife last june (2011) awaiting for release to me on the 6th April (2012) when I will have been out of the UK 5 tax years. Nobody can seem to justify why I can't get my money, surely this is unjust as I had entered into this agreement under the old HMRC rules. Is there anyone else in my situation? Can anybody help?
On 18 April 2012 at 4:45 pm andyh said:
Phil - you should of course seek advice but you should realise that some things have NOT changed. The 2004 UK Finance Act provisions relating to QROPS are STILL the same - ie if you have been out of the UK for 5 tax years plus the existing tax year then making a withdrawal from a QROPS is not subject to penalty. All this information is freely available on the UK HMRC website - there is a useful FAQS section. Also if a NZ QROPS becomes delisted post April 6th because of the changes the HMRC have clearly stated that members who remain in the scheme will not be subject to penalty. You are much better doing your own research and going back to the original source of information (ie the HMRC) rather than rely on 'advisers'- many of whom don't seem to have an idea.
On 18 April 2012 at 8:25 pm Richard said:
Hi Phil,

You need to contact QROPS Specialists who can help in that area. You need to see if your present company can release your pension penalty free. If so, you can move to a Malta QROPS. QROPS prior to April 6th, 2012 should be protected under the old rules. It sounds like perhaps your QROPS was not transferred in time or perhaps they will only release the 30% as a lump sum and the rest will have to provide an income for life. You need to ask Super Life to clarify the situation.
On 6 May 2012 at 9:37 am Rick said:
I'm in a similar situation as Phil and desperately awaiting the release of my funds to be able to manage my debts.
The advisers are no help at all they just say that Superlife are in talks with the HMRC so we will just have to wait. My opinion is that if Superlife can't fulfill the terms of the new rules (hence them being removed from the list) then they should honour the clients on the old regulations. It's disgusting that they can just ignore their clients in the way that they are now.
Commenting is closed

 

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