Thursday, 7 April 2011

UK Pension Transfers to QROPS Decrease Slightly

Transfers to qrops pension schemes have decreased by 10%

The volume of transfers from UK pension to overseas QROPS schemes fell by close to 10% between 2008 and 2010.

Billy Mackay, marketing director at AJ Bell, claimed that this change will not really effect transfers to Qrops schemes for individuals retiring overseas.

"The issue which clearly concerns the government is the promotion of Qrops as a tax avoidance vehicle to individuals who have little or no intention of leaving the UK."

He warned that the fall in the number of Qrops transfers provides evidence that changes to the UK pensions framework, such as the reduction in the tax charge applied on lump sum death benefits from the funds of individuals over 75 and the introduction of flexible drawdown, were already hitting the popularity of these transfers and this trend will continue.

Mr Mackay said: "We have also recently seen changes to the rules on disguised remuneration in EFRBS and the use of scheme pension to meet the minimum income requirement for flexible drawdown.

"All of these changes provide further evidence that the government is keen to support use of pensions in ways that remain consistent with the original intent of providing a secure income in retirement."

QROPS specialists can help find the right QROPS for you.

Trouble Ahead for HK QROPS

Hong Kong QROPS Schemes under scrutiny.

HMRC has announced a crackdown on tax abuses by QROPS HK Schemes.

An article in the International Adviser today stated that legislative measures are to be put in place to stem tax avoidance through the use of QROPS. It is believed, though, that this only relates to Hong Kong schemes.

Many advisers have been promoting Hong Kong QROPS schemes for a while as being able to access 100% of your pension as a lump sum, which is against the spirit of QROPS transfers. This could spell trouble for many QROPS HK schemes

The Inland Revenue announced that a “tax loophole would have emerged” had the government not taken action. No detail was provided on what the loophole is or what action will be taken.

More information about QROPS HK schemes should be provided on HMRC’s website, although no detail was available on the HMRC site at the time of writing this article.

The announcement said the legislation takes effect from today.