Overseas pensions in Australia and New Zealand could lose QROPS status after a letter sent by HM Revenue & Customs forced all schemes to ensure that policyholders can only access benefits before the age of 55 in the same circumstances as a UK pension.
The letter, dated 17 April 2015, asks scheme operators to ensure that the country in which the scheme is established acts to prohibit the payment of benefits before age 55 unless the member is retiring due to ill-health, in line with UK pension rules.
Another option given to scheme operators to meet the “pensions age test” is confirmation that the scheme rules do not allow for benefits from funds that had UK tax relief to be paid earlier than age 55, unless the member is retiring due to ill-health.
The letter is backdated to 6 April 2015, when fully flexible access was introduced on Qualifying Recognised Overseas Pension Schemes to bring them in line with UK pension schemes. This puts transfers at risk of a 55% unauthorised payment charge.
The letter will come as some concern to QROPS operating in Australia, which do not meet such requirements due to allowing benefits to be taken before the age of 55 in cases other than ill health such as “serious financial hardship”.
Similarly, Kiwi Saver scheme providers that have been granted QROPS status in New Zealand can currently not accept UK pension transfers and are prevented by the Kiwi Saver Scheme Rules from confirming to HMRC by the 17 June reply-by date that they comply with the test.