HM Revenue & Customs (HMRC) publishes a list of Qualifying Recognised Overseas Pension Schemes (QROPS) every 14 days or so, but what is the list and what does it mean for pension savers?
The list is basically a database of QROPS providers who have told HMRC that their pension scheme meets the qualifying conditions to be considered a QROPS and that they want the details to be released to the public.
HMRC goes to great pains to point out that the list is based on self-certified information provided by an overseas QROPS promoter and that retirement savers should be aware that inclusion on the list is not confirmation that HMRC has verified the QROPS meets all the qualifying rules.
The main purpose of the QROPS list is to aid a UK pension scheme carry out checks before making a pension transfers.
Under QROPS rules, a UK scheme can only send money to a QROPS on the list.
What does delisting mean?
The list is not meant to help retirement savers choose a QROPS.
“Inclusion on the QROPS list is not guarantee the scheme is a QROPS or any endorsement or approval of the scheme,” said an HMRC spokesman.
“Even if the scheme is listed, the retirement saver should still carry out their own due diligence to ensure they are not putting their money at risk.”
QROPS are regularly listed and delisted.
HMRC says delisting does not mean a scheme has broken any tax rules.
“Schemes can be listed and delisted for a number of reasons,” said the spokesman.
“A single member scheme could see the investor die or transfer their money out, so the scheme is delisted.
“From time to time, some schemes delist for administrative purposes or they may decide they no longer want to be on a public database.
Unauthorised pension transfers
“Others may no longer be considered QROPS because of rule changes in the UK or overseas.”
HMRC also carries out administrative reviews and often removes the scheme from the QROPS list while this takes place.
If a pension transfer is made to a QROPS that is not on the list or to a scheme subsequently revealed as failing to qualify as a QROPS, the transfer may be considered an ‘unauthorised payment’.
These payments face a tax charge of at least 55% of the transfer fund value.