It was back in June that HMRC confirmed the sweeping removal of almost every Austalian Superannuation scheme. Having this month only been left with two QROPS on the HMRC QROPS list, it is time to have a look at the potential fallout from what was one of the most dramatic months since QROPS were introduced.
On 6th April 2015, HMRC confirmed that the pension age test would mean that no QROPS can offer early payment to fund holders, and that payments can only begin at the age of 55. The one exception was in the case of ill health of a serious nature.
What transpired next was that Australian firms each offer early payment in the case of what they regard as serous financial hardship. In a bid to clarify this and to alert the relevant firms that it was unacceptable to be offering this if they wished to remain a QROPS, HMRC wrote to the 1,652 listed providers on 17th June asking form confirmation that they met the requirements. Having received either no response or the wrong response, HMRC moved to strike every Australian QROPS from the list. When you bear in mind that there are close to 1.5 million British expats living in Australia, you begin to see how this could have had widespread negative implications.
The truth is however, that residents of Australia with pensions that remain in the UK are very unlikely to have ever elected to place their funds into an Australian scheme, unless the advice they received was – for want of better word – shoddy.
You see as well as the Australian dollar recently hitting a six-year low, the truth is that the economy down under is widely regarded by anyone with insight into finance as being far too turbulent to touch, and also a great number of years behind more advanced and regulated financial jurisdictions.
So while the headlines may make for good click-bait, the truth is that although 1,652 Australian Superannuation schemes may well have wished to put themselves forward as a QROPS, few of them were being utilised by British pension holders as such.
More value can always be found in stronger and more established jurisdictions such as Malta, Guernsey and the Isle of Man, all of whom have trusted investment pedigree and regulation not too dissimilar to that of the UK. Unfortunately for Australia, this is where it falls some way short of the mark.