The Teachers’ Pension Scheme is writing to members urging them to hurry up completing any transfers to Qualifying Recognised Overseas Pension Scheme (QROPS).
The scheme is the official pension for teachers in the UK.
Teachers are being warned that the government has spotted that a proposed ban on switching public funded pensions overseas is flawed and transfers to a QROPS are possible.
To switch money offshore to a QROPS, the receiving scheme must be:
- Included on the latest HM Revenue & Customs (HMRC) QROPS List published prior to the transfer
- The QROPS must be administered from a country in the European Economic Area (EAA)
- The transfer cannot go to a occupational pension scheme
The transfer package going out to teachers includes updated letters and discharge paperwork that must be completed and signed by any teacher planning a QROPS transfer.
Transfer ban
“We know that the Treasury is drafting new rules to stop these transfers,” said a spokesman for the Teachers’ Pension Scheme.
“We expect the new rules to stop transfers from unfunded public service schemes like ours to a QROPS.
“Our members need to understand that they must complete and return the necessary paperwork before we can release their funds overseas, so we are writing to those who have requested a QROPS transfer since April to update them about the current situation.”
The ban was imposed by Chancellor George Osborne on April 6, 2015, to stop civil servants and public sector workers moving their pension funds offshore.
The intention appeared to block civil servants, teachers, health workers, policemen, firemen and members of the armed forces shifting their pensions overseas so the Treasury did not have to find the cash to cover the value of their funds.
QROPS options
Currently, the rules allow these workers to transfer to a QROPS based in the EEA – which covers the European Union, Iceland, Norway and Liechtenstein.
Many EEA states offer QROPS but few are suitable for transfers of unfunded public pensions as they specify the pension member must live in the same country as where the QROPS is administered.
One favoured option by many public workers is a Malta QROPS.
Malta is an EU state and member of the EEA, while also offering ‘third party’ pensions which let pension members live anywhere in the world with a QROPS administered on the island.