On the 9th March 2017 the Chancellor of the Exchequer announced that pension transfers to QROPS may be subject to an overseas transfer charge of 25% on the value of your pension transfer unless certain criteria was met. Please review our online Technical Hub for further information on these conditions.
WHY WAS THIS CHARGE INTRODUCED?
Simply, to minimize the number of individuals transferring their pension funds out of the UK, which many deem was purely for UK tax avoidance reasons. HMRC are keen to ensure that if a QROPS transfer goes ahead, any potential lost tax revenue is recouped by the government when the transfer is made. Furthermore, it is important to reinstate the original purpose of a QROPS, which was to provide a Retirement Savings product in an individual’s country of residence.
HOW HAS THIS CHARGE AFFECTED THE QROPS MARKET?
Without a doubt this has had an effect on individuals intending on moving their pension funds abroad and latest HMRC statistics confirm this. Around 9,700 transfers to QROPS took place last year which is a fall from 13,700 in 2015/16. The total value also decreased from £1.5bn to £1.2bn. Despite these figures, a more transparent market is emerging.
Whilst these changes have had a significant impact on other organisations in the offshore market, IVCM has, and will continue to, move in a positive direction through our innovative Retirement Solutions products like our Australian Expatriate Superannuation Fund, which is currently the only retail QROPS on the market.