Transfers: Transfer to a QROPS
A recognised transfer can be made to a qualifying recognised overseas pension scheme (QROPS) as well as a registered pension scheme.
For guidance on the conditions a scheme has to satisfy to be a QROPS and the information requirements for QROPS see PTM112000.
In addition to the normal requirements for a recognised transfer (see PTM100010) there are extra requirements that must also be met if a transfer is to be made to a QROPS. Scheme administrators should notify the member of the extra prescribed requirements within 30 days of the member requesting the transfer to the QROPS.
PTM103000 provides guidance on the actions a scheme administrator should take when transferring to a QROPS.
Can a transfer be made to any QROPS?
A transfer to a scheme that is a QROPS may not be possible. QROPS status only has significance for UK tax purposes. Whether or not a particular transfer can take place will depend on the scheme being able to accept the transfer under the legislation of the country in which it is established.
In particular HMRC understands that transfers to US “qualified” retirement plans, including individual retirement arrangements (IRAs), can’t be made as such plans are not permitted to accept a transfer of funds from a registered pension scheme.
Questions about whether or not a particular scheme can accept a transfer should be directed to the scheme or the relevant overseas authority.
The transfer is BCE 8
Section 216 Finance Act 2004
A transfer to a QROPS is a benefit crystallisation event (a BCE 8). PTM088690 provides more guidance on BCE 8.
If the amount transferred is more than the member’s available lifetime allowance the excess will be liable to the lifetime allowance charge at a rate of 25 per cent.
Member considerations before agreeing to make a transfer
As with any transfer, the person requesting the transfer, in this case the member, is responsible for ensuring the receiving scheme meets their requirements. With a transfer to a QROPS this includes, as far as possible, ensuring the scheme meets the conditions to be a QROPS. Members cannot rely on scheme administrators to carry out these checks for them.
The member should get independent professional advice and confirm with the QROPS scheme manager that the scheme meets the requirements to be a QROPS before they agree to the transfer. Any pension scheme that genuinely meets the conditions to be a QROPS should be in a position to provide evidence of how the scheme meets those conditions. Guidance on the conditions that a scheme must meet to be a QROPS is at PTM112100.
A letter from HMRC with a QROPS number is not confirmation that the scheme is or will remain a QROPS. It simply denotes that the scheme manager has notified HMRC that the scheme meets the conditions to be a recognised overseas pension scheme (ROPS) and has complied with certain information requirements. Similarly appearance on the published list of schemes that have told HMRC that they meet the conditions to be a ROPS is not a guarantee that the scheme is or will remain a QROPS.
If the scheme does not meet the conditions to be a ROPS when the transfer is made the transfer will not be a recognised transfer. The transfer will be an unauthorised payment and the member liable to tax of at least 40 per cent of the value of the transfer payment. PTM134000 provides full guidance on the tax charges due on an unauthorised payment.
UK tax due on QROPS payments
Paragraphs 1 to 7A Schedule 34 Finance Act 2004
The member should also be aware that transferring pension rights from a registered pension scheme to a QROPS does not take them out of scope of UK tax charges. Payments made from a QROPS can still be liable to UK tax charges that would also apply to payments made from a registered pension scheme. PTM113200 provides guidance on when a member may be liable to tax charges in respect of a QROPS.
Transfer may cause loss of protection
Members will also need to consider the impact a transfer will have on any lifetime allowance, lump sum or pension age protection. The protection may be lost or the level of protection reduced because of a transfer. For more information on
- enhanced protection - see PTM092410,
- fixed protection and fixed protection 2014 - see PTM093400,
- protected pension age - see PTM062240.
- scheme specific lump sum protection - see PTM063150.
Information the member has to provide before the transfer takes place
Regulation 11BA Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567
In addition to the normal forms a member may be asked to complete when requesting a transfer, the scheme administrator should ask a member to provide the following information:
- Information to enable the scheme administrator to work out if there is a lifetime allowance charge due to the proposed transfer. If the member does not provide enough information about their available lifetime allowance the scheme administrator may assume that the whole transfer is liable to the lifetime allowance charge.
- Certain information prescribed by regulations and a written and signed acknowledgment - see below for details. This information must be provided within 60 days of the member requesting the transfer to the QROPS. A transfer request is when a member has made a substantive request to the scheme administrator of their pension scheme on which the scheme administrator is required to take action in relation to the transfer. A casual enquiry is not a transfer request. If the member does not meet this deadline the member’s transfer request can lapse and the process can start again with a new transfer request from the member.
Prescribed information that the scheme administrator requires from the member
- The member’s
* name and date of birth; * principal residential address and, if that address is not in the United Kingdom, the member’s last principal residential address in the UK; * National Insurance number or, where applicable, written confirmation that the member does not qualify for a National Insurance number, and * telephone number, if any, which the member provides for use by the scheme administrator or HMRC in relation to the scheme;
- The name and address of the QROPS;
- The country or territory under the law of which the QROPS is established and regulated;
- If the member is no longer UK resident the date they ceased to be resident in the UK. (This does not apply if the transfer was requested before 12 August 2013.)
Prescribed member’s written acknowledgement
The member must sign a written statement to confirm they acknowledge that they are aware that a transfer other than a recognised transfer to a QROPS of sums and assets held for the purposes of, or representing accrued rights under, an arrangement under a registered pension scheme:
- Gives rise to a liability under section 208 (unauthorised payments charge), and
- May give rise to a liability under section 209 (unauthorised payments surcharge).
Form APSS 263 can be used to collect the prescribed information and provide the written acknowledgement. However the form of the acknowledgment is not prescribed and schemes are free to produce their own paper work for this purpose.