Are one of those people who plan to take your Pension pot under the new freedoms and move overseas to live out your retirement in sunnier climes? If so, you will need to ensure that your pension can follow you and that you can draw on it whilst abroad. HMRC have specific rules about which overseas pension schemes they recognise as being acceptable hosts for a UK pension. You can see the most recent list (updated regularly) of these Recognised Overseas Pensions Schemes (ROPS) on the HMRC web site.
The list was reissued on 1st July 2015 following a period of suspension, during which HMRC asked schemes to confirm that their ROPS met the conditions of the ‘pensions age test’, which states that benefits can only be paid out of a scheme before age 55 in cases of “serious ill health. Clearly, quite a lot did not meet those criteria as the total number of schemes has fallen from around 3800 to 663. Australian schemes dropped from 1,600 to one, with the local government superannuation scheme – which is only open to local government employees – the only one left remaining. Schemes in the Republic of Ireland were also considerably affected, dropping from 797 to 56, while Swiss schemes fell from 100 to one, Spanish ROPS from 16 to two, and South African schemes from 29 to seven.
Updated 16 Nov 2015
HMRC has recently updated its list of recognised schemes and has now added a further 18 schemes to the Australian section of the Rops list, bringing its total number of schemes to 23. The update has seen further additions to other countries’ provisions too. Ireland, which had 77 schemes in September, now has 82. France, which had eight, now has ten. The Isle of Man, which had 196, now has 199. Guernsey, having had 129, now has 131 schemes. Barbados remains without Rops provision, however.
The onus is on you to find out which scheme qualifies as a ROPS and whether there will be any tax to pay. HMRC will usually pursue any UK tax charges (and interest for late payment) arising from transfers to overseas entities that do not meet the ROPS requirements even when they appear on the list. This includes where taxpayers are overseas.
So, it is probably a good idea to take some professional advice from an adviser or Financial Planner specialising in this area before heading off to lie on the beach. There are a number of companies offering advice and some, such as gpfm Financial Planners, have useful summaries and guides to overseas pensions on their web sites.