UK Pension Providers Pushing For Tax Changes To Reduce Use Of QROPS

Efforts by UK pension plan providers to reduce the flow of pensions abroad have been revealed, after a major supplier of SIPPs said almost £500m of UK pension funds had been transferred offshore in the two years after 6 April 2006, or A-Day.

SIPP provider AJ Bell also said a Freedom of Information request it made had revealed that more than three times as many transfers to Qualifying Recognised Overseas Pension Schemes (QROPS) had occurred during this two year period – more than 7,300 – than the number of UK individuals who opted for Alternatively Secured Pensions (ASP).

The figures are considered particularly striking because QROPS schemes may not be used by UK residents who do not intend to live abroad permanently

AJ Bell is among those seeking a change in the current 82% tax penalty applied on death on ASPs, which it and other pensions product providers say is encouraging people to make other arrangements, including QROPS.

News of the efforts to slow the flow of pensions overseas came as QROPS providers in Gibraltar continued to seek clarity on what is understood to have been a breakthrough in efforts to get HM Revenue & Customs to recognise their schemes, as reported on these pages last month.

Details of what has been described as a deal which would involve certain regulatory changes in Gibraltar, expected to be made early this year, have not yet been released in spite of constant pressure from frustrated Gibraltar QROPS trustees.

Since the middle of last year, these trustees have voluntarily suspended pension transfers from the UK, pending resolution of HMRC’s concerns.

QROPS Transfers In 2009 Thought ‘Down’

A spokesman for AJ Bell said figures for QROPS transfers in 2009/2010 were not yet in although it was thought the number was lower than the previous tax year (“but not significantly”) as fewer Britons emigrated due to economic conditions and the weak currency.

“[We] still expect to see the number of QROPS cases exceeding the number of clients using Alternative Secured Pensions,” the spokesman added.

“In terms of money coming back, there is no evidence from our new business experience that suggests funds are coming back to the UK.”

Change Unlikely Under Labour

AJ Bell believes a change in the UK tax laws affecting QROPS is only likely under a new government, although company officials admit the Conservative party has yet to show much enthusiasm for the subject.

Britain loses as much as £1m a day to overseas pension schemes, according to  AJ Bell.

A Day was the beginning of a new set of pension rules that were aimed at encouraging more people to save more money for their retirement, in part by giving them tax breaks.

Source: FOI request to HMRC by AJ Bell

Candour Consultancy are authorised introducers' to all the leading QROPS providers and can advise on the most suitable scheme for your personal circumstance. If you have any questions or require any additional information, please click here to contact us.