Mike’s Comments on ROPS Vs QROPS

Recently, British press announced that the HMRC cannot confirm that all ROPS are qualified (QROPS).

Here’s what that means to the man on the street:

In very simple terms, HMRC has said if a Trustee cannot confirm that their scheme cannot be accessed before 55, then it will not qualify as a QROPS.

HMRC is putting the responsibility on the providers to do this as, if they fail to do so, clients will be charged a 55 per cent unauthorised tax transfer fee.

This has no effect on Gibraltar, and Malta has changed their laws to comply with this, increasing the access age from 50 to 55 to match the UK’s pension legislation.

It may, however, prove to be a fatal blow to Australia and New Zealand QROPS:

Australian and New Zealand law allows that – if someone can show that they are in financial hardship – they can access their pension at any age. This means Australian and New Zealand QROPS will be classed as ROPS.

The likelihood of these countries changing this law to aid expats is unlikely, therefore it will be interesting to see how these two countries, and the industry, respond, as they may not be advantageous jurisdictions for QROPS.

With a third of QROPS being Australian, the resulting drop off from the QROP list if they cannot satisfy HMRC’s request will be significant.

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