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QROPS History – A History of QROPS 2006 – 2018

The History of QROPS Pension Transfers Abroad

I thought it would be useful to compile a history of Qualifying Recognised Overseas Pension Scheme (QROPS) transfers and how they have been destroyed over the years. It will be a surprise if the QROPS market still exits in a few years and if it still does, what conditions will be imposed on transfers.

Already, QROPS is now not really an option if you are moving to the USA, Canada, Switzerland, Asia, Africa, the Middle East or Latin America. QROPS transfers dropped by 50% in 2017 and after Brexit, transfers may fall again. Below, you can see a QROPS timeline from 2006 – 2018.

A Brief History of QROPS

  • April 6th, 2006 – happy days, QROPS were introduced following the Schengen Agreement which allows freedom of movement of labour and capital in Europe. Most expats are moving their pensions to Guernsey where it is out of the UK tax net and there is no income tax for non-residents. A QROPS in Guernsey also avoided any tax on growth or death as long as members remained resident abroad.
  • May 5th, 2008 – Singapore loses its QROPS status
  • September 8th, 2009 – HMRC freezes QROPS transfers to Gibraltar where there is zero income tax on pensions.
  • March 2010 – First Malta QROPS schemes appear
  • October 10th, 2010 – Isle of Man QROPS launches the 50c, a QROPS which allows a 30% tax-free lump sum.
  • November 10th, 2010 – Isle of Man 50c are closed for new business.
  • January 2011 – HMRC increases QROPS reporting requirements for trustees from 5 years to 10 years following a transfer
  • December 2011 – new QROPS rule making sure 70% of any pension pot provides an income for life for a member
  • April 12th, 2012 – Massive cull of many schemes in Guernsey, the Isle of Man and New Zealand
  • April 15th, 2012 – Cyprus QROPS delisted
  • May 10th, 2012 – Guensey’s new rewritten QROPS 157e is delisted.
  • July 2012 – Guernsey try to rewrite their QROP schemes again, but fail to be listed.
  • July 2012 – Qatar says no to QROPS business
  • June 2013 – HMRC loses Singapore QROPS case to expats, but Singapore QROPS remain delisted
  • August 2013 – Hong Kong QROPS culled
  • June 2014 – HMRC delists all Swiss QROPS
  • April 2015, HMRC now inexplicably renames QROPS to ROPS.
  • May 2015, HMRC closes 40% of Australian QROPS schemes as they allow expats to claim their pension if they have ill health
  • April 6th, 2015, HMRC stops all transfers to QROPS from NHS pension transfers
  • June 2015, many Irish QROPS stop accepting transfers due to ill health clause
  • August 15th, 2016 – Australia QROPS 500,000 AUD pension cap and you must be over 55 to transfer.
  • December 2016 – French and Italian QROPS are removed, but Malta QROPS are still allowed
  • March 9th, 2017 – The day it all changed. 25% exit tax hits QROPS. If you are not moving to Europe, Australia, New Zealand or India, you will now be punished. You also cannot move from that area for 5 years after transfer or you get hit with a retrospective tax charge
  • QROPS After Brexit – March 2019 or more likely, December 2020. There is a possibility that pension transfers to residents in the EU may face a tax penalty on exit, such as the 25% exit tax which exists for many people retiring outside the EU.

QROPS Options 2018/19

  1. Australia – if you are over the age of 55, you can move your pension into an Australian QROPS, but there is a cap of 500,000 AUD and there are many other conditions. You can read more information here about transferring a pension to Australia. There is no tax on your retirement income in Australia.
  2. New Zealand – you can transfer to a NZ pension scheme at any age. These are typically Discretionary Managed Pension Schemes. There is no tax on retirement benefits in New Zealand. After 5 years, you could move to Australia, Asia or elsewhere.
  3. India – you can transfer a pension to India into Rupees into a QROPS in India
  4. Europe – you can transfer to a QROPS in Malta if you are moving to the European Economic Area. Then, usually, you just pay income tax in your country of residence. After Brexit, there may be restrictions placed on transfers or they may be taxed on exit. More in our next article.
  5. There may be some others I have missed, you can check HMRC’s QROPS list for detail

Non-QROPS Options

What are the options for expats moving to the USA, Canada, Switzerland, Asia, the Middle East, Africa and Latin America?

  1. Leave your pension where it is. You may be taxed in the UK or you may be taxed overseas. It will all depend on the individual Double Taxation Agreements between the UK and your country of residence. HMRC now heavily frowns on occupational scheme transfers and unfunded public pension schemes cannot be transferred, i.e. NHS pension transfers, Armed Forces, civil service pensions, etc
  2. Move your pension to an International SIPP in the Isle of Man – here you will have flexibility of fund choice, currency choice, etc and can have your pension paid into your local bank account overseas in your country of residence at retirement

25% Exit Tax in Detail

UK Budget 2017 and QROPS | HMRC Slams Expats with 25% Tax on QROPS