Thousands of retirement savers are looking for a way out of a pension nightmare after the Qualifying Recognised Overseas Pension Scheme (QROPS) market collapsed in Australia.
As a favourite UK retirement and emigration destination, Australia reckons to be home to at least 1.2 million British expats.
Add to that the thousands of Australians who have pension rights from living and working in the UK who also had the right to transfer pension funds from the UK back home, and the scale of the problem can be appreciated.
On June 1, Australia was home to the largest number of QROPS – 1,653.
On September 1, this was culled to two.
Did Australia QROPS Always Break the Rules?
The market collapsed from 44% of QROPS worldwide to nothing because Australian pension providers have a clause in their contracts that allows payments under certain circumstances to savers aged less than 55 years old.
It could be argued that Australia QROPS never complied with UK pension law as no one under 55 can touch their pension cash without suffering exceptional circumstances, but no one seemed to much bother until HM Revenue & Customs (HMRC) opted to enforce the rule from April 6.
Retirement savers with Australia QROPS now have few options:
- Stay with their current scheme and hope HMRC gives an amnesty to transfers since April6 that broke pension rules and may be subject to a 55% tax charge
- Move to another offshore QROPS
- Start a new Australian QROPS
QROPS Solutions
Careful consideration must be given to each option and the solution will differ for each retirement saver according to their financial objectives and personal circumstances.
One option is for sure – only a properly authorised and Australian regulated IFA can give pension advice in Australia and few firms are equipped with the qualification and experience to fit the bill.
Taking offshore advice is like jumping from the lifeboat and hoping to swim to shore through heavy seas.
Certainly, switching to an offshore QROPS in a safe jurisdiction offering HMRC compliant pensions is a suitable and available opportunity for some.
Financial centres such as Malta and Gibraltar, plus one or two others may resolve the mess for many expats and Australians with transferred funds from the UK.
Get Regulated Australian Financial Advice
Fill out the Get Advice Form here to be connected to an Australian Regulated QROPS Pension transfer expert or you can download the free QROPS guide here
Really? Move a post April 2015 transfer, that may attract an unauthorised payment, will stop HMRC from charging? I don’t think so. You do realise that the move to an Australian QROPS is a one way street and I am not aware of any that would allow such a move to a QROPS outside Australia.