Australia QROPS are making a comeback after a disastrous year- but is HM Revenue & Customs (HMRC) going to pull the plug again?
In June, HMRC delisted hundreds of Australia QROPS because they failed pension age test rules.
The pension age test was introduced in April 2015 and ensures a QROPS does not pay benefits to anyone under 55 years old.
QROPS in Australia lost their status because local rules allowed them to pay hardship payments or make loans to savers under 55 years old.
Since then, many providers have come up with a new formula for offshore pensions in Australia which has a clause written in that only someone over 55 can take out a QROPS.
But this leaves thousands of under 55s stranded without an Australia QROPS option.
Offshore QROPS options for Australia
The new Australia QROPS are new schemes and no one is yet completely sure that the new contracts obey HMRC rules.
Listing on the HMRC list does not denote approval; just that the provider certifies the scheme meets the qualifying rules to become a QROPS.
However, all is not lost for this huge number of potential offshore retirement savers.
Any British expat or foreign worker now living in Australia who has UK pension rights can switch their UK pension funds to what is termed a ‘third party’ QROPS.
These QROPS are based in one financial centre, but allow retirement savers to live elsewhere.
The typical options are QROPS is Malta, Gibraltar and the Isle of Man.
Flexible access
All allow retirement savers to live anywhere in the world except the UK and meet the pension age test, so anyone aged under 55 can transfer their savings into one of the pensions they offer.
Malta is regarded as a QROPS favourite for Australian retirement savers because the island is within the European Union and has aligned pension rules with flexible access in the UK.
One Malta QROPS provider is already offering pension drawdown on the lines of the UK model.
Although Gibraltar and the Isle of Man are in Europe, they are not part of the European Union or European Economic Area, so currently have to ring fence 70% of transferred contributions to pay a pension in retirement to the saver.
Both financial centres, along with Guernsey, have indicated they wish to introduce flexible drawdown.
