Beating The Australia QROPS Trap


British expats in Australia have had their retirement plans shaken by the recent HM Revenue & Customs (HMRC) ban on Qualifying Recognised Overseas Pension Scheme (QROPS) in the country.

Since 2006, Australia led the way as the leading global financial centre for QROPS – but in June 2015, more than 1,650 pensions were delisted by HMRC for breaching pension age test rules.

These rules mean Australian QROPS cannot offer payments to savers under 55 years old, but many local schemes have financial arrangements for younger financial savers and are no longer QROPS.

In the latest list, Australia has two listed offshore pensions.

So, British expats now have to look at alternative arrangements if they wish to transfer their cash out of a delisted Australian QROPS or invest in a new scheme.

How to set up a new QROPS

The move also affects thousands of Australians who have worked in the UK and built up pension savings they wish to transfer into a QROPS.

Options are still open for expats and Aussies who want to put their retirement cash in a QROPS, but an extra complication is that under the country’s strict financial regulation, only local advisers with the right qualifications can offer pension advice.

The first step in moving money to an QROPS is valuing any current pension pots in the UK to put together an accurate transfer value.

Next, consult an Australian QROPS adviser to discuss your options – these will include retirement dates and finances, tax issues and offshore pensions that will accept a transfer for someone living in Australia.

The solution is likely to be a ‘third party’ QROPS, which are offered by several leading financial centres.

These QROPS are based offshore, in places such as Malta, Gibraltar and the Isle of Man.

Benefits for investors

Providers manage the pensions from offshore and allow the retirement saver to live wherever they wish in the world.

The pension age test issue arose with Australia QROPS when the British government introduced flexible access rules in April 2015 that allow anyone aged 55 years old or over access their pension cash as they like.

No one under 55 can do except under exceptional circumstances, such as suffering a terminal illness.

Hundreds of QROPS beat the test – at the latest count, 41 financial centres offer 852 QROPS pensions. Not all are suitable for expats or international workers with British pension rights in Australia.

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