Cyprus was a QROPS financial centre until April 2012, when HM Revenue and Customs delisted the island as an acceptable jurisdiction without comment or warning.
The implication of the move was someone at HMRC or in Cyprus decided the four schemes that were open to transfers no longer met the rules for QROPS.
QROPS rules say that on the date the schemes are no longer deemed to meet the rules, they have to report the value of tax relieved contributions and the retirement savers details to HMRC.
In plain language, tax relieved contributions are the amount transferred out of UK pensions schemes to the QROPS which had picked up tax relief.
Financial decisions
From that date, the QROPS remains a pension scheme, but is subject to the rules set by the regulator in Cyprus, not HMRC.
Contributions can still go into the scheme – providing they are not tax relieved in the UK.
No more transfers can come in to the former QROPS from a UK pension, as it becomes an unauthorised withdrawal from the UK pensions and subject to a 55% tax charge.
The QROPS investor has some financial decisions to make:
- They can stay within the current QROPS under Cyprus pension rules
- They can transfer to another QROPS
The decision depends on the prospects of the pension fund remaining ring-fenced and intact in Cyprus – and how the government might treat the transfer.
Investor options
Until the dust settles on the Cypriot economy, retirement savers have some tough decisions to make, but obtaining a pension transfer analysis valuing the fund from the provider is a good first step to dealing with the challenge.
So far, the government seems concentrated on the island’s banking crisis rather than taking a broader view of pensions and investments.
As HMRC has a policy of not discussing individual QROPS or financial jurisdictions, the reason why Cyprus delisted as a QROPS jurisdiction remains a mystery.
No providers or investors have revealed details either.
For retirement savers wanting to consider their options, the first step is to contact a regulated and experienced international financial adviser who can monitor the bail-out and look at the financial and tax implications of moving money to another QROPS jurisdiction.
Get Advice
If you are concerned about your pension in Cyprus or are interested in transfering your UK pension to a QROPS and would like to be put in touch with a qualified financial adviser, please contact us via the contact form here for a referral.
