Final Salary Scheme QROPS Transfers Over?

The Budget 2014 has been a cause for much speculation throughout the financial world since its announcement in April. Topping the list for many are the proposed pension reforms, many of which relate to the future of QROPS.

It has been clarified beyond debate that as of April 2015, any public sector pensions will no longer be eligible for QROPS transfer. This means that anybody with a pension from the armed forces, NHS, police and emergency services, teaching and civil service will be unable to reap the benefits of moving their pension abroad as an expat.

There is also speculation that pensions from the private sector could be subject to the same impositions but this is under consultation and will be widely criticised if confirmed.

The transfer of pensions into QROPS can take anything from 2 to 6 months to complete, so for many expats considering making the most of the scheme, there is only 6 months left to be able to start the process. Now could be the last chance expats from the UK will have to be able to reap the benefits of QROPS.

While it would seem that smaller pension pots are now similarly beneficial regardless of where they are held, there is no doubt that those with larger pensions would be well-advised to seriously consider the benefit of choosing the type of investment – and currency – they want.

Everything Changes

The changes are due for consultation in June with an announcement possible in the Autumn, but the proposals up for discussion are as follows:

• Public sector pension transfers now prohibited. Exceptional circumstances considered.
• Private sector pension transfers to be reviewed.
• Consultation on tax percentages, current 55% tax on death post-retirement likely to be reduced.
• Normal Minimum Pension Age (NMPA) to increase to 57, State Pension Age (SPA) also increasing to 67, although this is not scheduled to come into effect until 2028.
• Flexibility on tax for withdrawing lump sum on retirement.

The UK pension landscape is forever changing, and much uncertainty has been cast by the latest in a long line of reforms aimed at saving the government significant amounts of money. Currently it would appear that the government is paying out more than it can afford when it comes to transferring existing pensions. Interest rates are low right now and with the massive shortfall which they currently face, they are understandably keen to retain as many pensions within the UK as possible in order to try to raise more capital. A move which is undoubtedly controversial, and not without risk.