Public Pension QROPS Transfers – The Story So Far


Pension advisers are warning that Chancellor George Osborne may be thinking about closing the door on Qualifying Recognised Overseas Pension Schemes (QROPS) transfers for civil servants and public sector workers.

Osborne has already indicated he is considering different pension rules for retirement savers in defined benefit or final salary pensions paid by councils or the state in his big overhaul of defined contributions announced in Budget 2014.

So, for a civil servant or public sector worker worried about drawing down on their pension, what has the Chancellor actually said that has triggered so much concern?

Well, not a lot really.

Public sector pensions – the Chancellor’s policy statement

The exact words Osborne used are: “Having considered this carefully, the government intends to introduce legislation to remove the option to transfer for those in public sector schemes, except in very limited circumstances.

“While the government would in principle welcome the opportunity to extend greater choice to members of private sector defined benefit pension schemes, it will not do so at the expense of significant damage to the wider economy.

“Funded defined benefit schemes play an important role in funding long-term investment in the UK economy, which the government does not want to put at risk.

“The government’s starting point is therefore that, whilst in principle it would like to permit transfers from private sector defined benefit schemes under the new freedoms, it will only consider doing so if the risks and issues around doing so can be shown to be manageable.”

He added that any decision is likely to be made in time for the start of the next tax year, on April 6, 2015.

Civil and public pensions v QROPS

For final salary pension savers who want to transfer their pensions into a QROPS, a whole host of issues also need careful thought through.

Most civil or public sector pensions come with enhanced benefits that are not generally available in a QROPS or a defined contribution scheme without extra costs, if they are available at all.

That means giving up benefits that may not be replaceable, so any financial adviser would have to give a detailed analysis recommending a final salary scheme transfer to a QROPS.

That does not mean a transfer is not viable or available, just that the administration of the transfer is more complicated than a like-for-like defined contribution pension transfer.

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Download the Free Pension Transfer Guide

Expat Pension Transfers Guide expert writers have created a simple guide to Expat Pension Transfers just for you.

Find out how you could save tax, increase growth and investment opportunities with this simple, no-nonsense guide that will introduce QROPS, SIPPs and QNUPS options and talk through the pros and cons. Download the free guide by following the link below

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