Chancellor George Osborne has left expats and international workers with QROPS pensions up in the air again over flexible access rules.
No mention was made in his Budget 2016 about when flexible access allowing investors to draw down and spend their pensions as they wish might be introduced outside of the European Union.
Flexible access was introduced in April 2015 in the UK, and at the time, Osborne announced the measure would be extended to QROPS as well.
Shortly after, The Treasury revealed that flexible access would not apply to QROPS based outside the EU, but that the rules would be extended to the rest of the world in due course.
Since then, the Chancellor, The Treasury and HM Revenue and Customs, which monitors the offshore pensions, have made no mention of flexible access for QROPS.
Malta is only option
Malta is the only financial centre out of 20 in the EU offering flexible access.
Although Malta allows early drawdown, only one provider out of 24 on the Mediterranean island is believed to have the option available.
The EU has 394 of the 1,050 QROPS listed worldwide – amounting to 38% of the total.
Gibraltar, Guernsey and the Isle of Man have all announced they want to change pension rules to align with flexible access in the UK, but as all are crown Territories or Dependencies, they are technically outside the EU and cannot offer flexible access without breaking UK pension law.
In the UK, flexible access allows pension savers aged 55 or over to withdraw cash from their retirement savings when they like without any restrictions on spending.
QROPS rules demand the pensions outside the EU ring fence 70% of savings for paying an income during retirement.
Limited opportunities
The rules leave expats and international workers who want a flexible access option with limited opportunities.
Current UK pension rules allow the over 55s to take cash from retirement savings in a number of ways.
These include taking the tax-free cash lump sum, drawing a regular income or leaving the sum invested for irregular withdrawals.
Expats with UK pensions can take flexible access, while those with a QROPS can mostly take a 30% lump sum and a regular income.
A Treasury spokesman said the extension of flexible access was under review, but could not give any timescale for implementation.
For more information about QROPS and the benefits it provides, download the iExpats QROPS Guide or complete the Get Advice form.
