South Africa Loses QROPS Status For Expat Pensions

South Africa has dropped off the list of financial jurisdictions offering QROPS expat offshore pensions.

The latest HM Revenue & Customs QROPS List published on October 15, 2018, confirms the removal of the last QROPS based in South Africa.

The ABSA Group Pension Fund was the final South African QROPS.

Neither ABSA or HMRC have commented about the removal.

Generally, QROPS are delisted for three main reasons:

  • HMRC is probing the administrative or tax status of the scheme
  • The last member has drawn down on their fund or transferred out of the fund
  • The QROPS provider closes

History of South Africa QROPS

South Africa has been ever-present on the HMRC list since QROPS were introduced in April 2006.

Between March 2010 and June 2015, the number of QROPS peaked at between 28 and 31 pensions.

After HMRC introduced tax and rules changes in June 2015, the number slumped to seven QROPS, rising to a recent peak of 12 pensions at the start of 2016.

QROPS in South Africa were subject to the overseas transfer charge of 25% unless the expat or former international worker with UK pension rights transferring money to the scheme lived in the country.

South Africa joins Hungary as the second QROPS jurisdiction to lose status this year. Hungary dropped off the list in May.

The only new jurisdiction to offer QROPS this year was Hong Kong, which joined the listing in May.

QROPS losing favour with expats

With South Africa missing, the number of QROPS jurisdictions fall s to 28 worldwide.

They offer 1,432 pensions – an increase of 19 this month mostly due to an influx of 13 QROPS in The Netherlands, taking the country’s total from 17 to 30 since the start of October.

Australia still has a 50% market share with 741 QROPS pensions, including six new pensions this month.

Recent statistics from HMRC show the number of QROPS transfers has fallen steadily by around 5,000 a year from a peak of 20,100 worth £1.76 billion in 2014-15 to 4,700 valued at £740 million in 2017-18.

At the same time, the average transfer value has increased from £87,562 to £157,446.

Read more about the South African Expat Tax rules

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