Changes to UK pension rules affecting QROPS arrangements
Changes to the tax and pension rules governing UK pension schemes
The United Kingdom (UK) Government introduced changes to the tax and pension rules governing UK pension schemes last year. These changes took effect on 6 April 2015. Most of these changes related to pension benefits payable in the UK, however, changes were made regarding the Pension Age Test, which will impact Australian QROPS (Qualifying Registered Overseas Pension Schemes).
The new rules require that QROPS do not offer access to transferred UK funds before the age of 55, unless the member retires because of ill-health. This requirement presents an issue for Australian QROPS however, as under Australian legislation there are other types of early release (i.e. financial hardship, compassionate grounds).
We’re investigating the impact of the Pension Age Test requirement to our QROPS products. We’re working with our lawyers and industry bodies to understand how and if we can comply with the UK requirements, and what the implications will be for our customers. We’ve also raised our concerns directly with Her Majesty’s Revenue & Customs (HMRC).
How this affects you
As an interim measure, we’re placing a hold on the completion of any further paperwork with UK pension schemes, until we have clarity around the impact of these changes. Many UK pension schemes have also placed a hold on transferring UK pension benefits to Australian QROPS. We recommend customers seek UK advice on the potential implications for any transfers in progress.
MLC will keep you informed of any progress. We appreciate your patience while we deal with this industry wide issue.