2016 has been something of a rollercoaster ride in the world of pension transfers, with changes proposed and imposed by the authorities in both Britain and New Zealand.
Most recently, Chancellor of the Exchequer, Phillip Hammond, used his Autumn Statement to announce “sweeping changes” to the UK’s pensions legislation. These were formalised in a draft Finance Bill issued on 5th December.
From our initial review, GBPensions are of the opinion that the measures proposed in this Bill are primarily attempting to iron out tax anomalies, specifically with overseas pension schemes and non-UK residents.
So far as our clients and potential clients are concerned, the section we feel could have most impact upon them is 1.12 Changes to tax treatment of foreign pension regimes.
Provision 11 and the TIIN (Tax Implication & Impact Notes) to which this legislation refers, can be found here: Foreign pension schemes.
To highlight what we regard to be the salient issues for our clients, Background to the measure states: …changes were published for consultation on 19 December 2014. These draft regulations contained some provisions that, in the end, were not introduced to Parliament and “the 70% rule” (which requires 70% of funds that have received UK tax relief, either in connection with contributions or as a result of a tax-free transfer, to be designated to provide the individual with an ‘income for life’) has remained in place temporarily.
Please note the use of the word temporarily, and then read this excerpt from the final bullet point of Proposed revisions:
- the “70% rule” will be removed from the conditions that a pension scheme has to meet to be an “overseas pension scheme” or “recognised overseas pension scheme.”
It would certainly appear then that the requirement for QROPS to retain 70% of their fund to provide the member with an “income for life” has now been revised, and that these changes will come into affect with the 2017 Finance Bill, on and after 6th April 2017.
According to the policy paper, this will affect individuals and households with foreign pension savings … as these changes to align the tax treatment with UK pension payments may influence their decisions on moving or managing their pension savings outside of the UK…
At GBPensions, we view this as potentially good news for members of QROPS, as it appears that they may be given the same access to their funds at age 55 as members of SIPPs – which of course is an option which GBPensions are already pleased to offer clients.
Naturally, GBPensions will be keeping a careful eye on these proposals over the coming months, and we shall inform our clients, partners and professional associates of any important updates. By all means, if you have any concerns, please do get in touch, either by phone on 0800 427 693 or by e-mail.