The boss of one of the world’s largest independent financial advisory organisations is commending the government’s plans to bring the tax treatment of overseas pensions more closely in line with the UK’s domestic pension tax regime.
The comments from Nigel Green, founder and chief executive of deVere Group, come after yesterday’s Autumn Statement reveals that Qualifying Recognised Overseas Pension Schemes’ (QROPS) tax rules are to likely to become more closely aligned with UK pension schemes’ rules.
Mr Green observes: “Under the government’s latest plans, QROPS will be taxed in the same way as a UK pension for anyone who then later returns to the UK. Currently only 90 per cent of income from a QROPS is subject to income tax, as opposed to 100 per cent in a UK pension scheme.
“In addition, the member payment provisions will extend from five to 10 years, plus the eligibility criteria for a scheme to be listed as a QROPS will be tighter.”
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He continues: “I welcome the government’s plans as they will help ensure that QROPS are not misused and/or mis-sold.
“QROPS are designed to provide an income in retirement for those permanently living outside the UK or planning to do so, as well as to offer all the many associated financial benefits of having an HMRC-recognised pension scheme based in a jurisdiction outside the UK.
“I welcome this move to update the QROPS rules. It means that clients are even more protected, making QROPS an even more attractive option.
“It further highlights that QROPS still keep the same standards or equivalent as UK pensions, that they are fully part of the retirement planning ‘Establishment’, and the deployment of more and more of government resources demonstrates that the market is well governed.
“I also champion the suggested tightening on eligibility criteria. This will prevent jurisdictions who are failing to meet the stringent requirements demanded by HMRC from bending the rules; whilst other jurisdictions, including Malta, the Isle of Man and Gibraltar, which are fully compliant with HMRC rules and standards, will benefit from this.”
He adds: “I expect the changes announced in the Autumn Statement will trigger a surge in the number of people seeking to transfer their pensions out of the UK before the new plans come into full effect.”
Mr Green concludes: “As the world becomes ever more internationally mobile, international pension planning is, of course, by default, an enormous growth area. As such, I welcome the plans to make the overseas pension transfer market even more robust.”