Singapore is the only country to be thrown out of the QROPS circle since the inception of Qualifying Recognised Overseas Pension Schemes on April 6, 2006.
HM Revenue and Customs unceremoniously dumped Singapore from the QROPS list without giving a reason in May 2008 and has refused to reinstate the country despite the threat of court action.
No reason has been disclosed, although the Singapore financial regulator did fine a financial firm £21,000 for allowing unlicensed advisers to give QROPS and other financial advice. This was immediately before the country was removed from the QROPS listing.
So far, the Singapore financial regulator has not commented on HMRC’s action in public.
Singapore QROPS investors have to pay tax penalties
This has left hundreds of QROPS investors in financial difficulty as HMRC is now demanding up to 55% of their original fund investment in tax and penalties for making unauthorised pension payments.
Some leading financial advice firms have transferred more than a thousand of these investors out of Singapore to new QROPS schemes by agreeing terms with the tax man.
The remaining investors are advised to move their pension funds to a new QROPS scheme as soon as possible to minimise their losses.
To put the Singapore situation in perspective, the country is just one of more than 40 countries operating 1,400 QROPS pension schemes worldwide and remains the sole country to be stripped of QROPS status.
UK government figures show that about 3,500 expats and international workers with UK pension rights consolidate their funds in to a QROPS scheme every year and that total QROPS funds under management exceed £0.5 billion.
QROPS are tax effective and advantageous investments
All the evidence suggests that, on the whole, the vast majority of QROPS schemes are tax effective and advantageous for investors compared to leaving their pension funds in the UK and that the QROPS providers run reputable and honest businesses.
Of course, like all products or services involving large sums of money, unpalatable incidents will arise from time to time.
That’s more the darker side of human nature than a fault with QROPS regulations.
Taking advice from a regulated adviser with a background in successful QROPS transfers is a vital protection. Check out the adviser is also experienced in QROPS transfers to the tax jurisdiction you want to use as the rules and regulations can differ vastly between countries.
For help in locating a good adviser, feel free to contact QROPS.net