What Happened To QROPS Expat Pensions In 2017?

Expats have seen some big changes in QROPS offshore pension schemes during 2017.

A massive qualifying rules overhaul by HM Revenue & Customs in April saw a new pension age test introduced.

The rule stopped any pension paying benefits to anyone aged less than 55 years old and opened the way for the offshore schemes to start pension freedoms on the same basis as UK pensions.

The freedoms let retirement savers draw money to spend as they wish from their funds once they reach 55.

The statistics for QROPS in 2017 show how the market has changed for expats:

Delisted QROPS in 2017

Providers in 14 financial centres delisted their QROPS, but two relisted, leaving 12 missing from the roster at the end of 2017.

The United States and Sweden both returned from delisting during the year. The USA delisted and returned twice.

Those that delisted and remain missing are: Canada, Czech Republic, Greece, Hong Kong, Iceland, Jamaica, Kosovo, Portugal, Spain, Sri Lanka and Turkey.

Australia holds QROPS record

The HMRC official QROPS List started the year with 1,264 pensions. This number dropped to 932 in April as schemes rushed to delist because of the new pension age test.

Australia remained the offshore centre with the most QROPS throughout the year – a record held since the introduction of QROPS in April 2006.

Australia started the year with 377 QROPS, which has gradually increased to end 2017 on 538 QROPS – 46%of the global total.

The Isle of Man is the second largest QROPS market by number of schemes with 307 pensions – an increase of 60 over the year.

No other QROPS jurisdiction has more than 60 schemes (Ireland).

Overseas transfer charge

Chancellor Phillip Hammond also introduced the overseas transfer charge in March 2017.

The charge is a 25% levy on any UK pension or QROPS fund transferred to another QROPS if the retirement saver does not live in the European Economic Area or the financial jurisdiction where the receiving QROPS is based.

According to HMRC figures released in July, 9,700 retirement savers switched their money to a QROPS in the year to April 5, 2017. Their total funds were worth £1.22 billion.

The previous year, 13,700 transfers worth £1.5 billion were made.