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GLOSSARY

Qualifying recognised overseas pension scheme definition

Published by a LexisNexis Pensions expert

What does Qualifying recognised overseas pension scheme mean?

A QROPS is a foreign pension scheme that HMRC recognises as being capable of accepting a transfer value from a UK-registered pension scheme.

HMRC imposes rules on QROPS before they are regarded as acceptable and these include that it is recognised for tax purposes by the local jurisdiction, is open to membership by locals, and reflects either EET or TTE tax systems. The maximum lump sum is restricted to 30% of the fund value and the minimum retirement age is not lower than the UK HMRC ages (55 from 2010). It has so far been used by expatriates to export their pension arrangements, so as to avoid the lifetime allowance charge, no obligation to buy a lifetime annuity, the ability to leave money to heirs, no liability to UK tax on pension income and investment freedom. HMRC publishes a list of their rules and recognised schemes at www.hmrc.gov.uk/pensionschemes/qrops.pdf. It is almost certain that HMRC requirements breach EU freedoms and are not enforceable on transfers within the EU, but as yet there have been

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International pension transfers

Pension rights may be transferred from one scheme to another. To avoid any adverse tax consequences under the Finance Act 2004 (FA 2004), a transfer from a UK-registered pension scheme must constitute a 'recognised transfer' as such a transfer is expressly recognised at FA 2004, s 164(1)(c) as a type of authorised member payment.This Practice Note covers the considerations applicable on:•the only type of recognised transfer possible from a UK-registered pension scheme to an overseas pension arrangement (namely a transfer to a Qualifying Recognised Overseas Pension Scheme (QROPS))—for further information, see: Transfer to a QROPS, below•transfers from a UK-registered pension scheme to overseas arrangements other than a QROPS—for further information, see: Transfer to an overseas pension scheme other than a QROPS, below•transfers from overseas arrangements to a UK-registered pension scheme—for further information, see: Transfers from overseas pension schemesBetween 13 January 2019 and IP completion day (11 pm on 31 December 2020), additional requirements applied to cross-border transfers, ie bulk transfers between UK occupational pension schemes and EU pension schemes. For...

Increasing the normal minimum pension age (NMPA) to 57—pensions impact

Increasing the normal minimum pension age (NMPA) to 57—pensions impact Government decision to increase normal minimum pension age from 55 to 57 Following a period of consultation in 2021, the government decided to increase the normal minimum pension age (NMPA) from 55 to 57 with effect from 6 April 2028. The NMPA is the earliest age at which members may take their benefits (other than ill-health benefits) as authorised member payments under a registered pension scheme. The NMPA used to be set at 50 under the Finance Act 2004 (FA 2004) before it was changed on 6 April 2010 to 55. However, some members retained the right to take their pension before age 55. This is referred to in this Practice Note as the ‘pre-55 protected pension age’. For further information, see Practice Note: Normal minimum pension age and protected pension age. The government’s decision to increase the NMPA to 57 aims to reflect the increasing life expectancy which has led to people retiring later in life, as well as the rise in state pension age...

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