UK tightens up overseas pension rules
The UK Government has moved to tighten up the rules around its qualifying recognised overseas pensions schemes (QROPS) arrangements in a move likely to impact some financial planning companies in both Australia and New Zealand.
The UK Government outlined its intended changes in early December, saying they were intended to make the QROPS regime operate in line with the policy intention.
The UK Government's explanatory documentation made clear that the QROPS regime had been the subject of an on-going review and that its proposed legislative changes were aimed at ending abuses.
"The Government has found that QROPS are being marketed extensively as a way of paying amounts or enabling the payment of amounts that are not allowed under UK rules (in particular 100 per cent lump sums) once the UK tax rules no longer apply," the documentation said.
"This is contrary to the policy rationale for allowing transfers of UK tax-relieved pension savings to be made free of UK tax to QROPS," it said.
The documentation pointed to the impact of the changes, saying there would be additional reporting requirements for non-UK pension business schemes that receive the transfers of UK pension savings, but it will still be less than is required from UK schemes and it will be information that bona fide pension schemes are used to providing.
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