Clarity sought on UK pensions
Australian superannuation funds have sought greater clarity from the UK Government around the future workings of its overseas pension scheme.
In the wake of a series recent changes to the UK regime, the Association of Superannuation Funds of Australia (ASFA) has lodged a submission with the UK's Revenue and Customs department as part of its consultation around the new pension arrangements.
In doing so, ASFA has pointed to Australia's regulatory regime and asked whether Australian superannuation funds could be considered capable of meeting the UK's new pension age test, and accordingly, being capable of holding "Recognised Overseas Pension Scheme" (ROPS) status.
Numerous Australian superannuation funds lost their so-called "Qualifying Recognised Overseas Pension Scheme" (QROPS) status as a result of changes imposed in the UK in April, last year.
The ASFA submission has argued that at least a part of the problem could be addressed by permitting QROPS to ‘quarantine' UK tax relieved pension monies from those monies which have been contributed to the scheme from within that jurisdiction or from other sources.
It said this would more readily facilitate the overseas scheme restricting access to the UK tax relieved monies in accordance with the UK ROPS legislation.
"Currently any withdrawal from a scheme which contains any money transferred from the UK is deemed to have been derived first from the UK transfer amount, irrespective of whether the UK transfer monies are in a separate account," the submission said.
"We understand that the underlying policy rationale for this is that this ensures that any liability to UK tax is extinguished at the earliest opportunity."
It said the majority of overseas schemes would also hold amounts accumulated from contributions or other sources which had no connection to the UK.
"The overseas regulatory regime may permit the payment of a part benefit, prior to retirement age, in circumstances which would not be considered to meet the UK pension age test," the submission said.
"Provided the overseas regulatory regime only permitted the payment of these benefits, and did not mandate them, it would be open to the trustees/operators of the overseas scheme to amend their governing rules to the effect that any member with any UK tax relieved monies would be unable to access such payments."
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