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QROPS: Qualifying recognised overseas pension scheme

Since A-Day (6 April 2006), payments by registered occupational pension schemes are categorised as either authorised or unauthorised member or employer payments. (For further details, see Authorised payments).

A member of a registered scheme may transfer their benefits abroad, if the rules of their scheme permit them to do so. A transfer to an overseas scheme which is registered with HM Revenue & Customs (HMRC) or a qualifying recognised overseas pension scheme (QROPS) will be a recognised transfer and, as such, will not attract tax charges. A transfer to any other scheme abroad will be an unauthorised payment and subject to tax. 

Process

The Trustees or their appointed administrators must satisfy themselves that the receiving scheme is a QROPS by reviewing the transfer documentation supplied by the member and making reasonable checks of the overseas’ scheme’s status. HMRC has stated that they may rely on the QROPS list provided that the it is checked no more than one day before the transfer is made as the list is regularly updated. However, administrators should be aware that not all QROPS have consented to have their details published. 

A transfer to a QROPS is a benefit crystallisation event for lifetime allowance purposes. The amount of pension rights being transferred needs to be tested against the amount of the member’s lifetime allowance to determine whether a tax charge is payable.

The transfer of benefits to a QROPS is also a reportable event to HMRC. 

Author: Caroline Legg