In order for a person to transfer a UK pension to Australia and to avoid incurring up to a 55% tax charge a person must transfer their UK Pension to an Australian Super Fund that is QROPS registered (now known as ROPS -Recognised Overseas Pension Scheme).
Effective 6 April 2015 a change in UK law (announced in the 2014 Budget and separate to the change in law detailed below) meant that persons with un-funded government pension schemes such as NHS and Teachers Pensions would no longer have the option to transfer these pensions after this date.
Accordingly there was an influx of people looking to ensure they could secure their transfer prior to this date (to secure the transfer signed transfer paperwork had to be received by the UK Pension provider prior to 6 April 15) resulting in a much higher number of transfers taking place than usual.
In addition to the legislation regarding the ban on transferring certain government pensions further legislation also came into effect on 6 April 2015 which effectively meant that all Australian ROPS funds would potentially be non-compliant.
The new rules being that UK Pension monies should not be able to be accessed prior to age 55 (except under the UK ill health definition) which due to certain situations in Australia although rare whereby people are potentially able to access monies before age 55 (ie financial hardship) meant that Australia did not comply with the new requirements.
Most (ROPS) Super Funds were not fully aware of the magnitude of these changes until they received a letter sent by HMRC dated 17 April and received around the beginning of May informing them that they had until the 17 June essentially to confirm compliance with the new requirements which in turn meant that they retain ROPS status.
Following realisation by Super Funds that upon receipt of the letter they were potentially non-compliant many stopped receiving payments and in any event many UK pension providers on the advice of HMRC had stopped making payments at this time anyway.
I posted this thread at the time.
We are aware that some Superannuation Funds went about amending their Trust Deeds to reflect the UK changes so that they believe they still comply and others have done nothing and instead have lobbied the Australian Law Council and the Association of Superannuation Funds of Australia (ASFA) who are urgently looking to arrange a meeting with Treasury (who have already been in talks with HMRC) to discuss the best approach for the future.
The potential issues are around transfers received by Australian Super Funds between 6 April and 17 June 2015. The real issue is whether these funds continued to have ROPS status at the time these funds were received and if indeed it is decided that these funds did not have ROPS status at this time whether these payments received will attract tax penalties.
HMRC publish a list of ROPS schemes twice a month and they temporarily suspended the list on the 17 June: http://www.pomsinoz.com/forum/money-...rops-list.html
The new list is due out today and will hopefully list the Super Funds that have remained compliant although we will have to wait and see.
It seems HMRC has advised the Treasury, that they may consider relief for transfers completed after 6 April (although at present only to 17 April, which was the date that the letter was sent to QROPS funds advising of the changes) however this has not yet been confirmed as far as I am aware.
I believe if this is the case then in all fairness the relief should go through to when the letters were reasonably expected to be received in Australia not generated at the very least.
HMRC advised the Treasury that it does not have any compliance or integrity concerns in regards to Australian funds. It claimed that the purpose of the new rules was to set a simple test of equivalence with the UK rules.
At this stage of course it makes sense for anyone in the process of transferring to hold off pending clarity around how this will play out and for those that have had a hold placed on funds waiting to come over ie NHS Pensions a change of Australian Super Fund may be required if the original Australian Scheme no longer retains ROPS status.
We will try to keep members abreast of all updates as they come through but as you can see a lot of information is unclear at this time and I think it best to wait for the facts before speculating on outcomes.
We will be happy to receive PM's for members who are concerned about the above.