Important changes to Qualifying Recognised Overseas Pension Schemes (QROPS)
All Australian super funds registered as Qualifying Recognised Overseas Pension Schemes (QROPS) are required to comply with recent UK law changes from 6 April 2015.
The changes include restricting members aged under 55 from accessing benefits transferred to a QROPS approved fund, unless the member retires and satisfies Her Majesty’s Revenue and Customs (HMRC - the UK’s tax office equivalent) definition of ill-health.
This impacts all Australian QROPS as Australian law currently allows benefits to be paid to members aged under 55 in limited circumstances, including financial hardship, compassionate grounds, and permanent incapacity, or in accordance with Australian Taxation Office (ATO) release authorities relating to excess contributions. There are also other limited circumstances where Australian super funds may be required to release benefits under binding financial arrangements or other court orders that are determined by law and are not at the discretion of the super fund.
Due to the Australian regulatory framework, Kinetic Super – like all other Australian super funds – cannot currently confirm compliance with the new rules. Kinetic Super have been advised by the HMRC that we will no longer appear on the approved (QROPS) list with immediate effect. This list is published by HMRC to help members and UK pension schemes satisfy themselves that the overseas receiving super fund is a QROPS.
The Australian Treasury Department are currently in discussions with HMRC to consider the implications and potential solutions, however until these issues are resolved, we have temporarily suspended any UK Pension transfers.
How does this change affect me?
If you have made a UK transfer after 6 April 2015 to any super fund which does not comply with the new rules, then the HMRC could impose 55% tax on the value of the transfer.
If you have made a UK Pension transfer before 6 April 2015, these changes will have no impact to your transfer amount. However, as this change is likely to impact all Australian QROPS super funds, any rollovers to another super fund, or any QROPS benefits paid out from your super fund, are required to be reported to the HMRC and may be subject to an unauthorised payments tax.