The number of Australian superannuation funds considered compliant with new UK pension laws and thus able to receive UK pensions transfers has been reduced from 1660 to one.
In a new list released by UK tax authority, HM Revenue & Customs (HMRC), only Local Government Superannuation Scheme remains as a Recognised Overseas Pensions Scheme (ROPS) after the release of the revised list of funds.
The move follows changes to the UK pension laws from 6 April in which a pension or super fund could only receive UK pension funds if it restricted access to funds before age 55, unless the member retires because of ill-health.
Australian schemes also allow access before age 55 for financial hardship and in the lead up to the changes Australian schemes were notified of their need to comply with the changes to the UK law.
Australian pensions and super funds that have not complied and continue to receive UK pension transfers will expose the fund member to a 55 per cent tax on the roll-over amount imposed by HMRC on the outgoing funds.
Of the 1660 funds on the list, many were self-managed superannuation schemes but all of the major retail and industry funds that were on the list have also been struck off.
However even if funds are added back to the list HMRC will not automatically consider them as schemes qualified to receive UK pensions stating on its ROPS website that it “can’t guarantee these are ROPS or that any transfers to them will be free of UK tax. It is your responsibility to find out if you have to pay tax on any transfer of pension savings”.
UK based financial adviser and pension transfer specialist Geraint Davies, managing director with Montfort International, said the shift could result in HMRC examining all transfers after April 5 and many of those which have taken place beforehand.
“Anyone who has made a transfer since 5 April is a marked person and the HMRC may examine a list of transfers to Australia since that date. It may also examine how those Australian super funds promoted and marketed their services to people seeking transfers,” Davies said.
“In the UK we expected zero tolerance on this issue by the HMRC and the letters it sent to Australian funds were a courtesy letters reminding them that it they did not qualify they should stop receiving funds. However my understanding is not a single Australian scheme asked for clarification.”
