Recent changes relating to the transfer of pension scheme assets from UK based funds has thrown the UK industry in turmoil, according to Montfort International managing director Geraint Davies.
Davies, who is based in the UK, is involved in assisting clients transfer funds from pension schemes in the UK when they immigrate or leave the UK permanently for Australia among other countries.
He says the UK tax office, Inland Revenue, decided in late January it will no longer police the schemes to ensure funds are being transferred correctly but will force schemes to self regulate.
“Inland Revenue has said it has had enough of some of the rorting and so have moved the onus for compliance to the schemes,” Davies says.
However it has also said that schemes which fail to work within the new guidelines will be subject to heavy fines.
“These schemes need to become super vigilant as the regulators will now only be engaged in random spot checks but this sudden change has put the schemes on tenterhooks,” Davies says.
“It is now dependent on the schemes to say what is right and wrong and they will need to check the status of people in these funds, because these changes are applicable in different ways for permanent and temporary immigrants both arriving and leaving the UK.”
According to Davies schemes will become even more complex and if they have problems may become hesitant to assist clients in transferring funds.
“Inland Revenue has said it will go after schemes that do not comply and this could mean they will either do nothing in regard to transferring funds or try to get funds back. Either way disadvantages clients,” Davies says.
He also says that if local planners become involved in the transfer they could also unknowingly incur tax for the clients.
“Planners need to ensure they are equipped with systems that comply with UK regulations. These funds want bona fide people at the Australian end.”
