History to UK DB/ Final Salary Scheme developments that have occurred since 2015:
In 2015, UK legislation banned transfers of all unfunded Public Sector DB schemes (details below)
In 2015, UK legislation placed additional safeguard requirements on DB scheme transfers with values over £30k - i.e. they must now obtain UK FCA Advice in addition to Australian Advice
In 2016, growing speculation that the Public Sector ban may extend to Private Sector (Company) DB schemes caused a significant increase in the volume of transfer requests for Company DB Schemes throughout 2016/17 - click here for more details
In 2017, CETVs (Cash Equivalent Transfer Values) for some DB schemes began to decline, after experiencing all time highs for the past few years
Partial Ban on Public Sector DB Scheme Transfers:
Effective from 6 April 2015, Unfunded Public Sector Pension transfers (like the NHS) have been banned from overseas transfers. Funded Public Sector Pensions (like USS) however, are still eligible for transfer - see expanded list below- click here for more information.
Important: - Many Public Sector/Civil Service Pensions require requests for transfer at least 12 months prior to reaching retirement age (usually 60 yrs old) therefore, we suggest investigating your pension situation by no later than 58 years of age.
Possible Future UK Legislation to Ban Private Sector (Company DB scheme) Transfers
Growing speculation that the 2015 public sector ban on DB scheme transfers could extend to private sector (company) DB schemes was discussed recently in a Professional Pensions article - click here for details. As a result, a significant increase in the number of DB scheme transfer requests has ocurred since mid 2016.
Additional Safeguards - UK DB (Defined Benefit/Final Salary Schemes) with transfer values of GBP 30k or over will now require UK FCA Advice.
Effective from 6 April 2015, DB schemes with transfer values greater than £30k, UK legislation now requires members to obtain UK advice from an advisor who is authorised by the UK FCA (Financial Conduct Authority), has appropriate experience and permissions from HMRC and who is independent of the fund.
Sterling Planners can facilitate this requirement for UK advice via our UK partner, Cobens PLC
Additional Fees for the UK advice component are circa £ 900 for the UK Statement of Advice and circa £ 1,850 to set up an appropriate UK SIPP for initial transfers (as required).
Some UK DB Scheme CETVs Begin to Decline:
CETVs (Cash Equivalent Transfer Values) for UK DB Schemes have been at all time highs since 2013 and as predicted, some of these schemes have begun issuing declining values from early 2017.
This could be the best time ever to transfer a DB/Final Salary Scheme given transfer values have been at all time highs (for the past few years). The prediction throughout 2016 stated that as interest and gilt rates begin to rise, transfer values would begin to fall - which has been evidenced by some recent CETVs issued from late 2016.
PDF Version of Article:- click here to read the article " Best Time Ever to Ditch your Final Salary Pension" by Moira O'Neill for the Investors Chronicle, Feb 2013.
If you have any questions please contact our client service team on 1300 132 737.
January 2018 Update.
Breaking News - a well known UK company DB (Defined Benefit) pension scheme has announced all future Cash Equivalent Transfer Values (CETVs) from February 2018 will be reduced by 20% to help alleviate their underfunding situation - see Latest News Article. This represents a growing trend, as thousands of UK DB Schemes face the challenges of meeting future pension commitments without sufficient funds. Sterling Planners have observed this growing trend of reductions in CETVs since January 2017.
The January HMRC ROPS list now contains 554 Australian funds, mostly comprised of individual SMSFs (which represents an increase of 39 new funds since the November 2017 list).
New QROPS regulations, effective 9 March 2017, imposed a 25% tax charge on UK pension transfers to offshore schemes like Gibraltar or Malta when the client is not also residing in the same country as the QROPS (for more details refer 25% tax on QROPS transfers). After the announcement, HMRC suspended the ROPS list two times [in April and June 2017] to make the necessary amendments. The resulting compliance crackdown saw an additional 410 QROPS being removed from the ROPS list globally and several jurisdictions stopped listing QROPS completely. The most significant changes to QROPS regulations occured in 2015 when the UK government moved to crack down on what it said was the mis-use of pension transfers to enable people to access their pensions before the age of 55. Since then, there has been 52% fewer overseas pension transfers than the peak year of 2014-2015, in which 20,100 were transferred compared with 9,700 transferred in the 12mths to 5 April 2017.
Transfers to Australia are currently possible for clients aged 55yrs and over, satisfying the work test (if 65 yrs or over) with permanent residency status in Australia or citizenship, who are currently resident in Australia, with a transfer value of GBP 100k or greater with an eligible UK pension scheme - Over 55 SMSF Transfer Option. If you are under 55 yrs with a UK DB Scheme (Final Salary scheme), refer to our Under 55 Secure CETV Option.
We do not recommend transfers to offshore schemes such as Malta, NZ, Gibraltar, Guernsey or Isle of Man etc [unless the member is resident in the country of transfer as per the recent March 2017 HMRC announcement - HMRC Tax on Offshore QROPS.
Download our Free UK Pensions E-book for a comprehensive UK pension transfer checklist.
Why you need QROPS Advice - How expert advice could potentially save you thousands on your UK Transfer.
Who is Eligible to Transfer their UK pension? To make a compliant UK pension transfer, you must either be:
Not Eligible for Transfer (effective April 2015) - All unfunded Civil Pension Schemes (eg NHS, Police Pensions, Teachers Pensions, Firefighters, Armed Forces etc - click here for more information.) and all UK State Pensions (i.e. Old Age Pensions from your National Insurance contributions.)
Brief history of the QROPS situation - refer to our QROPS webpage.
Details of our Over 55 SMSF service offering - click here.
Details of our QROPS Advice document and fees - refer to our UK Pension Report and Fees page.
Details of our Under 55 Secure CETV to UK SIPP - for clients aged under 55yrs with Defined Benefit/Final Salary Pensions in the UK, please click here.
Post 6 April 2015 Transfers - HMRC Tax Relief Decision – for UK pension transfers made after 6 April 2015 and before 1 July 2015, HMRC announced in July 2016 that these transfers do not constitute unauthorised payments and therefore will NOT be subject to the 55% penalty tax - click here for details.
Note: The QROPS (now ROPS) list is self-certified and cannot be relied upon to avoid potential penalties. It is ultimately the responsibility of the member to determine whether or not their receiving scheme complies with QROPS regulations.
Contact our client service team on 1300 132 737 if you have any questions.