While in the UK pension benefits are generally only able to be taken from the age of 55, some QROP schemes have let expats take benefits earlier if they have lived outside of the UK for five consecutive tax years.
However, some within the QROPS industry are now considering the future of such policies with HM Revenue & Customs taking a closer look at the practise under the auspices of ‘Project Bloom’.
‘Project Bloom’ is a joint project of the HMRC, Serious Fraud Office and the Pensions Regulator that is tasked with combating the issue of ‘pension liberation’.
The QROPS provider STM’s chief executive Colin Porter commented, “From what I understand, Project Bloom is much wider than just about tax-take, it is about ensuring that the ability to receive benefits is aligned to that of UK pension plan holders, and thus less likely to result in the individual falling back on the UK for state support in retirement.
“STM is making a clear statement as to its view of the 50/55 debate, and whether pensions taken before age 55 in Malta could be viewed as pension liberation.
“We have seen the pressure building on this issue over the last six months, and we feel there is too much at stake to take the risk of being delisted.
“The fact that a tax charge cannot be raised does not mean the transfer may not fall under the Revenue’s definition of ‘pension liberation’, and this thus raises possible delisting concerns for the QROPS provider.
“We feel that QROPS are about looking after peoples’ pensions for decades, either side of the ages between 50 and 55 as well as in between, in the best interests of the scheme member. And in our opinion, not allowing benefits to be paid before age 55 is the only way that mandate can be met.”
As things stand the situation with QROPS is very much business as usual but these developments do underline the need to seek expert advice when considering transferring your UK pension offshore.