Suzanne Mortimer
Legal Director
Article
This year's budget was relatively quiet from a pensions perspective, but there was an important announcement which had immediate effect and which you should consider now with your administrator.
In this year's budget a new charge was introduced on transfers to qualifying recognised overseas pension schemes (QROPS) unless the transfer is excluded from the charge. This new charge is called the overseas transfer charge (OTC). Both the scheme member and the scheme administrator will be jointly and severally liable to the charge.
Further, a scheme which is currently a QROPS will stop being so on 14 April 2017 if it fails to submit a revised undertaking to HMRC by 13 April 2017. If that happens, transfers to that scheme after 13 April 2017 will be Unauthorised Payments.
There may be transfer requests already in the system which the new OTC may apply to. If the transfer request was submitted before 9 March 2017 the OTC will not apply.
Further, if the receiving scheme ceases to be a QROPS because if fails to make the necessary undertaking by 13 April 2017 the transfer will be an Unauthorised Payment.
Going forward administration practices and member communication will need to change to reflect the fact that the OTC may be payable.
You should contact your scheme administrator urgently to check:
For more information, contact our Pensions team.
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