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Treasury admits currently pensioners can beat transfer ban

Treasury admits currently pensioners can beat transfer ban

HM Treasury has admitted they are currently looking to close a loophole for expats with public sector pensions.

A spokesman for HM Treasury said: “We are clear that the transfer restrictions from unfunded public service pension schemes should apply to transfers to qualifying recognised overseas pension schemes, including those based in the European Economic Area.

“We are currently consulting with pension schemes ahead of introducing legislation to enforce this.”

HM Treasury confirmed it was looking to introduce legislation after Justin Harris, managing director of Zurich-based Chase Belgrave, said it was possible to get around HM Treasury’s recent transfer ban on unfunded public sector pension schemes.

Since 6 April 2015, changes under the Pensions Schemes Act 2015 have stopped transfers from unfunded public service pension schemes to ones, whether in the UK or abroad, based on defined contributions or flexible access arrangements.

But Mr Harris said: “It has now come to light that the ban does not cover transfers to non-occupational Qrops based in the European Economic Area.

“This means that holders of UK pensions currently living in many jurisdictions around the world can still benefit from transferring to a Qrops.

“However, HM Treasury is expected to introduce new legislation in the near future to close this loophole.

“People with public sector pension schemes, even if they live outside the EEA, wanting to take advantage should act without delay.”

Teachers’ Pensions is one of the schemes which is now taking action based on this new information and said it is now writing to members whose application to discharge their benefits to such an EEA Qrops was received on or after 6 April 2015.

But in a statement it said: “We are aware that HM Treasury are planning further legislation to cover the schemes described above within the restrictions on transfers from unfunded public service pension schemes.

“Consequently members need to be aware that in order for Teachers’ Pensions to make a transfer payment they must submit the completed discharge paperwork before any such legislation comes into effect.”

http://www.ftadviser.com/2015/08/05/pensions/personal-pensions/treasury-admits-currently-pensioners-can-beat-transfer-ban-0KX4lc8aiSm1YqU6PgHmoL/article.html

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