The three Canadian Rops, all run by the Bank of Montreal (BMO), were the only ones left after a cull by HMRC in November 2016 saw more than 60 schemes removed.
Rops providers are required to comply with HMRC’s ‘pension age test’, which prevents savers from accessing their funds before the age of 55, except for cases of serious ill health.
In Canada, however, Rops are treated more as registered retirement savings plans that can be cashed-in partly or fully at any time, regardless of age.
As a result, the number of schemes approved by the UK tax office fell to 69 in September 2016 from 95 in April 2015, before dropping to just three in November.
Geraint Davies, managing director of Montfort International, told International Adviser: “BMO clearly didn’t satisfy the HMRC criteria for Rops. Any financial adviser in the UK who has recommended Canadian Rops to their clients needs to be investigated by the Financial Conduct Authority.”
HMRC clampdown
Since the introduction of the pension freedoms in April 2015, the UK taxman has clamped down on overseas pension schemes that allow savers to access their cash before UK rules permit.
In July 2015, over a thousand of Australian Rops were dropped from the list for allowing early pay outs in cases of serious financial hardship.
In December 2016, HMRC removed all schemes from Italy and France. The list from November showed that there had been 11 French and 19 Italian schemes on the Rops list.
Paul Davies, director of advisory firm bdhSterling, told International Adviser: “HMRC are serious about ensuring that overseas schemes meet the Pensions Age Test and that Canadian schemes, at present, have not done enough in their rules to satisfy HMRC that they have met the pensions age test.”
