The latest edition of the UK Government’s recognised overseas pension scheme (Rops) list saw the removal of the last South African Rops, prompting concern that the country had lost its right to accept such pension transfers.
When the list was updated on 15 October, the final scheme (ABSA Group Pension Fund) had been removed, taking the number of South African Rops to zero.
But this does not represent a significant decrease or indicate that, like Australia and Canada, the schemes were removed as a result of UK concerns about the treatment of Rops in the destination country.
In August 2017, South Africa had just three schemes on the list.
Australia has recovered and, once again, represents a significant proportion of the list, while Canada has not regained its permissions.
Still comply with regulations
Rex Cowley, co-founder of Overseas Trust and Pension, told International Adviser: “While no SA plans appear on the Rops list, the list still makes provision for SA schemes to be listed and SA regulations can comply with Rops requirements.”
He explained that Rops in South Africa were “in the main, occupational plans and the qualification with Rops rules was to accommodate the transfer of benefits where an employee had worked in the UK for a group subsidiary”.
“From an advice perspective, it made very little sense to transfer benefits accumulated in a registered UK plan into a SA [Qualifying non-UK pension scheme] as domestic rules only permit 25% of pension funds to be invested outside of SA and the base currency is rand.”
Cowley added that further complications arise in respect of exchange control regulations “which only complicate matters further”.
“From a commercial perspective, Rops were never retailed by SA domestic firms, and SA residents with a UK pension would look to a non-SA provider to ensure their pension assets remained internationalised and in a tax neutral territory before considering a transfer to an SA plan.”
Voluntary inclusion
The Rops list does not state why a scheme has been removed.
Speaking to IA in December 2017, following the removal of all Hong Kong schemes from the Rops list, David White, managing director of QB Partners, said HMRC often removes schemes from the list without warning.
“HMRC have an ongoing review process whereby they look to ensure that overseas pension schemes are meeting their requirements.
“If schemes do not meet HMRC’s requirements HMRC can remove them from the list and this does happen fairly regularly,” he said, adding that schemes can be reinstated to the list once they address the shortfall in the HMRC requirements.
There were two Hong Kong schemes on the latest list.
IA contacted HM Revenue & Customs for further details about the removal of the last South Africa scheme.
A spokesperson said: “We do not discuss identifiable schemes. This list contains pension schemes that have told HMRC they meet the conditions to be a Rops and have asked to be included on the list.”
However, as inclusion on the list is voluntary, it is entirely possible that the scheme requested that the UK remove it in its latest update.
