Within HM Revenue & Custom’s note, called Pension Flexibility 2015 (click here to view a .pdf), the Revenue states that “a number of consequential changes are made to FA 2004 and ITEPA 2003 to enable QROPS to make payments to members from uncrystallised funds, and for these to be tested against the lifetime allowance”.
Paul Davies, a director at international pension transfer specialists Global QROPS, said, while no details seem to be available, the paragraph would suggest QROPS providers will be required to re-test a client’s pension against the LTA after it has been transferred from a UK pension. This transfer is deemed a number eight benefit crystallisation event.
Davies said: “After benefit crystallisation, i.e. the transfer, any benefits which haven’t been tested are now clearly going to be subject to further tests against the LTA.
“It may be that this change could impact existing schemes which have already reached or gone beyond the LTA.”
The new rules are part of much wider changes being introduced by the UK from 6 April next year, to increase the flexibility for people who have reached retirement and who are looking to begin taking benefits.
HMRC’s note also states the Government is provide it with more powers “requiring scheme managers or former scheme managers of QROPS, to provide information about the scheme”, although it does not detail what these changes will be.
Click here to read the draft Taxation of Pensions Bill
