Large market for Rops
Batty believes that despite the slide in Rops figures, there is a “large market” for such schemes.
“It’s interesting that, following a peak in 2014/15, Rops numbers in the last tax year were still the third highest on record. In addition the average size of pension fund transferred is the highest it has ever been, having grown for the past four years in a row.
“The figures suggest that there is still a large market for Rops, which has evolved over time,” he said.
Meanwhile, Rex Cowley, co-founder of Guernsey-headquartered Overseas Trust & Pension, said the Rops industry has suffered “several false starts” but adds it still has potential to grow.
“These numbers show a market that has had several false starts as changing regulations continue to impact any sustained momentum. The circa 110K cases written to date represents a small percentage of a total market and whilst the potential is clear it’s the ability to realise this potential, amidst ongoing regulatory change, remains the biggest challenge,” he told IA.
UK Rops reforms
The findings coincide with the UK’s wide-sweeping reforms of overseas pensions, announced in the Autumn Statement last month.
On Monday, the government revealed that from April 2017 it will require overseas pensions to be regulated in the country where they are established in order to be ‘recognised’ by HMRC, as it looks to scrap the 70% ‘income for life’ rule.
Other measures include plans to treat 100% of the income from a Rops taxable – rather than the 90% of income from a Rops which is currently subject to income tax, while member payment provisions will extend from five to 10 years, limiting the pension commencement lump-sum to 25% of the UK tax relieved funds for 10 years instead of five.
