As pointed out by the Teacher’s Pension earlier this month, the banning of public sector pension transfers into QROPS in April did not extend to QROPS schemes which are not occupational pension schemes and which have their main administration in a state in the European Economic Area.
However, Statutory Instrument 2015 No. 1614 released by the Government today closed the loophole, confirming that: “These Regulations prevent transfers from an unfunded public service defined benefits scheme to a qualifying recognised overseas pension scheme which can provide flexible benefits as a result of the transfer.”
James McLeod, head of pensions at AES International, said: “The legislation used to close this loophole is in itself very complicated, perhaps alluding to the complicated nature of the loophole originally.
“We are still trying to assess exactly what this means for our clients and whether they will be able to complete transfers to QROPS.
“There does seem to be a small window of opportunity for those who wish to transfer, but it’s not clear who will benefit.”
Last month, HMRC dropped thousands of QROPS from its recognised overseas pension schemes list, with Australian schemes faring the worst.
This was largely because regions did not comply with UK rules that only allowed pension holders early access to their savings if they were facing “serious ill health”.