The notification list, which is released fortnightly by HMRC, contains pension schemes that have told the department that they meet conditions to be a Rops.
Unsurprising move
David White, managing director of QB Partners, says HMRC often removes schemes from the list without warning, so the Hong Kong development has not come as a surprise for industry commentators.
“HMRC have an ongoing review process whereby they look to ensure that overseas pension schemes are meeting their requirements,” White said.
“If schemes do not meet HMRC’s requirements HMRC can remove them from the list and this does happen fairly regularly,” he said.
White said schemes can be reinstated to the list once they address the shortfall in the HMRC requirements.
Common shortfall
Because all 19 schemes in Hong Kong have been removed from the list, White says this suggest that HMRC has identified a shortfall in requirements that is common across all schemes.
“One of the biggest reasons that Rops schemes in other jurisdictions have been removed from the HMRC list is because they did not meet the Pension Age Test,” White said.
This rule was brought in following the introduction of pension freedoms in the UK in 2015 and requires that all overseas pension schemes to confirm that they would not allow pension benefits to be paid before age 55.
“I do have some familiarity with Hong Kong pension schemes and as far as I am aware they have all amended their rules to state that benefits in respect of transfer from UK pensions cannot be paid before age 55, so I do not think that this will be the reason for the removal of the schemes,” he said.
If HMRC have not removed the schemes due to the pension age test, White said he could only speculate as to why HMRC had removed Hong Kong schemes from the list.
“One of the Rops requirements is that the overseas scheme must comply with local regulation so this may be a reason why the Hong Kong schemes have been removed from the list,” White said.
Simon Harrall says:
David, the age test has been met for Hong Kong.
As the person who put the majority of the HK ORSO pensions on the list, in fact all bar 4, I am aware of the main reason, which has nothing to do with the pension age test.
I only drafted and issued the regulatory forms for subsequent approval at HK level and HMRC notification, ( “the car manufacturer not the driver”, if you like), however I feel sorry for the vast majority of the HK ORSO/QROPS which I established where they are bona fide workplace pensions. Those cases deserve to be re-instated and I believe they will be, as for example GBST and others which are proper company pensions where people work for the companies that sponsor the schemes and therefore are members of the legitimate pension schemes. The rest I have no idea about…………….!
Bethell Codrington says:
Perhaps if anyone read the Mandatory Provident Fund Schemes Authority (HK) press release in August 2017, the removal of HK QROPS will not be a surprise.
It’s final paragraph states:
“If you are invited to invest or enrol in an ORSO Scheme the relevant employer of which is not your actual employer, you should refuse the invitation and where appropriate report the incident to MPFA via our hotline”.
This dispels some of the myths peddled by some providers and was the reason why the original Beasley QROPS was withdrawn in 2008. That update regulations and the OTC charge make HK pretty unsuitable this type of activity.
Simon Harrall says:
Bethel good comments and I agree about the non real employment comment but all the legitimate firms that have them are fine. Real work place pensions of which 90% of the HMRC list was made up of should remain recognized, as indeed the MPFA have been fully appraised thereof.