The Qrops market has been in steady decline since its peak in 2014/15 when 20,100 accounts worth £1,760m switched into a qualifying overseas scheme.
David Denton, head of international technical sales at Old Mutual Wealth, comments: “Following the introduction of pension freedoms in 2015, the number of transfers out of defined benefit schemes surged.
“The latest figures on transfers to Qrops are confirmation that the UK government’s efforts to stem the flow of retirement savings to overseas schemes has had its desired effect.”
The government introduced a 25% overseas transfer charge in the 2017 Spring Budget – a move that many people predicted would all but shut down the Qrops market.
With the number of transfers in the 2017/18 tax year dropping from 9,700 in 2016/17, it appears many have been put off from moving their pensions offshore because of the financial consequences.
The remaining market largely is limited to the European Economic Area, which does not attract the overseas transfer charge.
David White, managing director of the QB Partner, told International Adviser: “Qrops do still have advantages for clients in the correct situations but advisers, now more than ever, have to fully understand the clients circumstances and objectives (including their longer term plans) and so hopefully these changes have improved the quality of advice being given.
“The fall in Qrops will have been accompanied by a corresponding rise in ‘international’ Sipps which are now being used as a transfer option for many non-EEA residents.
“Sipps are UK regulated and it is hoped that this change will also lead to an improvement of the appropriateness of advice, in particular in respect of underlying investments.”