The latest draft statutory instrument, which is subject to a four week consultation, proposes the allowance of up to 100% lump sum withdrawals from qualifying recognised overseas pension schemes (QROPS).
Currently, a QROPS holder is required to use 70% of the funds in their scheme to provide an income for life.
Also included in HMRC’s proposed changes are conditions that require pension benefits payable under a QROPS scheme that relate to funds that have received UK tax relief to be payable no earlier than they would be under the rules that apply to a UK registered pension scheme.
This means that all schemes that wish to hold QROPS status must have a minimum retirement age of no earlier than 55, the minimum retirement age in the UK, except in cases of serious ill-health.
Under plans announced in March’s Budget by George Osborne, someone reaching the age of 55 will be able to take their entire pension pot at once, if they wish, with 25% tax free and the rest taxed at the retiree’s marginal rate (subject to the person’s lifetime allowance).
These plans will come into place on 6 April 2015.
