No charges for ineligible pension schemes post Q-Day

QROPS that fail to take up proposed rule changes will not be hit by hefty member charges, according to David Higgins, technical expert director for Fairbairn’s at Overseas Pensions.

Legislation due on 6 April 2012, dubbed Q-Day, is expected to implement tougher reporting requirements to combat offshore tax abuse. Currently QROPS providers have to report events to HMRC for five years from the member's initial transfer date. This is likely to increase to ten years.

There has been industry concern that investors would be exposed to unexpected levies, as their pension schemes were no longer eligible due to jurisdiction or voluntary disqualification.

To provide clarity, Higgins said: "if you've transferred your client's UK pension to a QROPS and it ceases to be a QROPS from April, there are no implications for member payment charges or any scheme charges, provided that the scheme continues to fulfil its obligation to HMRC."

Former schemes would not be left in limbo. "Just because it stopped being a QROP doesn't mean these get off the hook. And I imagine most responsible providers wouldn't want to push the boundaries on that" Higgins explained.

However, stronger reporting responsibilities could pave the way for further regulatory intervention.

"The revenue is going to be getting a whole load more information on QROPS than they've ever had before in terms of payment, who is doing what and where. It will be interesting to see what they make of that information."

HMRC's consultation period on QROPS will end on January 31st.