Promising news for SMSFs after UK pension scheme saga
The addition of an SMSF to the HM Revenue & Customs’ register of recognised overseas pension schemes (ROPS) is a promising sign for UK expats looking to transfer their pension funds to Australia, says the SMSF Association.
Earlier this year, the UK’s HM Revenue & Customs (HMRC) made several changes to conditions that must be satisfied in order for a scheme to remain a qualifying recognised overseas pension scheme, which saw all but one Australian superannuation fund no longer satisfying this definition.
SMSF Adviser reported in June that under UK legislation, transfers from a UK pension fund are only permitted if it is a qualifying recognised overseas pension scheme.
Following an update of the list on Tuesday, a second Australian superannuation fund, in addition to the Local Government Superannuation Scheme, titled P Wyns Age 55 Super Fund (SMSF), has been added to the list of ROPS.
SMSF Association senior manager of technical and policy, Jordan George, said that judging by the name of the fund, it is likely the SMSF has been approved as a recognised overseas pension scheme since the trustees or members of the fund are aged 55 or older, which removes any concerns HMRC might have about the fund paying benefits to members under 55.
“It seems that this may be a way for SMSFs to still be registered as a qualified recognised overseas pension scheme (QROP). We don’t have any confirmation by HMRC on this yet but having seen what’s on the register, I think that’s something we can assume going forward,” said Mr George.
“I would guess that super fund has also had its trust deed amended to limit the ages of members to 55 and over.”
If this is the case, Mr George said, individuals with a UK pension will probably find it easier to have an SMSF with a trust deed that is restricted to members aged 55 and over.
“They’ll find it easier to access their UK pension and transfer it to Australia so I do think there is an opportunity for SMSFs in that it will be easier for people to access QROP arrangements through an SMSF,” he said.
Mr George added that it is important to remember that even once a super fund is listed on the register of ROPS, the trustee must ensure the fund meets the ongoing requirements of a QROP and that HMRC will not be able to continually monitor this for them.
“The trustee will need to assess on an ongoing basis whether they meet the ongoing requirements to be a QROP,” he said.
If they breach these requirements, Mr George said, the super fund could face a 55 per cent tax penalty.