If you have UK pension benefits, or have transferred them in the past, proposed changes to UK law may make this harder to meet and impose greater reporting requirements on QROPS funds, particularly for self managed superannuation funds.

The UK’s HM Revenue and Customs (HMRC) sets the rules for QROPS status. Generally speaking, an Australian super fund (including an SMSF) will be granted QROPS status if it matches preservation and benefit payment rules in the UK pension scheme.

The UK government has expressed concerns that the preservation restrictions are not appropriately applied in many countries and on 6 December 2011 released a draft of proposed changes to QROPS status. If passed, the changes will apply to any transfers received by a QROPS fund on or after 6 April 2012.

The proposed changes include:

• The QROPS provider will need to report withdrawals made within the first 10 years from the date of transfer (currently only required if the pensioner had been a UK resident within the previous five years)
• More personal data will need to be provided by the client to the UK pension scheme before a transfer can be approved, with that data then reported to HMRC
• Payments by a QROPS fund will need to be reported to HRMC within 60 days of the transfer.

These changes will affect existing and new members in Australian super funds (including SMSFs) that already have QROPS status or apply for status on or after 6 April 2012.

If you have already transferred your benefit, no action is required and the additional requirements are the responsibility of the superannuation fund to meet. However, this is an additional deterrent for establishing a self managed superannuation fund to receive UK pension benefit transfers.

Tags: UK pension benefit