Hawkish Qualifying Recognised Overseas Pension Scheme (QROPS) providers are ready to swoop on the decimated Australia pensions market for expats.
1,650 Australia QROPS were delisted by HM Revenue & Customs (HMRC) in June in an ongoing row about providing benefits to retirement savers aged under 55 years old.
HMRC says only over 55s can access their pensions under new rules introduced in the UK in April – and Australia QROPS were among more than 3,000.
Traditionally, QROPS providers in Australia are internal superannuation companies who cannot change their consumer contracts to meet HMRC requirements, effectively shutting the door on offering pensions to UK expats and international workers with UK pension rights living in the country.
This has left a huge void in what was the world’s leading QROPS market by number of schemes.
Until the mass delisting in June 2015, Australia had a 44% share of the global QROPS market by number of schemes.
Now, just two are available.
QROPS providers in other financial centres are now looking at filling that void by tailoring offshore pensions that match HMRC rules that are available on the Australian market.
A further complication is under Australian financial rules, only IFAs regulated in the country can give pension advice.
One, STM, provides pensions for retirement savers in more than 100 countries, including QROPS in Gibraltar and Malta.
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The company reports these are ‘strategic’ financial centres as they both have tax treaties with different countries and their QROPS can meet the regulatory demands of HMRC and clients in Australia.
CEO Colin Porter has told the media that STM has confirmed the company is adding an Australian compliant QROPS to its portfolio.
Other companies on the Isle of Man, now the leading global provider of QROPS by number of schemes available, are also looking at the market.
One of the advantages of QROPS based in Malta, Gibraltar or the Isle of Man is that they meet the HMRC over 55 pension age test and allow customers to live offshore.
That gives expats and the thousands of foreign workers in Australia who have built up pension rights in the UK an opportunity to still transfer their funds to one of the hundreds of offshore schemes they offer without breaking tax rules in Britain or Australia.