What’s The Point Of The ROPS List?

HM Revenue & Customs (HMRC) has published 123 lists of overseas pensions that meet the standards as Qualifying Recognised Overseas Pension Scheme (QROPS) since April 2006 – but the list seems pointless as no one checks if the pensions meet QROPS rules.

The idea is that managers of qualifying pensions self-certify their schemes meet QROPS rules.

UK pension fund managers are then clear to switch funds to a listed offshore pension without fear of tax penalties because the scheme is deemed a QROPS.

Unfortunately, the grand design is flawed.

After April 2015, HMRC changed the list title from the QROPS List to the Registered Overseas Pensions List (ROPS).

What is a ROPS?

Along with the name change came a flurry of letters to overseas pension administrators pointing out that to go on the list, their schemes needed to:

  • Be a pension scheme
  • Have an administrative base outside the UK
  • Qualify as a ROPS that meets standards laid down by HMRC about reporting payments to retirement savers
  • Agree to report make regular reports to confirm the pension remains a ROPS

The problem with the list is pension administrators are supposed to self-police their compliance with HMRC’s ROPS rules, but many fail to apply the rules correctly, which means their schemes have never met the qualifying standards or at some point changed their status so they lost qualification.

HMRC has made clear that inclusion on the list does not mean the pension is a QROPS and UK fund managers transferring money to a QROPS or the retirement saver setting up the scheme have an obligation for due diligence to prove the scheme qualifies before switching any money overseas.

Free advertising

This obligation seems to make the list nothing other than free advertising for offshore pensions.

The fact a pension is listed means nothing. HMRC do not check the schemes to confirm they qualify as ROPS and UK fund managers and expats switching pension funds cannot rely on inclusion on the list as confirmation that will not face tax penalties if a pension is deemed not to be a QROPS sometime in the future.

The message from HMRC is quite clear – the list states the tax man cannot guarantee any listed scheme is a ROPS.

The best solution for a retirement saver would seem to be only making a QROPS transfer via a regulated IFA with expertise in the market.