If you did not transfer your teacher’s, NHS or any other unfunded public sector pension away from the UK prior to April 5, 2015, you will undoubtedly have been informed that all transfers away from these types of pensions have now ceased.
Let’s be very clear about the government’s reasons for closing this loophole… Consider the possibility that all members who have provision in these types of pension pots wish to transfer out, and there are several reasons why somebody would see the benefit in this, including flexibility in accessing your fund, passing on your pot to your beneficiaries etc. If we bear in mind that, for example, a 10-year pot will amount to in the region of £80,000, you can imagine the scale of monies HMRC envisage leaving the confines of the UK – a scary thought?
Now we begin to understand the reason for removing the ability to choose what you want to do with your pension if you are no longer bound by the rules of the UK!
Interestingly, however, the transfer ban does not apply if a transfer is made to a non-occupational scheme, which is in the European Economic Area. Therefore, it may be possible still to put your pension where it will be most effective for you.
A note on the teachers’ scheme website says: “Teachers’ Pensions are writing out to members whose application to discharge their benefits to such a scheme was received by Teachers’ Pensions on or after April 6 2015.
“The letter will include new discharge forms and will ask members to complete and return the discharge paperwork if they still wish to proceed with the transfer.”
The note adds that if members still want to proceed with a transfer, they must do so before the Treasury takes action to close the loophole.
A Treasury spokeswoman confirms it is working on rule changes to extend the transfer ban, but, as yet, we do not know when these changes will take place. It says: “We are clear that the transfer restrictions from unfunded public service pension schemes should apply to transfers to Qualifying Recognised Overseas Pension Schemes, including those based in the European Economic Area.”
In July, HMRC cut thousands of schemes from its ROPS (Recognised Overseas Pension Scheme) list of overseas plans, following rule changes that disqualify schemes with early access mechanisms. There are, however, still many ROPS plans which are available.
Alternatively, if you’re unsure about transferring your plan out of the UK, and this is perfectly understandable, there are other alternative UK-based SIPP schemes which, in many cases, can prove beneficial.
If you are an expat, and have a non-funded public sector pension in the UK and are not sure what’s the best route for you, ask an expert free, no obligation, no consultation fee, and if your pension would be better left where it is, you’ll be the first to know about it.
Please note: HMRC are attempting to close this loophole so the above information may not be applicable to all transfers.
By Blacktower Financial Management (International) Limited
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