A number of Irish pension schemes which market themselves to UK savers seeking to transfer tax-relieved savings have pulled out of the market in the wake of a HMRC clampdown on age-related access concessions, FTAdviser understands.
This follows fresh fears the changes to rules following new retirement freedoms coming into force, first revealed by FTAdviser, could impact Irish schemes, which under national laws allow savers in some circumstances to take early retirement and access funds at age 50.
As such the majority of schemes are not able to assert compliance with the pension age test as demanded by the UK tax regulator in a recent blanket communication, which requires schemes to confirm savers are not able to access funds before the age of 55 in line with new UK rules.
Jim Connolly, head of pensions at Standard Life Ireland, said that the firm would be staying in the Qrops market because it operates a ‘single premium’ structure that means overseas business is kept administratively separate from local Irish business.
He said this had allowed it to update the rules for its UK ex-pat savers with tax-relieved contributions without affecting its wider membership.
Mr Connolly added that this would be far more difficult for other schemes which simply run a single fund in which local and ex-pat members’ savings are held, adding that a number of peers have already formally stepped back from the market.
He said:“When we originally entered the market we strategically opted to use a single premium structure as our Qrops solution. We felt that this was the most efficient way to comply with the reporting requirements whilst avoiding the administrative complexity of contaminating the fund with Irish contributions.
“This approach has now paid dividends as it is a relatively straightforward exercise to amend the rules to satisfy the new age restrictions. Many of our peers have opted out of the market.”
Irish Life confirmed to FTAdviser it is “no longer open for Qrops pension transfers from the UK”.
A spokesman for Zurich Ireland said it was keeping the matter “under review” in line with comments made to FTAdviser previously by the Irish Association of Pension Funds.
The spokesman said: “I have made enquiries and as this is an industry-wide issue and all companies in Ireland are affected. We have nothing to add to the IAPF comments in the FTAdviser article and we are keeping the matter under review.”
Jerry Moriarty, head of the IAPF, said last month the situation for Irish funds was the same as in Australia and New Zealand, in that providers would need to change rules for Irish savers and that this might lead to many losing their Qrops status.
Mr Moriarty explained it would be “unlikely” for schemes to change their rules because most of them are schemes which are designed for the general Irish public, not those transferring from the UK.
He said: “The situation is pretty much the same here because most schemes would allow early retirement from the age of 50. This would rule out pretty much all Irish schemes.
“It’s only come onto our radar on the last couple of days. We need to look at it and see what can be done on it and if anything can be done on it. Schemes have the options of changing their rules or they can no longer qualify as Qrops.”
FTAdviser also contacted Irish provider Davy, but the firm was unable to provide a comment at the time of writing.
ruth.gillbe@ft.com
