Paralysis is spreading across the overseas pension market as Scottish Widows has become the latest to temporarily halt transfers of tax-relieved savings, amid confusion on scheme status and a clampdown by the tax watchdog.
In an email to an adviser regarding a member seeking to move their fund, seen by FTAdviser, an employer with a final salary scheme stated they received a call from the scheme administrator, Scottish Widows, to notify they were freezing all overseas pension transfers.
The email continues that the firm will update later this week on the status of transfers.
A technical manager for Scottish Widows said: “I’m not prepared to comment on temporary restrictions.”
This follows a raft of recent activity in the Qrops space which started with a letter dated 17 April, which FTAdviser revealed had been sent to overseas schemes backdating regulations to 6 April.
Rules for qualifying recognised overseas schemes, or Qrops, were changed to ensure access rules were in line with those brought in under retirement freedoms in April, which allow open access but only after a member reaches age 55.
HMRC stated it was seeking confirmation from the schemes that they remain complaint with the rules. Failure to do so could mean transfers in are treated as unauthorised payments at hit with a retrospective 55 per cent tax charge.
This left schemes in countries such as Australia, New Zealand and Ireland facing difficulties as national law in these countries allows access under certain circumstances before age 55.
In these cases the scheme would need to re-writes its own rules, which many are unwilling to do as without adequate segregation arrangements this would also change the rules for those coming from within the country.
Earlier this month, FTAdviser revealed an Australian pension scheme had become the latest to tell advisers to halt transfers of UK tax-sheltered savings for individuals moving to the country, as a result of a recent crackdown in the wake of new retirement freedoms.
BT’s SuperWrap Superannuation Fund, now referred to on HMRC’s registered overseas pension list as Retirement Wrap Superannuation Fund following a recent update, recommended advisers withhold transfers from UK funds as a “precautionary measure” until it can confirm its status.
Later on FTAdviser also reported that a number of Irish pension schemes which market themselves to UK savers seeking to transfer tax-relieved savings appear to have pulled out of the market altogether in the wake of the crackdown on age-related access concessions.
A spokesperson for the Irish Association of Pension Funds confirmed the issues and said it was in contact with HMRC to “see if anything can be done”.
ruth.gillbe@ft.com