These schemes were created by pension simplification legislation brought in on what was known as A-Day in 2006.
In essence Qrops were designed to make it easier for people with UK pension schemes to transfer them abroad if they are leaving the UK.
Prior to their creation, there was a system for making transfers but these were on a case-by-case basis and each transfer had to be submitted to HM Revenue & Customs for approval.
Qrops legislation removed the requirement for approval on a per transfer basis and reduced the work for HMRC by moving the process to a registration at a scheme level.
The legislation requires that a UK scheme must only transfer into what HMRC recognises as a bone fide international pension scheme and for this they used the definition of a Recognised Overseas Pension Scheme (Rops).
A form of self-certification operates, and Rops that register with HMRC (becoming a Qrops) do so on the basis they meet HMRC stipulations over how a pension scheme should operate.
HMRC do not check a scheme’s credentials.
However, should it subsequently be discovered that a scheme is not compliant with the requirements then the consequences for people who have made transfers may be severe.
Qnups came about in February 2010 by way of a fix to the original legislation confirming the inheritance tax exemption for certain international pension schemes (including Qrops).
The Rops definition was used again in HMRC’s definition for being a Qnups (Qualifying Non-UK Pension Scheme).
It differs from a Qrops largely by virtue of the fact it is not registered with HMRC and therefore does not carry any HMRC reporting requirements.
Keith Boniface, marketing director of Brooklands Pensions, said by using the Rops definition for a Qrops in 2006 and then again in 2010 for a Qnups, HMRC was clearly telling the industry what they see as an acceptable international pension scheme.
