HM Revenue and Customs have confirmed to the Australian Treasury that Australian superannuation funds no longer comply with its rules under the new pension age test for them to remain recognised overseas pensions, FTAdviser understands.
These funds have the facility to allow recognised overseas pensions. HMRC’s pension age test requires schemes to assert savers are not able to access funds before the age of 55 in line with UK law.
The Australian Superannuation Funds Association sent round a note late last week to affected parties, outlining HMRC’s position on the case, as a result of what it understood to be a “high-level” discussion between the Australian Treasury and HMRC about Qrops on 24 June 2015.
The association said that HMRC advised the Australian Treasury that the Qrops changes affect all transfers completed after 6 April 2015. A spokesperson for HMRC told FTAdviser that it does not comment on identifiable cases.
The association’s update read: “Their [HMRC’s] view is that Australian funds (through no fault of their own) became non-compliant on 6 April, as they are unable to comply with the new UK Pension Age (due to our overarching legal framework as well as trust deeds).”
However, it added that HMRC advised the Australian Treasury that they may consider relief for transfers completed after 6 April. According to the note, HMRC advised the Australian Treasury that it does not have any compliance or integrity concerns with regard to Australian funds.
Asfa added that it understands the Australian Treasury will be looking to engage the relevant UK minister on this topic, but did not specify how.
This follows news in May this year that Australian pension schemes could no longer meet the compliance definition to qualify as registered overseas pension schemes, after a letter sent by HMRC backdating new regulations was brought in following the pension reforms.
At that time, HMRC stated it was seeking confirmation from the schemes that they remain complaint with the rules, and that failure to do so could mean transfers in are treated as unauthorised payments to be hit with a retrospective 55 per cent tax charge.
Asfa chief executive Ms Pauline Vamos told FTAdviser: “With labour markets becoming increasingly global, private pensions funds are also becoming global and it’s important for regulatory frameworks to recognise this.
“We are aware that there are negotiations taking place between HMRC and the Australian Treasury and it’s important that this issue is resolved as a matter of urgency.”
She added that Australian superannuation have high standards for accessing funds. “With few exceptions, individuals can only access funds in superannuation once they reach the preservation age (currently age 55, increasing to 60).”
Geraint Davies, managing director at Montfort International, said: “To ensure we appropriately manage clients whose funds we have accepted from 6 April, we will urgently commence work on the identifying impacted accounts and preparing our relief application. We will also look to make changes to our disclosure documents Asap.”