Canadian pension schemes and banks could no longer meet HM Revenue & Customs' requirements to qualify as registered overseas pension schemes, FTAdviser understands.
HMRC has written to them, backdating regulations brought in under the pension reforms, in a move understood to be similar to the action taken over Australian schemes in May 2015, when it said it was seeking confirmation from them they remained complaint with the UK rules.
In July 2015, concerns were raised that there is an anomaly in the Canadian overseas pension schemes system because under Canadian law savers are allowed to encash them at any age, irrespective of the UK’s pension age test.
Under the pension age test brought in by the pension freedoms, schemes are required to assert savers are not able to access funds before the age of 55, except in cases of extreme ill health in line with UK law.
There are currently 52 Canadian schemes listed on HM Revenue & Customs Rops list, published on Tuesday (2 November), with 9 schemes falling off it in the last two weeks.
At the beginning of July 2015 most of the Australian schemes came off the the list following a temporary suspension allowing it to be reformatted in light of recent rule changes.
Hugh Gittins, partner at international law firm Eversheds, said there have been reports that what happened to Australian schemes will happen to Canadian ones, because they do allow some people to cash in money before age 55.
"It is likely that many Canadian schemes will be knocked of HM Revenue & Customs Rops list," he explained. "Some schemes will not consider it worthwhile and other schemes that do will need to bring them into line. It is potentially bad news."
Statutory instrument 673 laid before the House of Commons in March 2015 revealed a stay of execution for the key requirement for a Rops to designate at least 70 per cent of an individual’s transferred pension to provide an income for life.
Jim Bell, director at Cheshire-based Serenus Consulting said so far the Canadian Imperial Bank of Commerce has lost Rops approval, but he was not sure why.
He said: "Other banks must have satisfied HM Revenue & Customs to this date. It is going to be more like Australia where they restrict transfers until age 55."
According to Mr Bell, this process has been kept "very secret" by HM Revenue & Customs.
He said: "They realise they should have done it a long time ago. We've been asking them over over a year to be certain of the advice we give and it looks like HM Revenue & Customs are taking action."
Bethell Codrington, global head for international pensions at TMF Group, said: "There is a wealth of evidence saying Canadian schemes do not meet the pension age test. HM Revenue and Customs have been told this over the last 18 months [by international pensions providers requesting clarification].
He added: "Why have they [HMRC] not asked the Canadian legal system to comment, which is what they did with Australia?"
