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UK government confirms QROPS ban on public sector and civil service pensions
| Published: | 11 Sep at 6 PM |
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Workers in the UK’s civil service and public services hoping to retire overseas via a QROPS have had their hopes dashed by a government ban on unfunded defined pension transfers.
UK Chancellor George Osborne has announced that, from April 2015, some transfers from civil service and public pensions will be banned. Although the news wasn’t exactly unexpected, it’s yet another blow for retirees hoping to emigrate.
The announcement is part of a raft of pension rule changes presented for parliamentary discussion and is expected to be the most controversial. The rules are complicated, and split pension transfers into two defined sectors.
Civil service and public pensions backed by an investment fund will still be able to be transferred to a defined contribution scheme, with their holders able to take advantage of early access to their cash. Transfers from unfunded pensions, in which contributions are used to pay retirees directly, will be banned.
According to the government, the reason behind the differential is the need to protect the Treasury from financial and currency risks. The excuse is not likely to impress those who’ve spent their working lives serving the country, even when it’s explained that unfunded transfers are paid for by the public purse and may damage the government’s chances of decreasing the deficit.
Put simply, local government employees are likely to be permitted to switch, whilst crucial public servants in the forces, police, fire services, schools and the health services will be forced to stay in a UK pension scheme. Plus points for the second category do exist, and include [protection from currency exchange fluctuations and possibly a larger initial drawdown.
According to the Chancellor, funded transfers will only be allowed after a pension review is undertaken by a professional, FCA-registered independent FA. Whilst the reasons given concern extra benefits unavailable with most QROPS, the rule may also protect retirees from being scammed by rogue FAs
UK Chancellor George Osborne has announced that, from April 2015, some transfers from civil service and public pensions will be banned. Although the news wasn’t exactly unexpected, it’s yet another blow for retirees hoping to emigrate.
The announcement is part of a raft of pension rule changes presented for parliamentary discussion and is expected to be the most controversial. The rules are complicated, and split pension transfers into two defined sectors.
Civil service and public pensions backed by an investment fund will still be able to be transferred to a defined contribution scheme, with their holders able to take advantage of early access to their cash. Transfers from unfunded pensions, in which contributions are used to pay retirees directly, will be banned.
According to the government, the reason behind the differential is the need to protect the Treasury from financial and currency risks. The excuse is not likely to impress those who’ve spent their working lives serving the country, even when it’s explained that unfunded transfers are paid for by the public purse and may damage the government’s chances of decreasing the deficit.
Put simply, local government employees are likely to be permitted to switch, whilst crucial public servants in the forces, police, fire services, schools and the health services will be forced to stay in a UK pension scheme. Plus points for the second category do exist, and include [protection from currency exchange fluctuations and possibly a larger initial drawdown.
According to the Chancellor, funded transfers will only be allowed after a pension review is undertaken by a professional, FCA-registered independent FA. Whilst the reasons given concern extra benefits unavailable with most QROPS, the rule may also protect retirees from being scammed by rogue FAs
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