WHAT IS A ROPS?
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Registered overseas pension scheme (ROPS) were established in April 2015 replacing Qualifying Overseas Pension Schemes (QROPS) when HMRC introduced new tests for pension schemes. The test bars any pension from paying out benefits to any retirement saver aged under 55 years old except in exceptional circumstances, such as terminal illness. This test was introduced as part of the government’s flexible access pension rules that lets anyone aged 55 years old or over draw down their pension to spend as they wish. This option is not only available in the UK, but to pension providers in the European Economic Area (EEA). Outside of the EEA, ROPS providers have to ring fence 70% of any cash transfer in from a UK fund to pay a pension in retirement.
WHEN IS A ROPS SUITABLE?
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When a member of a UK pension scheme is planning to leave the UK and become non-UK tax resident then ROPS should be highlighted as a potential option. The individual circumstances will need to be reviewed and the benefits of transfer examined. It may also be applicable to UK residents in certain circumstances.
WHAT IS MY RESPONSIBILITY TO ADVISE?
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Where a client may be suitable for a ROPS an adviser will have the responsibility to be able to identify a potential need for ROPS and to discuss the available options with the client.
CAN I GET HELP WITH ADVICE?
Not all financial advisers will have the ability to advise on ROPS as it is a specialist area which requires technical knowledge and the resources to investigate the options.
Therefore, it is important that financial advisers are aware of suitably qualified ROPS advisors who they can introduce the client to in order for them to receive the advice they need.
