Can I transfer my (mis-sold) QROPS pension to a SIPP in the UK?

Many people when they leave the UK will consider transferring their pension from the UK to a pension scheme in their new country of residence which has QROPS status.

If you have previously transferred your UK pension to a QROPS, you can usually transfer this back to a pension scheme in the UK, such as a SIPP.

Mis-sold QROPS

Many expats were mis-sold a QROPS by an offshore financial adviser who pocketed a large commission when the pensions were transferred. The trustee and management charges for QROPS pensions are much higher than a typical pension and there tends to be multiple layers of product charges which can be confusing and very expensive. We’ve seen some ongoing charges of over 6% a year!

The most common mis-sold QROPS were in Malta, Guernsey, Gibraltar and the Isle of Man. QROPS in these location will usually allow transfers to a pension scheme in the UK, especially if the original funds came from a UK pension scheme.

Technically, a UK registered pension scheme can receive a transfer from an overseas pension scheme, even some that aren’t QROPS. However, whether you can transfer will depend on a couple of factors;

  • Will the overseas pension scheme allow a transfer to a UK registered pension scheme?
  • Will the receiving SIPP or other UK pension scheme accept a transfer from a non-UK registered pension scheme?

Not all QROPS will allow a transfer to a UK registered pension scheme. For example, Australian Superannuation funds do not allow transfers to overseas pension schemes, apart from Kiwi Saver schemes in New Zealand. Therefore, Superannuation funds in Australia, even those that have QROPS status, will not be able to transfer benefits to a UK pension scheme.

The final decision however will be up to the pension scheme trustees. Generally a transfer from an overseas pension scheme that is already in payment will not be accepted by a UK pension scheme.

Enhanced lifetime allowance

If you do transfer your QROPS to a UK registered pension scheme, you may receive an increase in your lifetime allowance.

A transfer from a ROPS that has not benefited from UK tax relief will result in an individual’s lifetime allowance being enhanced by a ‘recognised overseas scheme transfer factor’. In simple terms, this is calculated as the amount of the transfer divided by the standard lifetime allowance applying at the date of transfer.

For example, Peter transferred £200,000 from a recognised overseas pension scheme into his SIPP in June 2016. The standard lifetime allowance for the 2016/17 tax year was £1 million, meaning his enhancement factor would be 0.2.

Peter decided to take pension benefits in 2018/19 and these would be tested against a lifetime allowance of £1,236,000, ie £1,030,000 plus £206,000 (£1,030,000 x 0.2) rather than the standard lifetime allowance of £1,030,000.

MyExpatSIPP will usually accept transfers from QROPS and other overseas pension schemes. Contact us about transferring your QROPS pension to our low-cost SIPP.

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