Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether her Department has plans to review the regulatory framework for the qualifying recognised overseas pension scheme including the role of the Financial Conduct Authority.

A qualifying recognised overseas pension scheme (QROPS) is the name for any pension scheme located outside the UK which meets the criteria to receive transfers of UK tax relieved pension savings. Where the overseas pension scheme has broadly similar tax characteristics to a UK registered pension scheme. QROPS are pension schemes, not products.

Although QROPS can receive UK tax relieved pension savings, this does not mean that the UK has a right to regulate pension schemes in other countries. However, those overseas schemes are required to be regulated by a pensions regulator in the overseas country where they are established in order for them to receive UK tax relieved pensions. HMRC does not impose restrictions on assets a QROPS can invest in that is for the overseas regulator.

There are no plans to make HMRC, or the Pensions Regulator (TPR), or the Financial Conduct Authority (FCA), regulate QROPS. That would not be appropriate because the UK does not have jurisdiction over overseas pension schemes. HMRC’s primary role is to protect UK tax relief that have been given. HMRC can remove the QROPS status from pension schemes when it is not appropriate for the scheme to continue to be able to receive UK tax relieved pension savings. There are also no plans to introduce an investigation unit into QROPS or review the regulatory framework.

In the UK individuals are free to transfer their pension savings but must get financial advice for larger amounts. The QROPS rules allow individuals to move abroad to live or work to take their pension savings with them. HMRC makes clear that individuals should seek suitable professional advice, including from a regulated financial adviser, when transferring pension savings to a QROPS. A transfer to a QROPS is covered by the requirement to take regulated financial advice if transferring more than £30,000 from a Defined Benefit scheme.

Additionally, pension scheme administrators are responsible for carrying out due diligence on transfers to other pension schemes. They are also responsible for complying with the requirements of TPR and the FCA.

HMRC, TPR and the FCA are part of the Pension Scams Action Group (PSAG) - a multi-agency taskforce of law enforcement, Government and industry working together to tackle pension fraud.