by Tom Zachystal
This is the second installment of a two-part column on the process involved in transferring UK pensions to Qualifying Recognised Overseas Pension Schemes (QROPS). In part one we looked at the people, agencies, and costs involved in the transfer process and here we will summarize the paperwork that typically needs to be completed.
Whether you are dealing directly with a QROPS administrator or with an intermediary, you will be asked to complete a letter of authority that allows the agent to contact your UK pension administrator on your behalf to obtain information regarding your benefits. The agent will inquire regarding the transfer value of your benefits, whether you have any protected rights to transfer, and as to the paperwork the scheme requires to be completed in order to facilitate a QROPS transfer.If an LOA is requested in advance of transfer then, once the QROPS agent obtains information regarding your pension scheme, he will contact you again to discuss whether to proceed with the transfer. You may need to provide the following information for the LOA:
– Full name as it is on the pension documents
– Date of birth
– National Insurance number
– Type of pension scheme
– Name of UK pension scheme and policy number
Alternatively, if you already have much of the information regarding your UK benefits on hand, perhaps because you receive regular pension statements or perhaps because your UK pension administrator has contacted you regarding your options with respect to the pension, then you may have already decided that a transfer to a QROPS is the way to go. In this case the QROPS agent may ask you to complete a generic set of transfer forms that request your UK pension scheme to transfer your benefits to the QROPS and that include the LOA. Some pension schemes will act on the QROPS generic forms, in which case your transfer should then proceed, but some will insist that their own transfer forms be used, in which case these will be sent to your QROPS administrator for you to complete.
In addition to the above-mentioned information, the following forms/information generally is required for the transfer to proceed:
– Proof of residency and proof of identity: These may need to be certified or notarized and could be copies of documents such as your passport and a utility bill showing name and address.
– A statement regarding when you gave up UK residency.
– A statement regarding your expected or actual retirement age.
– A “Lifetime Allowance Declaration”: A QROPS transfer is what is known as a “benefit crystallization event”; as such, the transferred amount must be tested against the HMRC lifetime pension withdrawal allowance limits. If these limits are exceeded then HMRC assesses a special tax.
– Forms required to establish a QROPS pension account or an account within the QROPS. Some QROPS providers will establish a separate trust account for each client and obtain QROPS approval for each client separately, whereas in other cases there is a master trust structure that has been approved for QROPS status and clients have sub-accounts within the master trust. The former arrangement is generally more expensive but also more flexible in terms of what investments can be held and administrative issues.
– You will also likely be asked to acknowledge your understanding of certain HMRC regulations concerning QROPS issues, pension-sharing agreements, and pension options.
– If you are transferring protected rights then you will also have to complete HMRC form CA1881 or CA1890 depending upon the type of pension you have.
Finally, if your transferred money is to be invested within the QROPS, then you will need to complete forms to select your investments.
Clearly considerable paperwork is necessary in order to complete a pension transfer to a QROPS – but there is also plenty of help available from the agents and intermediaries who facilitate such transfers.