PTM103500 - Transfers: transfers to a registered pension scheme from a QROPS or former QROPS

Pension funds held under a qualifying recognised overseas pension scheme (QROPS) or former QROPS may be transferred to another pension scheme, including back to a registered pension scheme.

A transfer from a QROPS or former QROPS is not a contribution to the registered pension scheme; it is merely the relocating of pension rights from one scheme to another.

Transfers of benefits in payment

Paragraphs 1 to 7 Schedule 34 Finance Act 2004

Regulations 3 and 12 the Registered Pension Schemes (Transfer of Sums and Assets) Regulations 2006 – SI 2006/499

The Relevant Overseas Schemes (Transfer of Sums and Assets) Regulations 2018 – SI 2018/372

Under the Schedule 34 Finance Act 2004 provisions for the member payment charges a payment from a QROPS (or former QROPS) that if made from a registered pension scheme would be an unauthorised payment may be taxed as an unauthorised payment. 

What this means for a transfer is, to avoid being treated as an unauthorised payment, extra conditions apply to the transfer if part or all of the transfer represents a pension in payment.  The relevant guidance is at:

After the transfer of sums and asset representing a scheme pension or drawdown pension under a QROPS (or former QROPS) to a registered pension scheme, the new pension under the registered pension scheme is treated as if it were the original pension under the (former) QROPS for the purposes shown below. 

This means:

  • A pension commencement lump sum cannot be paid in connection with the provision of the replacement scheme pension or designation to create the replacement drawdown pension.
  • Where the form of drawdown under the (former) QROPS is the equivalent of capped drawdown (see PTM062520) the new pension under the registered pension scheme will also be capped drawdown.  If a member wants to take advantage of flexible pensions they will need to convert the capped drawdown pension fund into flexi-access drawdown – see PTM062750.
  • In deciding whether or not a reduction in scheme pension creates an unauthorised payment the rate of original scheme pension under the (former) QROPS is used.  The rate of scheme pension under the registered pension scheme should be the same as that under the (former) QROPS.  In making this, test reasonable administrative costs for making the transfer may be deducted.
  • If the scheme pension under the (former) QROPS has a guarantee period, this period cannot be extended.  Any period of guaranteed pension payment must end on or before the expiry date of the guarantee period (if any) under the original scheme pension.
  • The maximum pension protection lump sum death benefit (see PTM073300) or annuity protection lump sum death benefit (see PTM073400) will be calculated by reference to the amount crystallised by the original scheme pension and the amount of scheme pension payments made under both the original and new scheme pensions.

Note that this ‘new for old’ treatment does not extend to relevant benefit crystallisation events.  

Overseas transfer factor

If after 5 April 2006 and before 6 April 2024 there is a transfer of an individual’s rights from an arrangement under a recognised overseas pension scheme to an arrangement under a registered pension scheme the individual’s allowances may be enhanced by a factor which is called a recognised overseas scheme transfer factor, for more about recognised overseas scheme transfer factor please see PTM172100.