Pensions in 30: 11. Mobile workers

The Month in Pensions - Gowling WLG

Key Points

• There are no statutory restrictions on membership of a UK pension scheme by persons who do not live or work in the United Kingdom.
• Restrictions on benefits accrued or provided under a registered pension scheme may be relaxed where a member does not benefit from UK tax relief because he or she is a "relevant overseas individual" or a transfer has been made into the scheme from a "recognised overseas pension scheme".
• A registered pension scheme may only make a transfer into an overseas pension scheme that is approved for the purpose by HMRC (a "qualifying recognised overseas pension scheme" - QROPS).
• Transfers to a QROPS (and onwards from a QROPS to another QROPS) are subject to the Overseas Transfer Charge (OTC) of 25% of the transferred value from 9 March 2017, unless certain exemptions apply.
• A member who comes to the UK as an existing member of a qualifying overseas pension scheme may benefit from migrant member relief on UK income tax.
• A scheme may only accept contributions from a "European Employer" if it is authorised to act as a cross-border pension scheme. Onerous funding requirements apply to cross-border defined benefit schemes.
• Despite the first bullet point above, it is worth noting that having a scheme member who is subject to the labour and social security laws of another EEA state (i.e. who works elsewhere in the EU in a scheme) makes that a cross-border scheme with onerous funding consequences.
• The European parliament and Council has agreed a revised IORP Directive (IORP II) which will make changes to cross-border pension arrangements (subject to how the Directive is applied in the UK as a result of the UK leaving the EU).
• Changes to the taxation of "Foreign Pensions" from 6 April 2017 are substantial.

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