There is a new press release from Allan Gray about QROPS in South Africa.
Allan Gray is one of the most respected and well-known fund management groups in South Africa and their Practice Note 298 (released on 23rd May 2017) states-
The UK’s HM Revenue and Customs (HMRC) has set out new requirements for Qualified Recognised Overseas Pension Schemes (QROPS) to retain its status as a qualifying scheme, effective 9 March 2017. Upon review of the requirements, we are of the view that it has become exceptionally onerous to both clients and QROPS administrators and we have therefore not accepted the terms as set out by HMRC. As a result, the Allan Gray Retirement Annuity Fund and the Allan Gray Living Annuity are no longer on HMRC’s list of Recognised Overseas Pension Schemes (ROPS), published on 18 April 2017.
What does this mean for QROPS in South Africa?
It means that some companies have come to the same conclusion as us – it is not viable!
If you do not now move your QROPS based in South Africa, while resident there, you will be subject to an immediate 25% additional tax charge on transfer to other locations. In fact, most QROPS in South Africa were not actually in South Africa at all. Many being in Gibraltar or Malta- despite their being no reason to be with the UK /South Africa Double Tax Treaty .
Therefore, Allan Gray’s decision limits choice in what was probably not a large market anyway, and gives a clear indicator that UK pensions should remain in the UK.
QROPS in South Africa
If you were sold a QROPS while in South Africa, it really needs reviewing as many are in expensive insurance wrappers with large trustee fees and high fund charges. Over the past few years, the rising markets have hidden the devastating effects this fees can have on retirement funds. When there is a market correction the fees will become all too apparent.
Tailormade can offer a review review for those with QROPS in South Africa.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was published on 25th May 2017
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