QROPS and TTFAC

TomLloyd_Read

Hello all

I'd be interested if anyone has any thoughts on this.

A client received an email from their QROPS provider yesterday regarding the LSA and LSDBA and having read it, we just wondered if we'd missed anything in all the webinars and things we'd read. The client transferred most of his UK pensions to the QROPS in 2018 and the one remaining pension in 2020. He hasn't lived in the UK for a number of year and has no plans to return.

It says: "The application of these new rules and the allowances to QROPS members is complicated... the basic position is that these new rules will apply to members of QROPS who are still within the UK’s member payment charges, to whom UK pension rules still apply."

"The main issue for QROPS members is that their allowances are likely to be reduced by an amount calculated by reference to the original fund transfer to the QROPS. Transitional rules have been introduced to ensure that members are not unfairly affected and HMRC have confirmed that these rules apply to QROPS members."

"To ensure that members are not adversely affected by the reduction in their allowances, they need to obtain a transitional tax-free amount certificate before they receive their lump sum from their QROPS. This certificate should ensure that there is no reduction in the allowances from the original transfer to the QROPS, which essentially means the member’s pre-6 April 2024 position is protected. HMRC have informed us that members need to apply to the UK ceding scheme, from which the QROPS transfer was made, for a certificate. "

Does all of this sound right? I thought they had to apply to a scheme they are a member of but they aren't a member of a scheme anymore?! I didn't think a payment from a QROPS used an LSA? Clearly if he still had UK benefits that would be different and a TTFAC may help.

Thanks!

Tom

les_cameron

I don't believe any of that is right. Yu are right they cannot apply for a TTFAC from the ceding scheme as they are not a member. Unless I've missed something there is no interaction between the QROPS benefits and UK benefits (other than in establishing the initial LSA/LSDBA).

TomLloyd_Read

Thanks Les, as I thought. They said they have correspondence from HMRC on the matter which clients could request. I have asked if they could send this to me.

les_cameron

@TomLloyd_Read said:
Thanks Les, as I thought. They said they have correspondence from HMRC on the matter which clients could request. I have asked if they could send this to me.

I'd like to see that too. Suitably redacted of course!

TomLloyd_Read

Already planned to send it over when I get it!