20th AUGUST 2015
As promised in the last Budget, new government regulations are set to come in on the 7th September this year which will allow expats with unfunded public sector pensions to transfer their pots abroad.
Since the pension freedoms came into force on 6 April, changes under the Pensions Schemes Act 2015 have stopped transfers from unfunded public service pension schemes to ones, whether in the UK or abroad, based on defined contributions or flexible access arrangements.
However, until the loophole officially closes, members of unfunded public sector pension schemes can transfer into overseas defined contribution pension schemes, such as recognised overseas pensions, although they are banned from transferring into UK DC schemes.
This followsÂ the Treasury earlier this month admitting it was looking to close this loophole for expats with public sector pensions.
At that time, a spokesperson for the Treasury said: “We are clear that the transfer restrictions from unfunded public service pension schemes should apply to transfers to qualifying recognised overseas pension schemes, including those based in the European Economic Area.”
Today (20 August) the spokesperson added: “This is why we have recently laid legislation to this effect.”
Earlier this month,Â Teachers Pensions announcedÂ it was taking action based on this new information and was now writing to members whose application to discharge their benefits to such an EEA Qrops was received on or after 6 April.
It said in a statement at that time: “We are aware that HM Treasury are planning further legislation to cover the schemes described above within the restrictions on transfers from unfunded public service pension schemes.
Consequently members need to be aware that in order for Teachers’ Pensions to make a transfer payment they must submit the completed discharge paperwork before any such legislation comes into effect.”