“The decline of the QROPS market continues and despite a small increase in the volume of transfers, the total value was down another 14% in 2018-19, with the average transfer value falling to just under £130,000.
“The market peaked in 2014-15 with more than 20,000 transfers to overseas schemes. The rapid decline in the scale of foreign transfers since then is down to a combination of factors, in particular the drop in defined benefit transfers. Following the introduction of pension freedoms, thousands opted for the flexibility of a personal pension and sought to transfer out, with the overseas market experiencing a ripple effect as a result. DB transfers have since begun to decline in popularity and advice in that area has come under increased scrutiny, with advisers facing increased costs to participate in the DB transfer market.
“In addition, a new 25% tax charge applicable from March 2017 has further discouraged overseas transfers. This was designed to deter transfers to overseas schemes purely for a tax gain. It is also now a requirement for a UK regulated pension adviser to approve the transfer.
“Moving assets into a QROPS can still offer useful flexibility, especially for those people planning to leave the UK permanently that want to simplify their finances by taking their pension with them. At the moment the rules refer to the EEA regarding exemptions from the 25% tax charge, meaning no tax applies on a transfer to another scheme within the EEA. This situation will need to be clarified once the terms of the UK’s departure from Europe are resolved.”