The number of people transferring their pension overseas through a Qualifying Recognised Overseas Pension Scheme (QROPS) fell by 52 per since the introduction of a transfer charge, it has been revealed.
The number of transfers over 2016/17 fell from 9,700, worth a total of £1.22bn, to 4,700 over 2017/18, totalling £740m.
In the March 2017 Budget, Chancellor Philip Hammond introduced a 25 per transfer charge on members transferring into a QROPS outside of the members’ resident country, or to a country outside of the European Economic Area (EEA).
Despite this, transfers were already on the decline since their 2014/15 peak, where 20,100 transfers valued at £1.76bn were made.
A Freedom of Information request made by Canada Life found that 30 overseas transfers were paid to HMRC over 2017/18, totalling £1.4m.
Canada Life pensions technical director, Andrew Tully, said: “Going by the low number of transfers where a charge has been applied, it would appear many people have had second thoughts about moving their pension overseas.
“The pension freedoms may also have had an impact on the general decline in the number of transfers to QROPS as there is much greater flexibility in how people can access their benefits in the UK.”
According to the government, it is expected to raise £65m in 2017/18 through the charge, however, Tully believes it will still be content that a tax loophole has been closed.
“Although the number of transfers attracting a charge is very small, and the resulting tax raised very low compared to the government’s own assumptions, HM Treasury will be pleased another tax loophole has effectively been closed and further tax leakage prevented,” he added.