SMSF legal firm DBA Lawyers is working on a solution to allow SMSF trustees to accept United Kingdom pension fund transfers under the Qualifying Recognised Overseas Pension Scheme (QROPS) rules.
Since the qualifying conditions changed on 6 April, SMSFs trying to prove their QROPS eligibility have experienced difficulties complying with the relevant sections of UK law.
Specifically, the SMSF trustees are being asked to complete a form issued by UK revenue authorities within 30 days, outlining the elements needing to be satisfied for participation in the scheme.
“Part of the questionnaire asks whether the SMSF trust deed can pay members under the age of 55 other than for retirement due to permanent capacity,” DBA Lawyers director Daniel Butler said.
“Most deeds have flexibility around payment of benefits for members under 55. There can be payments on compassionate grounds, for financial hardship, release authorities for excess contributions and for temporary incapacity.
“So there are reasons why an SMSF trustee could not honestly sign such a declaration.”
Having recognised this issue, DBA Lawyers is formulating a solution for SMSFs.
“We have been working on a deed overlay for our clients who will need to fix up their deed as well as they can to enable them to sign that QROPS document in a truthful manner as best they can,” Butler said.
“So there may be a solution there, depending on what trustees want to do.”