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Ongoing Scheme Funding - Internationally Mobile Workers

Key Points

  • There are no statutory restrictions on membership of a UK pension scheme by persons who do not live or work in the United Kingdom
  • Restrictions on benefits accrued or provided under a registered pension scheme may be relaxed where a member does not benefit from UK tax relief because he or she is a 'relevant overseas individual' or a transfer has been made into the scheme from a 'recognised overseas pension scheme'.
  • A registered pension scheme may only make a transfer into an overseas pension scheme that is approved for the purpose by HMRC (a "qualifying recognised overseas pension scheme").
  • A member who comes to the UK as an existing member of a qualifying overseas pension scheme may benefit from migrant member relief on UK income tax.
  • A scheme may only accept contributions from a "European Employer" if it is authorised to act as a cross-border pension scheme. Onerous funding requirements apply to cross-border defined benefit schemes.
  • Despite the first bullet point above, it is worth noting that having a scheme member who is subject to the labour and social security laws of another EEA state (i.e. who works elsewhere in the EU in a scheme) makes that a cross border scheme with onerous funding consequences.
  • The European Commission has agreed a revised IORP Directive which will make changes to cross border pension scheme arrangements.

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