In his determination in the case of Mrs N (PO-9935) the Pensions Ombudsman has ordered a scheme to compensate a member for the tax charges incurred in consequence of a transfer to an overseas scheme being an unauthorised payment.
A transfer to an overseas scheme will be an unauthorised payment and incur penal tax charges unless the receiving scheme is a "qualifying recognised overseas pension scheme" (QROPS). In Mrs N's case, the receiving scheme had been on HMRC's QROPS list, but had already been removed before the transfer request was made. The transferring scheme had a policy that it would not make overseas transfers to schemes that were not on the QROPS list. The transferring scheme's administrators had checked the QROPS list before making the transfer, but had apparently mistaken a scheme with a similar name for the receiving scheme and gone ahead with the transfer.
This case underlines the importance of making proper checks before making a transfer to an overseas scheme. Since the events giving rise to this case, HMRC has changed the name of its list to the "ROPS" (Recognised Overseas Pension Schemes) list. Even where a scheme appears on the list, it may not necessarily be a qualifying recognised overseas pension scheme, so schemes need to make sure they make appropriate checks.