Chancellor Philip Hammond yesterday revealed the government would crack down on individuals who try to avoid taxes by moving their pensions outside the European Economic Area (EEA).
A 25% tax on transfers of qualifying recognised overseas pension schemes (QRPOS) will apply from 9 March 2017.
The taxes won’t apply if the individual and the QRPOS are in the same country after the transfer or if the transfer is in a country in the EEA. Exceptions will also apply if the QRPOS is an occupational pension sponsored by the individual’s employer.
STM said the change is likely to affect its ability to grow the number QRPOS policies it administers.
About 80% of its new QROPS business is generated outside the EEA.
“Intermediaries will be carrying out extensive research over the coming weeks to analyse the impact of the proposed new tax charge further,” STM said.
However the group believes the new taxes won’t hurt the existing QROPS business, which generated recurring revenue from annual management charges of £8.4mln in 2016.
The company’s pension business represented about 50% of total revenue in 2016. The other 50% comes from its life assurance division.
Shares declined 13.92% to 34.0p in early trading.