New Guidelines for Being a QROPS 2013
The new guidelines for being a QROPS can be found here. The Guernsey Association of Pension Providers actually also prepared a QROPS code of practice which trustees were supposed to follow whilst setting up a QROPS. The Code was intended to apply to QROPS which were set up as RATS although many of the principles were be relevant to QROPS established as Occupational Pension Schemes or as Retirement Annuity Contracts.
Adherence to the Code was voluntary but a list of Members who agreed to abide by the rules was published on the GAPP website. Ironically, more than 300 Guernsey pension schemes were delisted from being a QROPS in April last year despite following these guidelines.
The Inland Revenue actually publish a list of QROPS schemes which have consented to have their details printed and which fulfill the latest QROPS requirements set out by HMRC. However, HMRC also makes it clear that they do not necessarily approve of any of these schemes. Nevertheless HMRC has laid down the QROPS Guidelines for 2013.
In fact, to be precise, to quote from their site, ‘Publication on the list should not be seen as confirmation by HMRC that it has verified all of the information supplied by the scheme in its notification. The purpose of this list is merely to help UK registered pension schemes carry out their due diligence when transferring pension savings to another pension scheme that is not a registered pension scheme.’ It seems pointless for HMRC to publish this list when it is essentially meaningless. Nevertheless, this is the only guidance that financial advisors, pension schemes and clients can follow.
QROPS Guidelines 2013 Since Singapore Schemes Closed for not Being a QROPS
Singapore schemes were closed in the past for not being a QROPS as their pension allegedly discriminated against local Singaporeans joining the scheme. Equity trust, the parent of the Panthera QROPS range on Friday lost its appeal against a High Court ruling last May, which found that HMRC was within its rights in stripping the Recognised Overseas Self Invested International Pensions Retirement Trust (Singapore) of its QROPS status in 2008.
The new QROPS rules have been strengthened since in April 2012 and it is now clear on the requirements for being a QROPS. In order to become a Qualifying Recognized Overseas Pension Scheme, a QROPS must be open to both local and overseas residents. At least 70% of the money transferred must provide an income for life. Furthermore, both locals and non-residents must be taxed equally with respect to a QROPS in order to satisfy “condition 4”.
QROPS Guidelines 2013 and the Future of QROPS Schemes
So, where has this left us now? New Zealand, Malta, Gibraltar and the Isle of Man are currently the most popular destinations for QROPS transfers and each has its own merits. The decision for choosing the correct QROPS jurisdiction now heavily relies on the specific Double Taxation Agreements between the QROPS jurisdiction and the country you reside in. Malta has over 60 DTA’s and is a popular choice for being a QROPS destination.
However, if the country you live in has no DTA with Malta or NZ, then Gibraltar may be the wisest choice with its flat rate of 2.5% tax on income only. You would still avoid the 55% tax upon death that the UK imposes whilst drawing your pension benefits and would avoid UK income taxes.
The QROPS market is tricky to navigate and you really need to contact QROPS Specialists to find out what the best options are. The market is constantly evolving and a suitability report needs to be prepared by the advisor. It maybe the case that your pension is better off where it is or transferring to a UK SIPP to increase investment flexibility. SIPP fees are much lower than QROPS fees, but don’t avoid the taxes on inheritance.
For a free pension transfer analysis and suitability report, please send your enquiries and transfer values for your UK pension to firstname.lastname@example.orgNew QROPS Guidelines for 2013 Free Pension Transfer Analysis by Richard Malpass