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QROPS Jurisdictions in Focus : A Round-Up

By Stephen Ward BA (Econ), ACII, APMI, APFS, AIFP - Fri 2th Sep 2011

Over the last few weeks we have provided quite a detailed summary for expats to consider of how QROPS operate in the key jurisdictions. There are pros and cons of all of these, for example:

1.) New Zealand QROPS are able to offer the most benefit flexibility for long term expats but funds that remain invested are subject to tax.

2.) Guernsey QROPS offer less benefit flexibility (in some instances now a UK Self invested personal pension scheme (SIPP) can be more flexible), but funds invested are not taxed. There is however no investor protection for those who fall out with their QROPS trustees.

3.) Isle of Man QROPS - recent legislation allows the long term expat to receive all the growth following a transfer to an IOM QROPS to be taken as a lump sum in addition to 30% of the amount originally transferred in. There are very effective investor protection provisions, tax free growth of the fund invested, but restrictions on the ability to transfer out to another jurisdiction should circumstances change.

There are of course other jurisdictions including for example Malta, which although offering similar features to Guernsey schemes, is a member of the EU, which for some is seen as an additional benefit. Others such as Australia are only open to Australian residents.

The features and benefits of QROPS across the various jurisdictions make it essential to receive competent advice before deciding which, if any, to transfer to. One size does not fit all. A transfer to NZ may be the best solution for one client whilst for another, Guernsey or IOM or even a transfer to a UK SIPP may be best.

DON’T FORGET UK SIPPS

It is easy to forget the flexibility offered by a UK based SIPP in particular following the implementation of the Finance Act 2011. There are now provisions in place which for some even allow 100% commutation of the fund (albeit subject to tax). This is providing there is already in place a secure and guaranteed income of at least £20,000 a year. UK SIPPS generally cost much less than a QROPS and there is a highly effective investor protection regime through the Financial Services Authority.

SO WHAT OF THE FUTURE?

Other jurisdictions are looking closely at entering what is a multi-billion pound market for pension transfers into QROPS. We are privileged to be involved with some of these developments. Watch out for example for developments in the Caribbean which we think will be very exciting with interesting opportunities for short term and long term non UK residents.

New Zealand is on the brink of being able to offer tax free investment growth within pension funds. The legislation to accommodate this is currently winding its way through the NZ parliament and should receive Royal Assent soon. Although there are some technical hurdles to negotiate this potentially offers the opportunity for New Zealand as a jurisdiction to pretty much ‘wipe the floor’ with the rest of the market, offering lower costs, tax efficiency and a flexible approach to benefits.

So the QROPS market remains young and evolutionary. As further developments are finalised and come to the fore we will be the first to tell you about them on our Blog.

For further information about QROPS and Pension Planning opportunities please contact us today via clicking the link Here and leaving a few basic details on the form at the foot of the page.

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