HMRC 'interest' in 50c QROPS 'welcomed' by new IoM pension body

The newly created Isle of Man Association of Pension Scheme Providers has brushed aside speculation that HMRC may investigate the island’s 50c pension legislation.

There have been suggestions from pension providers based in and outside the Isle of Man that the UK tax authority may be unhappy with the way the new international pension regime is being promoted – in particular that it can facilitate tax-free lumps in excess of 30%.

The association, however, said it welcomed HMRC’s “input and interest” in the new legislation, which has been created in a large part to reinvigorate the island’s QROPS industry.

No cause for concernStuart Clifford, chairman of the association, who is also principal of Baker Tilly Isle of Man, said: “The speculation there has been over the interest of HMRC in these changes does not give us any cause for concern.

“It is quite normal for them to take notice of amendments to international legislation related to pension products which may be sold to UK passport holders. We welcome their interest and look forward to their input.”

Fedelta, a Manx pension trustee, last month revealed it had written to HMRC to clarify what was permissible under the 50c regime, specifically whether lump sums limits should be based on the transfer value or sum that had been accrued at the point of retirement.

It is unclear whether Fedelta has yet had a response from HMRC.

The controversy over the issue has been around a scheme promoted by local actuary and pension trustee Boal & Co.

Under its scheme, savers could receive a theoretically receive an uncapped lump sum at retirement, provided that 70% of the initial sum transferred is retained to pay for an income in retirement.

The remaining 30% could potentially grow substantially as a result of investment returns in between when the period the transfer was made and when benefits are taken. Under 50c rules, this 30%, plus all the investment growth accrued can be taken as a lump sum.

Boal & Co has defended its interpretation of the rules, which it said has been signed-off by HMRC.

Clifford added: “As an association we remain confident that the Isle of Man is on the cusp of a strong period of growth in the provision of products which will benefit individuals and families throughout the globe who wish to make sensible plans for retirement, in these difficult times."

A statement from the association added: “The Association aims to create a better understanding of pensions in the Island and to work with Government and fellow professionals to ensure that the industry is properly regulated and controlled whilst being competitive with other jurisdictions in the international pensions marketplace.”

For expert QROPS advice go to http://www.qrops-advisers.com or call 01664 444625

http://www.international-adviser.com/article/hmrc-interest-in-50c-qrops-welcomed-by-new-iom-pension-body