QROPS Advice: Guernsey moves closer to QROPS code of conduct

A code of conduct for QROPS providers in Guernsey is one step closer with the sub-committee’s first meeting set for tomorrow.

The sub-committee has been formed by the Guernsey Association of Pension Providers (GAPP) and contains a cross-section of QROPS providers from the jurisdiction. Its aim will be to establish a voluntary code of conduct, with additional input from tax and legal professionals, which will be displayed on the GAPP website along with a list of members aligned to those codes.

Members of GAPP will then be able to refer to their adherence to these codes in their own marketing material and provide additional comfort and assurance to clients and introducers.

Roger Berry, managing director of Concept Group and also chair of the sub-committee, said a code could be established as soon as one month from now.

“GAPP has been working on this for some time, and things are coming along quite nicely,” said Berry.

“I would hope within a month or so we should have something out there which is going to be helpful to not only the providers here, to ensure we are singing from the same hymn sheet, but also the users, intermediaries and members of these schemes.”

Furthermore, Berry said while the code would initially be voluntary there is a possibility in the future it could have some regulatory support.

“Most if not all the providers in Guernsey are now represented on the sub-committee so it has a huge amount of clout and the regulator and the tax office deal with this committee as well,” added
Berry.

“My hope is if we demonstrate to our local government that we are serious and we get this off the ground it is highly likely there may be some time found by the regulatory side and we might get some support from them. It may ultimately end up in something more formal.”

http://www.international-adviser.com/article/guernsey-moves-closer-to-qrops-code-of-conduct?utm_source=Sign-Up.to&utm_medium=email&utm_campaign=152272-IA+19+April+10

QROPS Advice: Full QROPS encashment still taking place

Intermediary firm Windsor Pensions has said it will accommodate British expats wishing to fully encash their pensions immediately upon leaving the country, despite this conflicting with UK regulations.

In particular, the firm said certain New Zealand-based QROPS schemes are willing to allow the practice. According to HMRC, QROPS must be treated exactly like domestic pensions for five years after the holder has left the UK, otherwise they will be liable to tax charges of up to 55%.

Steve Pimlott, an intermediary at Windsor Pensions, said: “Strictly speaking it is against the rules [to take full immediate encashment] but there are some schemes that will allow it. Most schemes which will allow this are based in New Zealand. We have used them, but I cannot go into details of the specific schemes.”

Windsor’s business largely comes from clients and IFAs based outside the UK and the company will not share its commission with UK intermediaries.

The claims by Windsor follow a report by IA in January that concerns had been raised by HMRC about the conduct of schemes in New Zealand.

Axa Life head of pensions and savings policy Steve Folkard offered a word of warning for those considering undertaking full immediate encashment.

“Potentially HMRC could try to recover the tax charge from the client, although this will depend on what jurisdiction they are in and whether there are any double tax treaties in place and so on – this aspect is complex and clients should seek professional advice,” he said.

In addition, Pimlott mentioned two Latvian-based schemes that have attracted some client money. One is the Wenns International Pension Scheme, which has proven particularly popular with ex-military personnel.

“The Latvian schemes are much more rigid in their rules – Wenns International is typically used by ex-servicemen – they have a lot of good packages, as well as the pension transfers for ex-servicemen,” he added.

http://www.international-adviser.com/article/full-qrops-encashment-still-taking-place?utm_source=Sign-Up.to&utm_medium=email&utm_campaign=151491-IA+09+April+10

QROPS Advice:Canary Islands pensioners able to enjoy life as planned

British expats abroad can now get more control over their pension plans thanks to new rules that remove many restrictions for people who retire overseas.

They can pay lower tax on income drawn from a relatively new form of pension (Qualifying Recognised Overseas Pension Scheme) QROPS avoid being forced to invest capital in an annuity which dies with the purchaser and pass their wealth to friends and family free of tax on death.

QROPS, as its name suggests, this is a form of pension based outside the UK which is recognised by the British authorities as being eligible to receive transfers from registered UK pension funds. Reputable advisers will only recommend transfers to countries which provide consumer protection equivalent or greater than the safeguards in the UK.

People who are living inside or outside the UK can transfer their deferred company and personal pensions to a QROPS. Any pension can be transferred as long as an annuity has not been purchased or, if it’s a final salary scheme which the pension has not commenced.

Where the pensioner has not been resident in the UK for five complete and consecutive fiscal years – and the tax rules determining residence will be examined in detail later in this guide – HMRC restrictions on how income and capital are spent no longer apply.

The best option for you will depend on your personal circumstances and it makes sense to take professional advice which can take account of your individual needs and objectives.

British pensions that can be transferred to a QROPS include former employers’ occupational schemes (but not final salary or defined benefit schemes already in payment); Superannuation Schemes; Executive Pension Schemes; Self Invested Personal Pension Schemes (SIPPSs); Small Self Administered Schemes (SSASs); Section 226 Personal Pension Schemes; Section 32 Pension Transfers and Personal Pensions.

Although QROPS is a relatively new product, what has become clear is that both Professional Advisers and clients should be cautious regarding their choice of QROPS provider and QROPS jurisdiction and a poor choice can lead to frozen pensions, high tax bills or both.

To discuss this further and to get the best Professional QROPS Advice please e-mail or call direct today for full details and to find out how we can assist you and start living the life you planned for……….

Post Script.
It does not matter what nationality the UK pension fund holder is, for example I am dealing with a French National who worked in the UK for 5 years and took out a pension plan. Now she lives in Spain with her Portuguese husband and we are looking to transfer her fund into a QROPS. What is important is do they hold a UK registered pension fund? what are their circumstances? Where have they expatriated too? And which jurisdiction suits the client best for tax purposes?

www.360canaries.com
Email: 360canaries@live.com
0034 680 832 708 / 616 718 903

QROPS Advice: QROPS or QNUPS?

WHAT IS A QNUPS?
• A QNUPS is a Qualifying Non UK Pension Scheme
• Not to be confused with Qualifying Recognised Overseas Pension Schemes (QROPS).
• Came into force on 15th February 2010 by HMRC.
• Generating opportunities for British expatriates concerning tax efficiency of local taxes and inheritance tax (IHT).

Who would consider a QNUPS?
• UK Expatriates or soon to be Expatriated
• UK Expatriates with existing QROPS schemes.
• Expats who my wish to return to the UK in the future.
• The high net worth UK resident or domiciled individuals with maximised income tax relievable pension contributions.


Benefits of QNUPS?

Retired British Expats Can Benefit From;

• UK inheritance tax and local succession taxes will not be payable from the QNUPS fund upon death.
• QNUPS will avoids local succession law, enabling you control who inherits what and how much. Thus removing the need for PETS (Potentially Exempt Transfers) as part of Inheritance Tax Planning.
• Income can be taken from age 55 (after 6th April 2010)
• Income can be deferred until age 75.
• No need to have any employment income to make contributions.
• Ability to continue investing even after age 80 even though you have been retired for many years giving rise to substantial tax advantages.
• Ability to take a lump sum as you would with any other pension scheme.
• There are no limits on contributions to the fund, nor fund size.
• Income is taken from the fund as drawn, leaving the remaining assets invested with an opportunity to grow in value tax free.
• Investment flexibility, with investments in stocks, bonds, alternative investments, deposits, real estate, private equity, options and life policies. Due to the non reporting freedom the fund manager in essence has the ability to invest in an even wider range of assets in comparison to QROPS, including; art, wine, boats aircraft and even residential property.
• Take income and benefits in currency of your choice reducing currency risk
• Trustee has no reporting requirements or obligations to HMRC on all assets transferred in outside of authorised UK pension Schemes

Disadvantages Of QNUPS
• You don’t receive any tax relief on the amount you invest.

What Opportunities Does QNUPS Offer to High Earners as UK Residents or Domiciles?

The introduction of the highest rate of income tax of fifty percent has meant that Higher Earners (UK Resident or Domiciled) will be experiencing restrictions on the levels of tax relief they can gain via pension contributions. As UK Residents or Domiciled individuals they will have the ability to contribute to a QNUPS and capitalise on all its benefits.

What’s the difference between QNUPS and QROPS?

• A QNUPS has no Double Taxation Agreement between the UK and the country where the QNUPS is therefore it has no reporting requirements or obligations to HMRC.
• A QNUPS is a Qualifying Non UK Pension Scheme
• A QROPS as per of the Double Taxation Agreements in place are required to report to HMRC for the first 5 years.
• Existing QROPS can be transferred into a QNUPS as an more tax effective wrapper.

In essence A QROPS can be definition as a QNUPS and a QNUPS can be (but need not be) a QROPS

HMRC are looking very closely at non-UK domiciles (recent case of Gaines-Cooper http://talkqrops.blogspot.com/2010/02/qrops-advice-qrops-newsgaines-cooper.html ) and you could be resident overseas but still deemed to be domiciled in the UK and liable to pay IHT, if HMRC can establish that Britain was the country which you still regarded as home at the time of your death. QNUPS helps with this issue as it makes your assets exempt from IHT UK domiciled or not even if you have returned to the UK.


QNUPS Jurisdictions
• Guernsey
• New Zealand
• Hong Kong
Others likely to join
• Isle of Man
• Gibraltar
• Malta


Where can I get QNUPS Advice?

Email your enquiry to qrops@aifsg.com or call 0044 1664 444625. For further information go to www.qnupsadvice.com. QNUPS Advice is provided by Argent International Financial Services Group. International is a highly respected financial services group of companies, specializes in comprehensive and independent financial advisory, wealth management, company and trust administration services to private, corporate and institutional investors. For over 22 years we have assisted investors to enhance their financial position and make the most of the opportunities available in the global financial market. For details of all our services including QROPS and QNUPS go to http://www.aifsg.com

QROPS Advice: Which Jurisdiction ticks all the boxes.

With a number of jurisdictions now offering QROPS, David Piesing from Praxis Fiduciaries and Stephen Ward of Premier Pension Solutions assess the relative benefits and which one comes out on top.

It seems like an eternity since QROPS became available back in April 2006. Four years on prospective client now have plenty of schemes and jurisdictions from which to choose.

The choice for most people is from schemes operating in jurisdictions which are open to both residents and non-residents.

The main markets for QROPS transfers are:

Guernsey
Isle of Man
Gibraltar
New Zealand
Malta will soon come on stream as well. We have not included Hong Kong as there are only 10 active schemes on the HMRC list and those are mainly occupational ones.

Here we assess these main jurisdictions and consider:

benefit flexibility for members who have been non-UK resident for at least five complete tax years;
investment flexibility;
taxation;
costs;
ease of transfer in and out.
Benefits for life
The key advantage of a QROPS when compared with a UK scheme is not having to buy an annuity by age 75. The jurisdictions on our list allow the fund on death to pass to nominated beneficiaries with no UK inheritance tax (IHT) liability.

Maximising benefit flexibility may require an onward transfer to a non-QROPS mirror scheme. This is possible without tax implications if the QROPS is non-investment regulated.

Most Guernsey QROPS have confirmed non-investment regulated status. Gibraltar, the Isle of Man and New Zealand QROPS, as well as those from Malta, generally meet this condition. Guernsey QROPS may allow access before age 50 (55 from 6 April, 2010) as a loan of up to 25% of the fund. Trustees can allow flexibility through a temporary annuity. Full commutation remains possible where the fund is small.

New Zealand schemes are not subject to the 70% income for life rule because of how they navigate the HMRC QROPS conditions. This allows capital payments from the fund. The lump sum from Isle of Man schemes is up to 30% of the fund. Guernsey (currently restricted to 25%) is expected to match this figure soon. Maltese schemes restrict lump sums to 25%, as do Gibraltar's.

Investment path

All jurisdictions offer investment flexibility. Member directed investment is generally avoided as schemes might otherwise be considered investment regulated with indefinite reporting to HMRC. Some schemes have allowed investment in residential property yet surprisingly still claim they are not investment regulated with no tax charge arising.

For the majority, traditional forms of investment are sufficient. More exotic choices are best delivered in a non-QROPS, such as a Qualifying Non-UK Pension Scheme (QNUPS), having received a transfer value from a QROPS without triggering an unauthorised payments charge after completion of the five-year non-residency period by the scheme member.

Taxation issues
The fund accumulates free of tax (except tax deducted at source on some dividend income) in all countries on our list except New Zealand. Fund taxation rules in New Zealand are complex, and are made on a comparative-value basis or assuming a 5% pa 'fair return', with the calculation of asset valuations required in NZ$. But the government is expected to announce it is exempting pension funds.

Isle of Man schemes deduct local tax on pension income, typically at 18%. This creates issues unless the Isle of Man has a double taxation treaty with the country where the member is resident. For example, a Spanish resident can neither offset nor reclaim Isle of Man tax deducted. On death, it applies a 7.5% IHT charge with a £100,000 cap.

The cost of QROPS

There is great variation between schemes and jurisdictions, and between providers within jurisdictions. However, there are two main models:

A packaged QROPS product with a menu of preapproved investment funds and management houses.
These are available in Guernsey, Isle of Man and New Zealand. Some claim to be fee-free. This is achieved through retrocession commissions which are at best only partially disclosed. In a new era of transparency and commission disclosure, it is hard to see how these schemes will be able to be marketed as such in their current form.

A transparent one-off setup fee and an annual fee, sometimes accompanied by a service-driven fee menu. This is found in all jurisdictions except New Zealand.
Some Isle of Man schemes can appear to be slightly cheaper than Guernsey ones, but the menu approach requires careful comparison. Some Gibraltar schemes seem comparatively expensive but volumes are currently small. Maltese schemes are expected to be priced at Guernsey levels. In New Zealand, where the fund remains in place for the longer term, scheme pricing can involve an annual charge of around 1.65% but no setup charge.

Ease of transfer

A look at both directions of transfer is important because personal circumstances can change. UK schemes give members the right to transfer, while overseas schemes do not. The transfer experience can vary from simple to horrific, although whether that is down to the jurisdiction or the provider is arguable. UK schemes can be freely transferred to any overseas scheme which is registered with HMRC as a QROPS.

QROPS providers in all countries generally deal well with the transfer process, which takes anything from a few weeks to several months. Transfers out of QROPS can be expensive. Some schemes apply seemingly punitive exit fees even though their service may have fallen short.

In addition, some QROPS do not state at outset a freedom to transfer out to QROPS in other jurisdictions, even where such transfers are expressly permitted by local law and by the tax authority of the existing scheme, and the new scheme is able to acceptthe transfer.

Conclusion

So which is the best jurisdiction for QROPS? Gibraltar is regarded as expensive, while the jury on Malta – a brand new entrant to the market – is still out, though it has considerable potential and an excellent double tax treaty network.

New Zealand has the most flexible benefit regime, but distance complicates the transfer process and the fund is taxed in a way which includes exposure to currency risk. The Isle of Man can be relatively low cost, but has an irritating exposure to local taxation which has deterred many potential users.

Guernsey ticks all the right boxes, and has sought HMRC input and guidance to prevent potential abuse by its sizeable community of QROPS providers. Ongoing dialogue with HMRC has benefited its status as arguably the world's leading QROPS jurisdiction.

Expatriate Wealth Services

Qualifying Non-UK Pension Schemes (QNUPS)
New tax planning opportunities for British expatriates

On the 15th February 2010, a new UK HM Revenue & Customs (HMRC) statutory instrument came into force, which creates significant opportunities for British expatriates to save local taxes in the country in which they are tax resident as well as UK inheritance tax (IHT).

The UK legislation created a new type of trust known as Qualifying Non-UK Pension Schemes (QNUPS) - which should not be confused with Qualifying Recognised Overseas Pension Schemes (QROPS).

The tax rules for pension schemes are generally more favourable than other investment structures.

QNUPS allow retired expatriates to continue to put money into a pension scheme -
Firstly, there is no maximum age at which you can invest in a QNUPS.
Secondly, you do not need to have any earned income from an employment in order to make a contribution.
Thirdly, there is no maximum contribution that can be made into a QNUPS.

The rules are sufficiently flexible to allow someone who is 85 years of age and has been retired for 25 years to put large investments into a QNUPS and immediately create significant tax advantages for themselves.


The benefits of QNUPS for retired British expatriates

A QNUPS is a pension scheme trust and as such you are entitled to take a cash lump sum and income during your lifetime, with the remainder of your fund being able to be passed to your spouse or heirs on your death free from all taxes.

The following advantages are available to you through a QNUPS:
As a pension scheme, a QNUPS is very tax efficient in most countries as it can avoid both local wealth taxes during your lifetime and succession taxes on your death.
A QNUPS also avoids local succession law, so that you are free to choose exactly who inherits your money and in what shares.
Income can be taken from age 55 (after 6th April 2010) or it can be deferred as it does not need to be taken until age 75. In certain countries it can be paid in a manner where a significant portion can be paid to you tax free.
When income is taken it is drawn down from the fund, thus leaving your scheme assets invested. Otherwise the assets grow free from tax.
On death the value of the QNUPS will be exempt from UK inheritance tax and local succession taxes.
A QNUPS offers considerable investment flexibility and choice. Furthermore your assets can be invested and any benefits taken in a currency of your choice, giving you the opportunity to remove currency risk.
The trustees of a QNUPS have no reporting obligations to HMRC unless the scheme also holds any assets transferred from an authorised UK pension scheme. You can have both a QROPS and a QNUPS.

http://www.expatwealth.telegraph.co.uk/template_textonly.aspx?page_info_id=43

QNUPS Advice

QNUPS - the next major offshore pensions planning opportunity for UK tax-relieved pension funds and the interaction with QROPS.
The Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 [SI 2010 / 0051] came into force on 15 February 2010 and have introduced QNUPS.

The purpose was to correct an error in the Finance Act 2004. Without these amending regulations UK pension funds once transferred to a QROPS would become liable to UK Inheritance Tax (IHT) charges. These regulations now mean a non-UK resident may transfer UK pension rights to a QROPS and upon death, whether before or after age 75, no Inheritance Tax liability arises.

These regulations apply to overseas schemes generally. But they have wider application for two reasons :
1. taxable property rules associated with one form of QROPS and
2. a restriction on the tax relief available on pension contributions to high-earning UK residents.


The technical side
To be a QNUPS the overseas scheme must satisfy the same conditions necessary for a Recognised Overseas Pension Scheme (ROPS) (SI 2006/206) with the importannt exception that there is no necessity for there to be Double Taxation Treaty (DTA) with the overseas scheme’s jurisdiction if the scheme is outside of the European Economic Area. A DTA is not necessary because there are no reporting requirements from the QNUPS to HMRC.

The outcomes are that a QNUPS benefits from UK IHT exemption in respect of:
(a) UK tax-relieved pension funds that have been transferred to a QNUPS.

(b) contributions to a QNUPS and

(c) assets held by a QNUPS generally.

A QROPS will by definition be a QNUPS. But a QNUPS need not be a QROPS. This leads to the feasibility of using QNUPS as an ultimate destination for UK tax-relieved pension funds to gain further advantage.

A QNUPS (which is not a QROPS), is a good home for UK pension funds which were originally transferred to a QROPS. A QNUPS (which is not a QROPS) need have no specific investment restrictions and may for example invest in residential property and the like. But the key to this is transferring from the QROPS to a QNUPS.

For clarification we need to differentiate between “investment regulated” and “non-investment regulated” QROPS. This is a consequence of SI 2009 / 2047, effective August 2009. These taxable property provisions (relating to investment in residential property, fine wines, antiques, and the like) extend UK investment rules to some QROPS. If the QROPS is “investment regulated” then Paragraph 7A of Schedule 34 Finance Act 2004, provides for a 70% tax charge where investment is made into taxable property out of UK pension funds which have been transferred to the QROPS. But there are further implications.

What follows are direct quotes from the Registered Pension Schemes Manual (RPSM).
“A transfer from a UK pension scheme to a QROPS constitutes a Relevant Transfer Fund” (RPSM13102130). Then we have to consider whether that fund comprises a Taxable Asset Transfer Fund (TATF). All transfers from UK pension schemes to an investment-regulated QROPS since 6 April 2006 comprise a TATF.

This is important because: “A payment to a transfer member has to be notified to HMRC regardless of whether or not they have been non-resident for more than five tax years if it is deemed to have been made from their Taxable Asset Transfer Fund” (RPSM14101070).

An investment-regulated QROPS means that the member is able to direct or influence the investments made. Most Guernsey QROPS have concluded that they are not investment regulated. Some have not declared their hand and one considers the distinction to be “immaterial”. New Zealand QROPS are not investment-regulated pension schemes. Some Hong Kong QROPS have taken the same view. The same is likely to apply to schemes in Gibraltar, Isle of Man and Malta.