Jersey Qualifying Recognised Overseas Pension Schemes (QROPS) are set to open to non-residents from January 1, 2015.
A long-awaited law change on the Channel Island that was put on the back burner in April 2012 after HM Revenue & Customs (HMRC) changed QROPS pension rules is due to take effect from the New Year.
In 2013, the Jersey government published a paper proposing draft legislation to allow ‘third party’ QROPS on the island.
Currently, only Jersey residents can transfer funds from a British onshore pension into a QROPS on the island.
The new rules will allow British expats and international workers with UK pension rights to set up a QROPS on Jersey regardless of where they live and whether they ever set foot on Jersey or not.
New rules
The new pension rules will also:
- Let non-residents contribute to retirement schemes on the island
- Offer additional pension schemes and flexibility to transfer funds on and off the island
- Allow QROPS to start paying benefits when an investor is aged 50 years old and before the age of 75 years old
- Give pension trustees more options to pay a tax-free lump sum of up to 30% of the QROPS fund value
The draft legislation went before the States, the island’s parliament, in May 2014 and has since been ratified as the Income Tax (Amendment No. 44) (Jersey) Law 2011.
“This new law will put jersey on an equal standing with other QROPS providers,” said a government spokesman.
“We expect the new flexibility to attract QROPS business to Jersey.”
Jersey has long offered QROPS pensions to British expats and international workers living on the island.
According to the latest list published by the UK’s HM Revenue & Customs (HMRC), Jersey has 137 QROPS schemes.
Financial respect
The island is the fifth largest provider of QROPS out of 42 financial jurisdictions worldwide, with just over 4% of the market by number of pensions.
QROPS were introduced in April 2006 as a retirement saving option for British expats.
More than 3,500 schemes are now offered worldwide, but some jurisdictions like Jersey have suffered in the market place because they could not offer third party pensions without a change of law.
“It’s been a long time coming, but we wanted to make sure the changes were right for the market,” said the spokesman.
“We’re confident many pension savers worldwide will be attracted to our island because of our excellent financial reputation.”
