Only 30 Qualifying Recognised Overseas Pension Scheme (QROPS) have delisted or been suspended in the past year as the offshore pensions market stabilises for retirement savers.
QROPS started in April 6, 2006, and the early years saw significant tussles between HM Revenue & Customs (HMRC) and providers as clever lawyers and tax experts tried to stretch the rules to provide even more benefits for their clients.
As a result, some jurisdictions lost their QROPS status – such as Singapore and Cyprus – while others saw rule changes decimate their QROPS business. Notably, these included Guernsey and New Zealand.
Now, the market is much more stable and QROPS are more likely to delist because the retirement saver dies or transfers their cash from a single member scheme rather than because of a tax tussle with HMRC.
Rising star
Now, the number of QROPS offered in 42 financial centres worldwide continues to grow at the rate of one opening every day – and has done so for more than a year.
In fact, the number of QROPS increased by 366 during the past 12 months.
The market has also seen a consistent group of financial jurisdictions dominate the top 10 providers.
The financial centre standing out most as a new player is Gibraltar, which has added 18 new QROPS in a year, increasing the Rock’s offering from 23 to 41 schemes.
The next QROPS List is due for publication by HMRC on October 15, 2014.
| Top 10 QROPS Tables - October 1, 2014 | ||
|---|---|---|
| Count of QROPS pensions | ||
| Values | ||
| Jurisdiction | October 1, 2013 | October 1, 2014 |
| Australia | 1244 | 1508 |
| Ireland | 733 | 769 |
| Isle of Man | 229 | 224 |
| Switzerland | 137 | 139 |
| Jersey | 135 | 137 |
| Netherlands | 105 | 115 |
| Canada | 98 | 100 |
| Guernsey | 51 | 81 |
| New Zealand | 48 | 59 |
| Germany | 56 | 55 |
| Total: | 2836 | 3187 |
| Market share by number of QROPS | ||
| Jurisdiction | October 1, 2013 | October 1, 2014 |
| Australia | 39.19% | 42.60% |
| Ireland | 23.09% | 21.72% |
| Isle of Man | 7.21% | 6.33% |
| Switzerland | 4.32% | 3.93% |
| Jersey | 4.25% | 3.87% |
| Netherlands | 3.31% | 3.25% |
| Canada | 3.09% | 2.82% |
| Guernsey | 1.61% | 2.29% |
| New Zealand | 1.51% | 1.67% |
| Germany | 1.76% | 1.55% |
| Grand Total | 89.35% | 90.03% |
| Most QROPS added in a year | ||
| Jurisdiction | No of QROPS | |
| Australia | 264 | |
| Ireland | 36 | |
| Guernsey | 30 | |
| Gibraltar | 18 | |
| New Zealand | 11 | |
| Netherlands | 10 | |
| Malta | 6 | |
| Italy | 3 | |
| Jersey | 2 | |
| Canada | 2 | |
| Austria | 2 | |
| Latvia | 2 | |
| Switzerland | 2 | |
| Luxembourg | 2 | |
| Hong Kong | 2 | |
| Grand Total | 392 | |
But there is still no clear guidance or best practice in how to best set up a QROPS to protect the beneficiary…I,e what sort of underlying investments are suitable, who are the qualified investment advisers, what is the role of the pension trustee and is a bond provider even necessary…as all these intermediaries add cost and reduce yield. All this leaves the investor very exposed to risk and potential loss with no compensation if things go wrong. What rules exist for how a QROPS should be set up to protect the investor?