Gibraltar QROPS are all systems go after politicians voted unanimously to update pensions rules that they believe will comply with UK tax laws.
For years, Gibraltar has held off accepting QROPS transfers over concerns that retirement savers could face hefty tax penalties for flouting strict pension rules even though some schemes are listed by HM Revenue & Customs.
Now, the Gibraltar parliament has passed a revised bill that the territory hopes meets the concerns of fund administrators and is acceptable to HMRC.
QROPS providers expect to start accepting transfers from UK pensions as soon as the new act is published in the Gibraltar Gazette.
The issue for Gibraltar QROPS has been income tax on pension payments for the over 60s.
Gibraltar has a 0% tax charge – which HMRC argued was not a tax charge at all.
The new law has a flat 2.5% tax charge on all Gibraltar pensions.
Other features of Gibraltar QROPS include a maximum 70% drawdown of any transferred funds, a minimum retirement age of 55 years old unless the saver suffers from ill health and a special clause that bars transferring funds in a Gibraltar QROPS onwards unless the receiving scheme complies with Gibraltar pension rules.
Gibraltar QROPS are trying to align their pensions industry with the new HMRC rules that say as long as a financial centre offers ‘broadly similar’ tax and benefits to residents and non-residents, then UK expats or international workers with UK pension rights can switch their funds in to the schemes regardless of where they live outside the UK.
Providers in some other QROPS centres have slammed the Gibraltar scheme as non-compliant with the new rules, but time will tell if this is correct.
Some of the comments could be interpreted as sour grapes aimed at promoting their own QROPS ahead of a business rival.