Gibraltar QROPS providers have pulled the wraps off a code of conduct aimed at safeguarding investors switching their pensions out of the UK.
The code is mandatory for providers of QROPS expat pensions in Gibraltar, says the Gibraltar Association of Pension Fund Administrators (GAPFA).
GAPFA hopes the code will stop pension firms tarnishing the financial centre’s image as a reputable and trustworthy QROPS destination.
Providers must follow the code to operate in Gibraltar – and abide by a fee structure and independent arbitration decisions from an industry ombudsman.
Watching for money laundering operations is an important facet of the code.
QROPS best practice
“Members should be particularly aware of “layering” arrangements often which involve funds being transferred from another jurisdiction,” says GAPFA.
“The use of investment processes, sometimes in the form of private limited companies, EIFs, or bond wrappers permitting private loans in excess of 50% are all possible areas where abuse can occur.
“Members accepting funds, even in a limited investment capacity, should be most wary and ensure they know the original source of funds and any subsequent on-going transfer so they have complete knowledge of the entire transaction chain.”
“Effectively this means the FSC will expect adherence to the code to be best industry practice”, said GAPFA chairman Steven Knight.
QROPS tax warning
“In any circumstance where the member is unable to identify both the ultimate originator and source of funds, and all subsequent investment steps of the assets under management, that business should be rejected.
“Members need to be acutely aware that a small number of operators in other jurisdictions have more pressure to continue to operate schemes that are non-compliant, and may seek to use conduits operated in other jurisdictions, including Gibraltar.”
“All such activity should be rejected immediately, and notification sent to the GAPFA on a private and confidential basis, so we can build a database of non-compliant schemes originating from outside of Gibraltar.”
Gibraltar changed pension rules earlier this year to bring them in line with UK QROPS policy.
These include limiting tax-free lump sum payments to 30% of the QROPS fund and a 2.5% tax on payments.
If you are interested in transferring a UK pension in to a QROPS and would like to be put in touch with a qualified financial adviser, please contact us via the contact form here for a referral.