Gibraltar’s Minister of Commerce Albert Isola has clarified the changes to the financial centre’s Qualifying Recognised Overseas Pension Scheme (QROPS).
Financial experts feared Gibraltar’s QROPS status was at risk with the introduction of new rules by Britain redefining the rules for offshore pensions for expats.
But the government passed eleventh-hour laws fine-tuning Gibraltar QROPS on March 31 – just five days ahead of the deadline set in the UK for providers to register their QROPS as compliant with the new rules.
Isola said: “I am pleased to say the introduction of these new pension regulations, which will ensure that Gibraltar retains the highest standards of pension regulation and maintains its status as a recognised jurisdiction for QROPS pension schemes.
Scope to avoid transfer charge
“Following discussions with the UK authorities we have decided not to introduce flexible access for Gibraltar QROPS; rather Gibraltar will keep its current arrangements that require members of QROPS schemes to retain 70% of their total funds to provide a pension income for life.
“The rate of tax on pension benefits taken from these retained funds will continue to be levied at the current rate of 2.5%.”
Isola also confirmed the new 25% QROPS transfer tax will not apply to expats living in the European Economic Area who transfer their pensions to a Gibraltar QROPS.
“We expect there will be a change in appetite for people to move their pensions offshore because of the introduction of the new transfer charge,” he said.
Gibraltar QROPS are EEA pensions
“It has been confirmed that Gibraltar will be treated as a European Economic Area country in respect of the new transfer charge, which is positive, and so Gibraltar will be able to continue to offer QROPS to individuals living in the EEA subject to the new requirements.”
So, Gibraltar will not offer flexible access to QROPS pensions, but expats escape the transfer charge if they live in Europe, move their pension to Gibraltar and remain living in Europe for five years from the date of transfer.
The pension fund must also stay in the EEA for this period to avoid the charge.
QROPS providers must certify their schemes meet the new rules by April 13. A new QROPS List from HMRC listing the new qualifiers will be released on April 18.
