Guernsey Qualifying Recognised Overseas Pension Schemes (QROPS) are the latest to green light flexible access withdrawal rules from April 2015.
Deputy treasury minister Jan Kuttelwascher announced the Channel Island’s government will amend tax laws to allow QROPS to operate under the same rules as pension schemes as those in the country where funds transferred in originated.
Unravelling the jargon, any UK pension funds in a Guernsey QROPS benefit from the same flexible access rules as a UK pension.
However, although the rules are changing at the government level, individual providers on the island can choose to opt in or out of flexible access.
Problems solved
The measure solves several problems for Guernsey QROPS savers –
- QROPS with funds transferred in from the UK can follow the flexible access rules
- Delisted Guernsey QROPS with funds transferred in from the UK can benefit from flexible access
- Transfers from Guernsey to QROPS elsewhere are now allowed, as amending pension rules on the island clears up a technical anomaly leaving some funds in limbo
Guernsey’s Association of Pension Providers president Stephen Ainsworth explained that the new rules take away fears that QROPS retirement savers felt about having their money trapped on the island.
The fears come from HM Revenue & Customs (HMRC) delisting more than 300 Guernsey QROPS in March 2012, leaving just three open on the island.
Since then, more QROPS have opened; leaving Guernsey ranked eight out of 45 financial centres offering the pensions to expats by number of QROPS.
Financial reputation
Guernsey providers offer 89 QROPS from a global total of 3,673 QROPS on HMRC’s QROPS List published on February 15, 2015.
Malta and Gibraltar also intend to amend pension regulations to allow flexible access for international workers and expats with QROPS.
Under flexible access, QROPS savers can:
- Take a tax free lump sum of up to 30% of their fund and buy an annuity
- Withdraw their entire pension fund as a 30%tax-free lump sum and taxable balance
- Withdraw smaller amounts, with up to the first 30% tax-free and the balance taxed
“The Guernsey government is working hard to give pension savers the best options for their money,” said Ainsworth. “We hope to maintain the financial reputation of the island and give an excellent service to our clients.”
