The opening of two new Qualifying Recognised Overseas Pension Schemes (QROPS) in Gibraltar poses some questions over the future of Guernsey QROPS.
One of the largest QROPS providers, the Concept Group, has opened the doors on the two new pensions to give the company access back to the market.
Both QROPS are marketed under the group’s Aurora offshore pensions branding.
The Concept Group was left high and dry when HM Revenue & Customs changed QROPS rules to exclude more than 300 pensions on Guernsey in 2012.
Despite reportedly clocking up more than £600 million in funds under management in Guernsey, Concept has looked for a way back to the market patiently for almost two years.
Offshore pensions
Meanwhile, Guernsey’s tax and finance officials have negotiated with HMRC about ways of reopening the island’s lucrative offshore pensions market.
A statement in the lead-up to Christmas from Guernsey suggested some movement, but Concept moving house to Gibraltar could be a signal that Guernsey QROPS have lost their way and are unlikely to come back into the fold at any time soon.
After all, setting up and regulating new QROPS schemes takes an investment in time, money and expertise and Concept would not want to split their efforts needlessly between more than one QROPS jurisdiction.
The problem was Guernsey’s QROPS had different rules for taxing pension benefits for island residents and non-residents.
HMRC frowned on this and removed their QROPS status.
Destination of choice
Gibraltar had similar problems and halted pension transfers in from the UK for a couple of years before HMRC stepped in to suspend QROPS on the Rock. The issue was only resolved when a new leader came to power and passed legislation to clear the tax obstacle that had caused so many problems for so long.
Since then, the Gibraltar QROPS market has gone from strength-to-strength, opening 23 new QROPS in just over a year.
“Gibraltar was picked as the QROPS jurisdiction of choice because of the simple 2.5% income tax rate on pension income for everyone and the Rock’s status as part of the European Union and all the security and regulation that brings to financial services,” said a Concept spokesman.
“The set-up here is easy for advisers to translate into terms of UK schemes when discussing QROPS with clients as well.
“Other financial centres may have their own advantages, like more double taxation treaties, but Gibraltar stacks up as the best option for us.”
Dont lock your pension in an offshore one its now much cheaper and tax free cash is now much higher onshore in the UK
Not to mention much cheaper and more efficient