A key feature of a seminar intended to mark the jurisdiction’s renewed commitment to a business it quietly got out of in 2009 was the unveiling of a planned Approved Code of Practice that Gibraltar companies interested in looking after the personal pensions schemes of British expatriates would be expected to sign up to.
Steven Knight, chairman of the Gibraltar Association of Pension Fund Administrators, introduced the plans for the code of practice at a seminar in a Gibraltar hotel, attended by what GAPFA said was an audience of more than 80 individuals in the pensions administration industry, government officials and others.
Knight sought to claim what he said was the “moral high ground” in the global QROPS administration industry, telling the seminar’s participants that in Gibraltar, “there will be no pension-busting, no non-compliant investments permitted, as has occurred in some other jurisdictions with QROPS.”
Knight said the code is being developed by GAPFA’s 20-plus members, in conjunction with the Gibraltar Financial Services Commission (FSC).
Today’s seminar came in the wake of a unanimous vote by Gibraltar’s Parliament on Friday to approve amendments to Gibraltar’s income tax legislation that the government says will enable pension transfers to the Rock to be resumed. Such transfers were voluntarily suspended almost three years ago by Gibraltar QROPS trustees, pending resolution of what were understood to be concerns by HM Revenue & Customs about the way pensions in Gibraltar were taxed – or rather, as HMRC was said to believe, were not.
The Revenue’s concerns first came in the form of letters received in the spring of 2009 by Gibraltar pension administrators, which asked them for clarification of local rules regarding the taxation of retirement income.
At that point Gibraltar taxed the pension income of people over 60 at 0%, which HMRC was said to regard as inconsistent with QROPS regulations.
The main feature of the amendment, which may be viewed by clicking here, is that it mandates all benefits paid by “certain imported pensions” are to be taxed at a rate of 2.5%.
The legislation also provides for a maximum commutation, or so-called pension-commencement lump sum, of no more than 30%; a minimum retirement age of 55, except "in very specific circumstances relating to chronic ill health"; and it prohibits schemes imported into Gibraltar from being transferred to another scheme outside of Gibraltar "which does not comply with the original requirements" of the Gibraltar scheme.
Existing Gib schemes need tweaking
Approximately 10 Gibraltar QROPS schemes are understood to have been in existence prior to the voluntary suspension of additional transfers in 2006.
Although these have never been delisted – unlike more than 300 schemes in some other jurisdictions, as was pointed out during today’s seminar, when HMRC unexpectedly cracked down on the industry in April – administrators of these Gib schemes "need to have their deed/rules amended to come within the Imported Pensions Legislation, pay the 2.5% tax on distributions made since importation, and approach HMRC to seek [its] approval," tax law specialist Chris White, a partner in Gibraltar law firm Hassans, said.
The seminar was kicked off by Gilbert Licudi, Gibraltar’s recently appointed minister for financial services, one of the Government officials most determined to see Gibraltar’s QROPS industry revived. "We have opened up a line of business to be tapped, and it is up to the professionals to make it work," he said.
"It is important to learn from the experience of other jurisdictions."
The amended legislation was expected to be published tomorrow in the Gazette, the Gibraltar Government’s official bulletin of record, after which it will be considered to be in effect.
