A billet d’état is due to be discussed at the Guernsey States meeting on 29 September, taking effect from 2 October if approved.
An expert in advising on the UK tax implications of non-UK pensions, Emily Osborne, a senior associate at law firm Stephenson Harwood, said: “The key issue is the QNUPS definition contained in the inheritance tax legislation.
“There do not seem to be any plans to change the IHT definition at present, so if the Guernsey former QROPS allow flexi-drawdown they will not meet the QNUPS definition and potentially lose their IHT protection.”
She said this could be an issue for some clients of advisers who have funds in Guernsey delisted QROPS, “though it may not be if the schemes are transferred to Malta, provided no IHT events occur in the meantime.”
This is because Malta is in the European Union, where the QNUPS test will be met, even if flexi-drawdown is offered, she said.
Osborne also said she had heard from some Guernsey pension providers that the Guernsey amendments would enable legislation only.
“In other words, the law changes should not automatically cause problems for schemes unless the trustees of those schemes then decide to vary the terms of the plans to enable flexible drawdown.”
However, warning how vigorous HMRC has been in pursuing perceived QROPS abuses, she added “they may take a contrary view”.
Roger Berry, managing director of Concept Group, said the Guernsey Government was likely to pass the legislation as drafted because “all it is doing is matching the accessibility that exists for a particular jurisdiction to the pension funds from that jurisdiction in Guernsey plans”.
Where funds in a Guernsey plan have come from the UK, a Guernsey trustee “may match the accessibility that is given in the UK to such funds, subject to its own plan deed and rules, he said.
This created the potential for flexible access for members in Guernsey’s significant former QROPS book of business.
He added: “As most such members are in multi-member plans, it seems unlikely any trustees will provide flexible access from those plans.
“As happens elsewhere, including in the UK, members that desire flexible access will change structure or transfer into specialist plans designed to meet the specific need, leaving the existing schemes unaffected.”
