States of Guernsey lawmakers are expected to be presented with the plan, put together by Guernsey’s Treasury & Resources Department, when they meet next month.
If the plan is approved, it will make possible the reinstatement of possibly dozens of Guernsey QROPS, which have been sitting in limbo ever since April 2012. That was when HM Revenue & Customs removed almost all of the qualifying recognised overseas pension schemes held in Guernsey at that point – 310 of them – from its list, following unexpected changes in the transfer requirements.
The action affected these pan-island occupational schemes because they were set up, typically by financial services firms with operations in more than one of the three Crown Dependency islands, to tax Guernsey residents differently from those scheme members resident in Jersey or the Isle of Man. This was because the employees of these firms who lived in Jersey or the IoM would be taxed differently in those jurisdictions.
This flexible tax feature meant that these occupational schemes were automatically de-listed in the same way as those schemes that were set up to accommodate the UK pensions of people living in a “third country”, such as Spain or France, who typically moved their UK pensions to Guernsey when they left Britain for good, since these schemes also necessarily treated non-residents' pension fund payments differently from those of residents, as different countries had different tax rates.
Stephen Ainsworth, president of the Guernsey Association of Pension Providers, which represents pension fund administrators in Guernsey, said GAPP welcomed the proposed tax law amendments.
"This is a positive move to enable pan-island schemes to regain QROPS status, and hence enable employees moving from the UK to bring their pension rights with them," Ainsworth added.
"It supports businesses with pension schemes which operate across the islands."
However, he added, "there will be issues for any Guernsey occupational pension schemes with members beyond the islands and the UK. Employers sponsoring such schemes should be taking action now, in order to avoid any unintended consequences of these proposed changes."
