As reported, legislation to make such transfers acceptable to Britain’s tax authorities, who determine which overseas pension schemes meet its strict qualifications, has been drawn up and is due to be taken to the Gibraltar Parliament “within six to eight weeks”.
London & Colonial does not yet have a QROPS in any jurisdiction. It had been close to setting one up in Gibraltar in 2009, when pension administrators there jointly decided to suspend all pension transfers there after HMRC expressed concerns over the Gibraltar QROPS regime.
That situation has mostly remained unchanged, although last year STM Fidecs launched a scheme that it said met HMRC’s requirements, and which is on HMRC’s list.
London & Colonial does, however, have a qualifying Non-UK pension scheme (QNUPS) in Gibraltar, where it also has a number of operations including a life insurance company and an annuities business.
Adam Wrench, head of product and business development at L&C, said the proposed change to Gibraltar’s pensions law “marks an important step for the QROPS market, and will revive what has essentially become a deflated industry for the British territory”.
“We are looking forward to finally being able to complete our range of UK and offshore self invested pensions. Until now the QROPS has been the missing piece in the jigsaw.
The launch of our QROPS will fully complement our existing range that currently includes our UK SIPP and offshore QNUPs.”
Tax of 2.5%
The fact that Gibraltar taxes its own residents over the age of 60 at 0% — which, it insists, is not the same thing as "no tax" — is understood to have been behind the concerns that led Gibraltar pension fund administrators to suspend transfers there nearly three years ago.
The proposed pension legislation provides for a tax on pension payouts 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 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.
There is also a retrospective element to the scheme that is designed to enable what is described as a "small number of pension schemes imported into Gibraltar" since 6 April 2006 "to comply with the requirements of other jurisdictions which allow exporting of pension funds", according to the details of the legislation released earlier this month by the Gibraltar government.
