The new scheme, the Aurora Quantum QNUPS (Qualifying Non-UK Pension Scheme), is set to be launched “imminently” and will be targeted at UK domiciled individuals residing outside the UK who can use it as an alternative or additional pension.
While contributions to the scheme will not attract tax relief, the QNUPS can be used to provide a tax efficient wrapper in which investors can build up a pension while overseas.
There is no limit on the single and regular contributions which can be made into the scheme – although to ensure UK IHT efficiency, Skandia and Concept advise contributions should be kept within the spirit of “retirement planning”.
Furthermore, Skandia and Concept highlight benefits including, access to up to a 30% lump sum and the ability to pass on any residue of the fund to beneficiaries on death. There is no requirement to purchase an annuity and no maximum age limit for investing; meaning individuals may continue to contribute into the scheme after the age of 75.
In addition, the QNUPS will allow for both employer and employee contributions to be made which, according to Skandia and Concept, could be particularly attractive if a client works in a country which does not have formal pension arrangements.
No drawdown requirement
In order to qualify as a QNUPS, a scheme must meet certain prescribed conditions, such as being recognised for tax purposes under local law and by being available to the local population in the jurisdiction within which it is established – in this case Guernsey. Members will not be able to access their funds until retirement age, which is currently set at 55, although there is no requirement to start drawing income from the scheme at that stage.
The scheme will be classed as an overseas pension and is therefore subject to the foreign income pension rules. There are no reporting requirements to HMRC on payments from the scheme. Using an offshore bond as the underlying investment vehicle ensures the arrangement is exempt from capital gains tax, other than withholding tax, on investment growth.
The companies believe Aurora Quantum QNUPS will be most attractive to British domiciled expatriates residing outside the UK, who wish to make or add to their pension savings in an IHT efficient retirement solution. They added that the scheme could also be used to consolidate any existing overseas pension assets.
It will be offered at a one-off set up fee of £645 plus an ongoing annual fee of £845. Additional transactional charges may apply for regular or ad-hoc contributions and a £2000 fee is charged on exit within the first five years of establishment, reducing to £500 after that.
This is the second time the two companies have come together to launch an overseas retirement product. In March 2010 they launched the Aurora Quantum QROPS and have since launched variations of this scheme including a low cost product in October last year.
Rachael Griffin, head of financial planning and commercial development at Skandia International, said: “The retirement planning needs of overseas investors are often complex and require specific expertise to ensure the benefits on offer are fully maximised. The availability of QNUPS extends the range of solutions available to such individuals, offering new and efficient ways to save for retirement with added benefits.”
