According to STM, its new US QROPS has been designed to interact with the double taxation agreement (DTA) that exists between Malta and the US, which, it noted, “specifically deals with pension payments between the two countries in an efficient manner”.
The new QROPS is called the STM Malta (US Qualified) Retirement Plan. It features a no-exit-penalty feature, as do all STM’s QROPS; and clients who transfer their pensions into the scheme are entitled to free transfers between it and other STM QROPS in other jurisdictions if they wish to change at some point, said David Erhardt, pensions director of STM’s AIM-listed parent, STM Group.
In addition to Malta, STM currently operates QROPS schemes in Gibraltar and Guernsey.
As reported here last August, the concept of qualifying recognised overseas pension schemes designed to accommodate those with UK pensions who are either retiring to the US, or moving back there for good, is relatively new. It has been helped by the taking effect on 1 Jan 2011 of a new DTA between the US and Malta, which is where a number of these new schemes are administered.
The development of these QROPS schemes for US residents also follows changes in UK tax regulations that have made certain other financial planning tools less attractive in comparison to a well-constructed QROPS, financial planning experts have said.
QROPS providers have also noted that these schemes reflect the industry’s growing sophistication, which has made providers to feel more confident about meeting the complex and daunting requirements of the US tax authorities. QROPS schemes did not exist before 2006, when they were created as a result of a major overhaul of UK pension legislation known as A Day.
STM has had some experience dealing with the often complicated legislative and regulatory aspects of QROPS structuring. For example, when pension transfers to Gibraltar were suspended in mid-2009 over HMRC’s concerns about the way the territory handled the taxation of pensions, it shifted its operations to Malta. Then, last year, STM supplemented its growing Malta business with a new Gibraltar QROPS scheme that it managed to get approved by both Gibraltar’s Income Tax Commissioner and HM Revenue & Customs, paving the way for the resumption of UK pension transfers to the territory.
DTA ‘critical’
Erhardt noted that the US/Malta DTA was critical to the creation of the new scheme, as well as answering concerns raised recently by HMRC over QROPS that are administered in countries that do not have a DTA with the UK, and which offer a different rate of tax on pension income for non-residents than they do for residents of the jurisdiction.
Erhardt said STM was “delighted” to be able to offer its clients a US QROPS. “We believe that this DTA, which is one of 59 that Malta has in place, has allowed this to become possible.
“The importance of DTAs should not be underestimated especially in light of the recent HMRC proposed changes.”
The STM group of companies was created in March 2007 when the parent company was admitted to AIM, at the same time STM acquired the Fidecs group of companies which are based in Gibraltar. STM Fidecs had been founded in 1989 by Tim Revill.
Malta is a relative newcomer to the world of QROPS, with its first scheme having been launched in 2010. It now has some 10 schemes operating, according to HMRC’s website.
