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December 2020

Qualifying Non-UK Pension Schemes (“QNUPS”) – Trust or Contract?

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By Callum Beausire, Business Development & Marketing Associate at Concept Group Limited.

Both contract and trust based personal retirement benefits schemes are available and approved under Guernsey law.

How do they both work?

It is possible to establish and manage a personal retirement benefits scheme in a number of different forms, although the most widely used and recognised in personal pension provision has been through the use of a pension trust.

It is common for multi-member pension trusts, such as Retirement Annuity Trust Schemes (“RATS”) and Qualifying Recognised Overseas Pension Schemes (“QROPS) around the world, to use a ‘Master Trust’ and individual Sub-Funds are then created for each individual scheme member in order to provide segregation.

It is also possible to replicate this arrangement using a contract based scheme, which still allows for a multi-participant scheme with individual Sub-Funds. One way in which the segregation of funds is achieved is through holding the assets within an individual Cell of a Protected Cell Company (“PCC”) referenced to an individual’s Sub-Fund.

Both Trust and Contract schemes have been developed in order to ensure that an individual scheme member will be entitled to the same lifetime and death benefit options.

In simple terms this means that both types of schemes offer the same pension benefits. The primary differences arise in the ongoing scheme management and administration.  These differences are considerations primarily for the Trustee of the trust based scheme and the Administrator of the contract based scheme, and will have little if any direct effect on the individual scheme member or participant.

When might a contract scheme be better than a trust scheme?

Trust arrangements are not understood and/or not formally recognised in many civil law jurisdictions and as such, membership of a trust based personal scheme can sometimes result in complex discussions between an individual scheme member and the relevant tax authority within the civil law country in which the individual scheme member resides in.  It may also trigger additional reporting or taxation.

Therefore, it is possible for individual’s resident in certain civil law jurisdictions that a contract based personal scheme might be considered as a viable alternative as this may remove the uncertainty that a trust arrangement creates in that relevant jurisdiction.

Examples of civil law countries include; Austria, Belgium, China, France, Germany, Italy, Mauritius, Netherlands, Poland, Portugal, Russia, Spain and Switzerland.

Trust arrangements are better understood in common law jurisdictions.

Examples of common law countries include; Australia, Canada, Cyprus, Gibraltar, India, Ireland, New Zealand, Singapore, United Kingdom and USA.

Should you wish to learn more about any of the retirement benefits schemes that Concept is able to offer, please contact us on or call 01481 723550.


Concept or Concept Group means Concept Group Limited, Concept Trustees Limited and any other group or associated companies. Concept does not provide financial nor tax advice and nothing in this article should be construed as such, nor shall they be held responsible for any liability or loss arising directly or indirectly from any reliance placed upon the content of this article.

The information in this article is based on our understanding of current laws and practices, both of which are subject to change. Whilst every effort has been made to ensure the information is correct, Concept cannot accept responsibility for its interpretation, or any future changes to law and practices in any relevant jurisdiction, some of which may have retrospective effect.

Concept Group are licensed under the Regulation of Fiduciaries, Administration Business and Company Directors etc (Bailiwick of Guernsey) Law, 2000 and are regulated by the Guernsey Financial Services Commission.

Copyright © 2020 Concept Group Limited.

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