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Callum Beausire

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.

London Virtual Roadshow

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Just 6 days remaining until the WE ARE GUERNSEY London Pensions Virtual Roadshow. 

This is a fantastic opportunity to see some of Guernsey’s leading pension professionals, including, Roger Berry, our Managing Director, discuss the wide range of Guernsey pension products, their governance, regulation and development.

To register for the webinar please follow this link –

LM Funds Marks Its Latest Casualty

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An article by Roger Berry, Managing Director of Concept Group Limited.

The appeal concerned a decision of the Royal Court of Guernsey from 2nd December 2019 Khuller v FNB, in which the Royal Court dismissed actions for breach of duty by FNB.

There had been some media attention raised by Manita Khuller before the hearing in which Khuller unsuccessfully represented herself.

The original decision concerned losses that had occurred on underlying investments in an insurance bond within a QROPS.  The most significant loss arising from investment of approximately half the pension fund in the infamous LM Performance fund, which was a total loss.  Originally, and for simplicities sake, it might be summarised by saying the Court did not find the Trustees grossly negligent or negligent at all as the Trustees had reasonably relied on the advice of an appointed investment adviser/manager.  The blurring of those differing roles a critical aspect in the successful appeal, finding the Trustees grossly negligent and in breach of their duties in allowing the investments.

This is an important decision highlighting the difference between investment adviser and investment manager when appointed by trustees and how it affects their normal responsibilities in a non-reserved powers trust.

The appeal was made on both the facts of the case the conclusion of law made.

Essentially it attacked two key elements of the case.  Firstly the appointment of adviser and secondly the investments made.  The latter element being where the appeal found success.

The trustees sought to show that they could rely on the delegation to the adviser/manager to remove or qualify its duties as trustee and in any event to be liable the trustees had to be shown to have acted with gross negligence (1).

Whilst in the appeal the appointment of the adviser was seen to be reasonable as certain checks had been made by the trustees and thus the original decision was undisturbed, the decision concerning breach of duties regards the choice of investments was overturned as it was concluded a mistake had been made in the original decision as to the position to which the adviser was appointed.  The appointment was as an adviser not as an investment manager, clear delegation of the trustees responsibilities was not achieved.

In reality, the adviser made direct instructions to the bond holder without prior knowledge of the trustees, who saw themselves unable to choose investments as they were not investment professionals.  The appeal court concluded the trustees had acted with indifference to its duty and the identified risks, which qualifies as being grossly negligent.

The quantum of damages is yet to be agreed.

  1. In this appeal case gross negligence was summarised as – a serious or flagrant degree of negligence, more fundamental than failure to exercise proper skill and/or care constituting negligence, and capable of embracing not only conduct undertaken with actual appreciation of the risks involved, but also serious disregard of or indifference to an obvious risk.

This case demonstrates that whilst some offshore advisers may have acted poorly for their clients, the deeper pockets of the trustees may be accessible to claims if the trustees have not properly delegated their responsibilities or used reserved powers trusts. 

Guernsey Secondary Pensions

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

This is due to affect employers and their employees in 2022 although the effects of the COVID-19 pandemic may well delay the date.  The main take-away is that it will be mandatory to offer a form of qualifying pension scheme to all staff.

How will it work?

Once enrolled an employee can then decide to opt out, but the employer still has a legal duty to re-enrol their employees every three years (if the employee has opted out) and the employee is able to opt out again if they so wish.

For employees that do not opt out, which one would expect to be most as they will benefit from the employer contributions, the requirements will be that the employee contributes 1% of earnings in the first year of enrolment, which will then increase to 6.5% over a 7 year period.  The employer contributions will start at 1% and increase to 3.5% over a 7 year period. Together the employer and employee contribution rate will be minimum 2% of earnings in the first year, rising to 10% after 7 years. Minimum rates can be changed for employer and employee providing that the joint employer and employee rate is not less than the minimum in any year.

What is an Eligible Employee?

An eligible employee is any employee that is resident in Guernsey and paying Social Security contributions.  All eligible employees would need to be automatically enrolled into a qualifying scheme by their employer and the eligible employee has the option to opt out of the scheme if they so wish.

What should employers consider?

It is important for the employers to carefully consider what is the most suitable route to take in order to meet the new auto-enrolment obligations.  Considerations such as costs, ease of use, investments, green and sustainable investments, the number of employees, staff turnover and remuneration packages will all factor into which route is the most suitable to take.  Options for employers are:

  • Establish their own qualifying scheme with an alternative provider;
  • Use an existing pension scheme that they may have;
  • Enrol employees into the default States Secondary Pension Scheme.

Concept Group Limited is a long standing, locally owned and locally run Guernsey based pension provider and has vast experience in operating employer sponsored pension schemes.  If you or your company is looking for more information about employer sponsored pension schemes, please get in touch by emailing us at or calling 01481 723550.

Concept Group’s NED Commonwealth Appointment

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Lyndon Trott, long standing Non-Executive Director of Concept Group Limited, has been appointed the independent Trustee of the Commonwealth Parliamentary Association’s (“CPA”) trust funds and is the first States of Guernsey Member to be appointed in such a role.

In October the CPA asked for expressions of interest from their 17,000 members, Deputy Trott applied and was short-listed.  Following the appointment, the Bailiff of Guernsey, Richard McMahon gave Deputy Trott permission to make a personal statement.  “From an impressive international short-list, we learned today that the application was successful and that the international executive committee has endorsed the appointment,” said Deputy Trott.  “This is clearly an honour and privilege for me personally, but in particular for our jurisdiction.” 

Deputy Trott will be working together with the Secretary-General and the Treasurer of the CPA International for a three year term.

The Board of Concept Group congratulates Lyndon on his prestigious appointment.

Recent Cases on Investment Losses Within Offshore Pensions Raise Interesting Questions

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By Roger Berry, Managing Director of Concept Group Limited.

As pension trustees we’re often asked “If my pension investments lose money and you’re my trustee aren’t you responsible?”

In some cases – the answer is yes – see the recent case where Malta’s Arbiter for Financial Services concluded that Momentum Pensions Malta was partly responsible for the losses suffered by clients of defunct advice firm Continental Wealth Management (CWM).

UK SIPP cases such as Carey Pensions and Berkeley Burke respectively demonstrate claims by pension members against trustees that have been unsuccessful and successful.  Much turns on the extent of due diligence performed by the trustee and the appropriateness of the investments. The Pension Scams Industy Group (PSIG) provide a “Code of Good Practice” which provides useful guidance on collecting appropriate due diligence.

Is there any guidance for Guernsey pensions?

Khuller Case – An offshore pension trustees case, heard in the Royal Court of Guernsey, in which the trustees were found not responsible for significant investment losses arising on alternative investments.  From a UK perspective – quite possibly investments that were not appropriate?

Manita Khuller, like many expats, was sold a QROPS into which she agreed to transfer her UK tax relieved pension assets.

Whilst interesting questions arise in this case about the transfer of two defined benefits schemes to the QROPS, the issue at point is what trustee responsibilities arose when subsequently some of the investments in the QROPS failed.

The investments included LM Managed Portfolio Fund (LM) and Mansion Student Accommodation Fund.  LM is likely to be a total loss. Mansion has, over time, repaid most of the capital. In addition, there was an investment in Prestige Alternative Finance Fund which performed well.

Irrespective of performance, the investments were made up of “alternative” and “professional investor” type funds.

In considering Trustee responsibilities, review of Guernsey Trust law, regulation of the Trustees and the legal approval framework of the pension scheme will be required.  However, critically, in understanding a Trustees powers and responsibilities examination of the governing documentation, the trust deed or instrument is required.

Following that one might also consider the “fair and reasonable” view which may be taken by an ombudsman. The UK case Berkeley Burke v FOS is of particular relevance.

In the Khuller case the deed was fairly standard, the Trustees had responsibilities for Investments and had the power to appoint an investment manager.

It is worth noting at this point that not all Guernsey QROPS have the same construction. It is not unusual to find “reserved powers” deeds in which typically the power to appoint the investment manager is with the member, not the Trustee.

Where a member has the power to appoint themselves or another party as the investment manager, the Trustee has considerably less responsibility.

In this case the Trustee had the power to appoint an Investment Manager who they reasonably considered was suitably qualified and competent.

It is perhaps notable that the adviser in this case was not licensed in the jurisdiction to provide the services of an Investment Manager.  Albeit, did it need to be?

In providing advice on the investments it could be argued to be advising the Trustees who were in Guernsey, leaving the advisers outside a requirement to be licensed. Consequentially the Royal Court of Guernsey concluded the Trustees had not breached their duties by appointing and unlicensed investment adviser.

The court also considered Section 22 of the Trusts (Guernsey) Law 2007, which directs Trustees to act, inter alia, within the law, the provisions of the Trust and only in the interests of the beneficiaries. It also provides that the Trustees “act en bon pére de famille” (2).

The Trustees also relied on the Trust deed that contained provisions to protect them from liability except arising from their wilful misconduct (3) or gross negligence (4).

This is not an unusual provision in Guernsey, the Crown Dependencies and other offshore jurisdictions but is different to the UK position. In itself it may be the material differentiator behind a decision which might otherwise seem curious from UK eyes.


  1. See Combating Pension Scams – Code of Good Practice.
  2. Act en bon pére de famille – as a prudent man of business would act – see Spread Trustees v Hutchinson.
  3. Willful Misconduct – consciously doing the act or omitting an act– Armitage V Nurse and Re Vickery.
  4. Gross Negligence – something more fundamental than failure to exercise proper skill and care –  Red Sea Tankers Ltd V Papachristidis. A serious or flagrant degree of negligence, not equating to reckless or intentional fault  – Investec Trust (Guernsey) Limited v Glenalla Properties Ltd.

A message to Clients and their Advisers of Concept Group Limited concerning COVID-19

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As of 25th March 2020, the government of Guernsey has decided that the most appropriate course of action to combat COVID-19 is to introduce strict measures on staying at home and away from others.

Concept Group is implementing its continuity plans to meet these requirements and to enable it to meet the needs of its clients and their advisers.

The health and safety of our employees is also crucial and whilst a minimal skeletal staff will attend the office, many other staff will have remote access from home.

As a consequence, Concept expects to maintain customer service and meet its clients’ needs whilst minimising the impact of these new strict government measures, but recognises that service levels may be affected by matters outside its control or if it experiences significant client and adviser requests.

Concept notes that the government measures are initially short term but expects they are, in all likelihood, going to continue for the foreseeable future.  Concept will provide further updates as measures change or its policies adapt to these extraordinary and challenging times.

If you need assistance please do not hesitate to contact us, preferably by email to, responses to telephone calls is limited due to remote working.

UK Pension Scam Industry Group relea­­­­ses new updated Code

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Roger Berry FCCA, Managing Director of Concept Group Limited comments: ­­­

Pension administrators faced with dubious transfer requests have long had concerns for their members over pension liberation, but they now need to be mindful of an increasingly sophisticated environment involving scam investments, commission swindles and other dishonest behaviour.

This sophistication requires pension administrators to respond, in order to protect their members.

The release of the new code, with amongst other things – up to date guidance, case studies and checklists, is a centralised resource to assist pension administrators.   We are delighted to have been one of the authors of the new updated code that provides helps to industry.  Although the code is UK centric it has great relevance and contains good practice for offshore pension trustees and administrators to consider.

Version 2.0 of the Code is now available to download from the PSIG website.

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