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Callum Beausire

Flexible Access Drawdown update – October 2017

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Further to our previous news article on 1st October 2015 where we first discussed the options available for Guernsey pension members, this update discusses the pragmatics of Guernsey Flexible Access after 2 years of practice, and further in  Guernsey legislation (pension regulation).

Which Guernsey pensions can have access?

The 2015 legislation provided for members of s.40 and s.157A pensions to consider their options for flexible access with respect to the legislation of the jurisdiction which sourced their pension funds.

So, if your pension originally accrued in Denmark, it would be the flexibilities of Danish pension legislation you would consider.  If from the UK, the UK flexibilities would apply.

Thus pensions that are or were a QROPS, with UK source funds in them would have the option of flexible access drawdown.

Options for Guernsey Delisted QROPS

For delisted Guernsey QROPS, which are now OPS, this offers the ability to take partial or full access if the scheme of which you are a member, provide this service.

It should be noted that not all providers offer flexible access, and members should carefully consider their options and take appropriate advice because Guernsey delisted QROPS have grand fathered benefits by HMRC.

Frequent misleading facts and red herrings, 55% tax charges and IHT issues, the 70% rule

If you meet the criteria laid out under, you can avoid tax issues particularly the 55% tax on unauthorised payments. Due to changes in pension legislation in Guernsey, the IHT issue requires less mitigation, although you may still need to transfer to a separate pension plan to achieve flexible access.

The 70% rule is often also a red herring, Delisted QROPS lost ‘membership’ of QROPS status so they have no reporting and the undertakings given to HMRC such as the 70% rule, strictly speaking are not binding. The introduction of pension regulation at scheme level in Guernsey also assists.

Tax Implications

This news release is provided for general purposes and does not constitute tax advice.

Concept shall not be held responsible for any liability or loss which may arise directly or indirectly from any reliance placed upon the on information contained in this document.

Although flexible access is paid out gross. Taxes may be due in the country of residence of the member. Taxes may be due the UK, although as a general rule, those non-resident of the UK for more than 5 UK tax years may be outside the application of certain UK tax charges and the unauthorised payment regime.

There are exceptions so tax advice should be taken. As a simple rule if you are aged 55 or over and you have been out of the UK more than 5 UK tax years, full or partial flexible access is worthy of consideration.

No Guernsey tax is deducted if you are not resident in Guernsey.

My Scheme doesn’t offer flexible access?

If the scheme you are in does not offer flexible access you may consider transfers to schemes which do.

It is possible to transfer from one Guernsey Delisted scheme to another and from other schemes in other jurisdictions, to a Guernsey plan.

What criteria do I need to meet to transfer?

Transfers from other schemes, including QROPS in other jurisdictions are possible. If you are under age 55, UK resident or have been UK resident in any of the last 5 full UK tax years, transfer may not be in your interest, or be acceptable to your existing scheme.

This is a very broad overview, other criteria exists, not least further changes introduced by the UK Finance Act 2017 which apply to transfers since March 2017.

Why would I consider a transfer to a Guernsey Scheme?

Members consider transfers for a variety of reasons, costs, service, tax benefits or stability of jurisdiction to name some.

Whilst other jurisdictions can pay flexible benefit, it may be that the jurisdiction in which the members reside does not benefit from tax agreements in place and thus significant taxes may arise.
As payment of benefits are generally made gross from Guernsey schemes there is often no need to consider tax agreements irrespective of where the members is living or will live. This is a significant benefit and a reason members frequently seek a transfer to Guernsey.

In addition, members of Guernsey schemes may prefer to have the certainty that whenever a member becomes resident, (assuming that is not Guernsey) benefits will be paid gross.

Guernsey pension legislation also offers in certain circumstances other flexibilities, including the possibility to invest in property and other non- standard assets and the ability to take loans from the scheme.

QROPS Update: HMRC introduces “Overseas Transfer Charge” of 25%

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HM Revenue & Customs (“HMRC”) yesterday announced that a new overseas transfer charge of 25% will be implemented and will be effective for transfers requested on or after 9th March 2017 for transfers from a UK registered pension scheme to a Qualifying Recognised Overseas Pension Scheme (“QROPS”).

There will be a few exclusions from this charge in certain circumstances, as follows:

  • If an individual transfers to a QROPS in the country in which they are resident (for example a South African resident could transfer to an SA QROPS);
  • If both the individual and the QROPS are in a country in the EEA (for example a Spanish resident client could transfer to a Gibraltar QROPS);
  • If an individual transfers to a QROPS which is an occupational pension scheme sponsored by their employer;
  • If an individual transfers to an overseas public service pension scheme and is employed by one of the employer’s participating in the scheme;
  • If an individual transfers to a QROPS established by an international organisation and the individual is employed by that international organisation.

This would seemingly mean that for all overseas transfers where an individual is resident in a non-EEA country, for example an individual who is resident in South Africa, Singapore, Hong Kong, Thailand, Malaysia etc. and is looking to transfer to a QROPS in Gibraltar, a request to transfer made after 9th March 2017 would be subject to a 25% overseas tax charge.

For anyone who has already made a request to transfer from a UK registered pension scheme to a QROPS, assuming that the UK scheme administrator has received a “substantive request to transfer” before the 9th March 2017, the 25% overseas transfer charge should not apply.

Any requests that are received by a UK scheme administrator on or after the 9th March 2017, or where the request has been received prior to the 9th March 2017 but is considered a casual enquiry and not a substantive request to transfer, this would also seemingly be subject to the 25% overseas transfer charge.

In circumstances where the overseas transfer charge is applicable, the 25% tax charge will be deducted by the UK pension scheme administrator before the transfer is made.

Further to the above, there are some further rules around the aforementioned exclusions which could mean that an individual would become subject to the overseas transfer charge post transfer if their relevant circumstances change and it is considered to be within the “relevant period” and also for the potential return of tax paid under the overseas transfer charge if their relevant circumstances change and it is considered to be within the “relevant period”. The relevant period is 5 complete and consecutive UK tax years of the date the transfer takes place.

Therefore, for transfer requests after 9th March 2017 some individuals who are excluded from the overseas transfer charge at the time of their transfer from a UK registered pension scheme to a QROPS, may become subject to the 25% tax charge at a later date, for example should they move from a country within the EEA (assuming their QROPS was also within a country within the EEA) to another which is not within the EEA.

Similarly, for someone who is subject to the 25% overseas transfer charge, they may actually be entitled to reclaim this amount at a later date should their circumstances change so that the overseas transfer charges are no longer applicable, for example should they move to a country within the EEA (if their QROPS was also within a country within the EEA), or should they become resident in the country in which their QROPS is based.

For those individuals who have already transferred their UK pension benefits to a QROPS before 9th March 2017, they will not be subject to the overseas transfer charge, including if they subsequently transfer from their existing QROPS (or former QROPS) into another QROPS (or former QROPS) at a later date.

What are we doing?

In light of this announcement, Concept Trustees (Gibraltar) Limited will be making arrangements to contact all relevant UK registered pension scheme administrators in the coming days on behalf of prospective members to determine whether a substantive request to transfer has been received before the 9th March 2017.

For those prospective members where it becomes apparent that a substantive request to transfer has been received prior to 9th March 2017, it is expected that the transfer should be able to proceed and will not be subject to the 25% overseas transfer charge.

We appreciate that during this period there will undoubtedly be a degree of uncertainty for some prospective members until such time as we can ascertain from the various UK pension scheme administrators whether they have received a substantive request to transfer, however please rest assured that we will endeavour to resolve these uncertainties as swiftly and efficiently as possible, before being able to revert to business partners, intermediaries and prospective clients to determine the most appropriate course of action.

Regular updates and communication will be maintained with all affected business partners, intermediaries and prospective clients to ensure that everyone understands the position, as it becomes known to us.

We would be grateful for your patience during what will be an extremely busy time for us.

Should you have any general questions around the revised rules on transfers to QROPS and particularly the overseas transfer charge, please do not hesitate to contact Sean Gillease, Sales & Marketing Manager on +44 (0) 1481 740599.

EU Referendum

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The European Union (EU) referendum has now concluded and the outcome is that the United Kingdom (UK) will leave the EU, albeit the actual process to leave the EU is likely to take a number of years.

For existing clients and prospective clients of Concept Group, there is seemingly very little impact as a result of the decision.

For existing members of our Guernsey delisted QROPS

There will seemingly be no impact as a result of the UK leaving the EU.

For existing members of our Gibraltar QROPS 

There will seemingly be no impact as a result of the UK leaving the EU.

For prospective/future members of our Gibraltar QROPS

There is no immediate impact as a result of the UK’s intention to  leave the EU and anyone considering a transfer to our Gibraltar QROPS, can still do so safe in the knowledge that any transfer will be an authorised transfer.

To reassure anyone who is considering transferring to a QROPS, the ability remains unchanged to complete transfers from a UK registered pension scheme to a QROPS and with the same associated benefits as before the UK’s EU referendum.

If you have any questions on this matter, please speak with your Financial Adviser in the first instance.

How long can a transfer from a UK registered pension scheme to a QROPS take?

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We are often asked by advisers and clients – how long will a transfer from a UK registered pension scheme to a QROPS take?

Unfortunately, the answer is always the same – it is impossible to say. The time it will take depends on a number of things, such as: the processes of the UK pension scheme provider, whether the funds will be transferred in cash or in-specie, the number of pension schemes the client has to transfer and finally, all documentation being received in an acceptable manner – such as due diligence being certified correctly etc.

From our experience a transfer from a UK registered pension scheme to a QROPS can take anywhere from 2 weeks to 6 months to complete.

The best way for clients and their advisers to keep the time taken for a transfer to a minimum is to ensure that everything being provided is complete and valid. In an effort to assist and streamline this process, Concept offers advisers the opportunity to scan their client applications in for a pre-check, which is designed to identify any outstanding items prior to the original documents being posted to us.

A UK registered scheme provider is likely to have its own internal processes to follow when a request from a member is received to transfer to a QROPS, but under HMRC requirements the registered pension scheme should carry out reasonable due diligence checks in relation to the transfer and must check the published ROPS list and should be able to demonstrate that such a check was carried out no more than one day before the transfer was made.

Following our involvement in the development of the Code of Good Practice for Combating Pension Scams, we’ve been able to further streamline our processes and dealings to ensure that a UK registered scheme provider has everything they require readily available to determine the bona fide of our scheme. This included the creation of a Scheme Validity Information Sheet which is sent to transferring UK registered scheme providers, detailing all of the required information, references and approvals which they need to ensure the validity of the scheme they will be transferring to.

Further information in respect of the transfer-out process from a UK registered pension scheme to a QROPS can be found on the HMRC website here.

Tracing Lost UK Pensions

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We frequently come across advisers assisting clients who, for whatever reason, are unable to trace an existing UK pension.

This could be as a result of changing employment, having lost the scheme documentation, or simply because so much time has passed since the client was in the scheme that they can no longer recall any details of it.

In an effort to try and assist advisers who might encounter such an issue, the below few sources/references may be of use:

Firstly, the Money Advice Service provides some useful information and tips for anyone who has lost a UK pension, which would be worth sending on to any clients you might come across who find themselves in this position. (Read more).

The Government’s online system for tracing lost UK pension schemes also may be able to assist. (Read more).

Finally, the Pensions Advisory Service offers assistance for individuals who have lost their UK pension schemes, so contacting them may also be worthwhile. (Read more).


The States of Guernsey has agreed in principle the introduction of a secondary pensions regime

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The States of Guernsey has agreed in principle for the development and introduction of a secondary pensions regime in Guernsey.

This decision has been taken following an outline proposal which was put together by the Social Security Department as a result of the March 2015 States debate on the Personal Tax, Pensions and Benefits Review.

Much of the detail has yet to be determined on the secondary pensions regime, but in basic terms employers in Guernsey would have a legal duty to enroll their employees into the new secondary pension scheme, or into another qualifying scheme. Employees can choose to opt-out, but experience from elsewhere suggests that most people who have been enrolled into the pension scheme will stay in.

Further information can be found here.

If you are an employer and/or an individual and wish to discuss how the proposed secondary pensions regime could impact you, please call a member of our Sales team who will be happy to speak with you.

New Rat rules take effect at end of the year

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Revised rules for retirement annuity trusts will now come into force from 31 December, the Guernsey Financial Services Commission has announced.

The commission pulled a set of rules at a late stage following a review and has made one change to the new list.

The revised rules were issued for comment following a consultation last year.

The objective of the review was to determine whether changes could be made to the rules on the pension product which might reduce costs and open up opportunities for the development of self-invest pensions without any reduction in the protection available to a member.

The objective of the review was well received by industry and the public at the time.


Via: Guernsey Press, Wednesday 9th December 2015

Guernsey Finance Appoints Non Executive Director of Concept Group, Lyndon Trott, as New Chairman

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The Board of Guernsey Finance has today announced that Concept Group’s Non Executive Director, Lyndon Trott, will be appointed as its Chairman with effect from 1 December. Mr Trott will replace Jim Gilligan, who is retiring as Chairman having held the position since 2006.


“I am delighted to have been invited by the States of Guernsey and the Guernsey International Business Association (GIBA) to support the promotion of Guernsey’s finance sector in this way,” said Mr Trott.

“Guernsey has a very strong offer – quality, stability, expertise and substance. Our banking sector remains strong, we’re a world leader in insurance and trusts and we have a powerful funds sector that drives investment into the UK and Europe”.

As well as sitting on the board of leading Guernsey-based fiduciary company Concept Group, Mr Trott was elected as Guernsey’s first Treasury Minister in 2004, and then progressed to become the jurisdiction’s youngest and longest-serving Chief Minister to date in 2008, a position he held until 2012. He has combined his 16-year political career with 30 years in the financial services sector.

Concept Group Managing Director Roger Berry said: “We are delighted that Lyndon has been appointed as the new Chairman of Guernsey Finance. As Concept’s longest standing Non Executive Director we have had the pleasure of working closely with Lyndon for many years.  He has wide industry experience, but it is his natural gravitas combined with a disarming charm and humour that give him the ideal tools to act as ambassador for the Island’s finance industry. Concept Group is fully committed to supporting Lyndon and the entire team at Guernsey Finance in whatever way we can.”

Guernsey Finance is a collaboration between the Commerce and Employment Department on behalf of the States of Guernsey and GIBA on behalf of the Island’s finance industries.  Its remit is to market Guernsey as an independent international finance centre on the world stage.

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