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Pensions Made Easy #7 – Can a QNUPS be useful for people not resident in the UK?

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

A Guernsey QNUPS may be useful for anyone looking to provide funds for their retirement. The gross roll-up of investments in a Guernsey QNUPS and the payment of benefit gross means from a Guernsey perspective the schemes are tax neutral. No tax relief is given on contributions into the scheme.

Whilst a QNUPS is useful for UK residents, particularly those who have depleted or exhausted their lifetime allowance for contributions into a UK registered pension scheme (currently £1.055 million in UK tax year 2019/20) to create efficient pension savings and on death.  There is also planning opportunities for non-UK residents that are UK Domiciled.

Domicile is your permanent home, usually assigned at birth, it does not change necessarily if you move away. Breaking UK Domicile is difficult and even apparently tenuous links to the UK can maintain your UK Domicile indefinitely. You can be “deemed” Domicile if you have spent extended periods in the UK – typically 17 of 20 tax years.

Any person who has a UK Domicile, which on birth or subsequentially obtained is hard to remove, may have their entire world wide assets exposed to UK IHT at 40% on death, not just UK situated assets.

Using a Guernsey QNUPS to provide funds on retirement has the benefit of being based in a highly respected and safe jurisdiction with high levels of regulation and an Ombudsman to turn to If anything goes wrong.

Any funds remaining on death can be passed to loved ones with the potential benefit of being outside UK IHT.

This can be a complex area on which professional advice should be taken. Nothing in the above statement should be construed as tax or other advice or be relied upon.

If you have any further questions, please do not hesitate to contact us.

IMPORTANT

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 document 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 post.

The information in this document 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 © 2019 Concept Group Limited

Pensions Made Easy #6 – Can a UK resident benefit from a QNUPS?

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

Potentially they can.

A Guernsey QNUPS will be a local, approved and regulated pension scheme. Whilst it pays benefits gross without the deduction of Guernsey tax a UK resident member will be exposed to UK income tax on benefits received. Whilst typical QNUPS have underlying investments of marketable securities and portfolios, they can, unlike a QROPS, better invest into assets such as residential property, vintage cars, stamps, wine, jewellery etc. Structuring of QNUPS can be a complex matter requiring professional tax advice, but with care QNUPS can be a useful way for UK residents to add to their savings for retirement and potentially benefit from exemptions to IHT.

This can be a complex area on which professional advice should be taken. The above statement is a simplified summary answer.

If you have any further questions, please do not hesitate to contact us on info@cgl.gg.

IMPORTANT

Concept or Concept Group means Concept Group Limited, Concept Trustees Limited and or any other group or associated companies. Concept does not provide financial nor tax advice and nothing in this summary 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 summary.

The information in this summary 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.

Pensions Made Easy #5 – Am I stuck in a QROPS, can I get out?

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

For members in a current QROPS i.e Maltese or Gibraltar QROPS, it is possible to transfer out to a Guernsey QNUPs or delisted QROPS to achieve greater flexibility on investments and tax benefits but certain criteria needs to be met.

  1. Original transfer to existing QROPS was pre April 2017
  2. Members must be aged 55 or older
  3. Members must be non-resident from the UK for more than 5 UK tax years.

This can be a complex area on which professional advice should be taken. The above statement is a simplified summary answer.

If you have any further questions, please do not hesitate to contact us on info@cgl.gg.

IMPORTANT

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 summary 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 summary.

The information in this summary 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.

Pensions Made Easy #4 – What are the advantages of being a member of a QNUPS or a Guernsey QROPS delisted in 2012?

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

  • No ongoing reporting to HMRC
  • Benefits are paid gross out of Guernsey, irrespective of country of residence of the member, no reliance on tax agreements, as in Malta and no 2.5% tax as in Gibraltar
  • 30% Pension Commencement Lump Sum (“PCLS”) can be taken
  • Loans may be given to members
  • Wide investment choice, e.g. not restricted as in Malta
  • Flexible Access to lump sums possible, not available in Gibraltar
  • Flexible benefits options, drawdown and annuities
  • Designed to meet QNUPS requirements and therefore potentially exempt from IHT
  • Death benefits paid out gross of tax in Guernsey
  • Capable of receiving transfers in from other delisted QROPS and current QROPS if certain criteria is met
  • Contributions can be made to the scheme.

This can be a complex area on which professional advice should be taken. The above statement is a simplified summary answer.

If you have further questions, please do not hesitate to contact us on info@cgl.gg.

IMPORTANT

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 summary 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 summary.

The information in this summary 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.

Pensions Made Easy #3 – Is a member of a delisted QROPS disadvantaged by not being in a current QROPS?

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

Generally no, because once your pension transfer has occurred from a UK scheme to a QROPS you have achieved the main goal of moving your pension assets out of the UK. The one disadvantage of a delisted scheme is that it cannot receive a transfer directly from a UK registered pension scheme. None the less, members of a delisted scheme who have already transferred their UK pension across may be in a very similar position to members of a current QROPS, and not worse off. They may actually be better off.

It is perhaps odd to think that being a member of a delisted QROPS might be better than being in a current QROPS, but that can be the case. QROPS have been delisted for many reasons, some not good, so some delisted schemes are considered by HMRC never to have been a QROPS and in such circumstances HMRC can seek to levy significant taxes. However many delisted QROPS have chosen to delist or were delisted as a result of changing UK legislation. In those circumstances, HMRC is usually not claiming that the scheme was not a QROPS previously so member’s death benefits are maintained.

Significant changes to HMRC QROPS legislation occurred in 2012 and as a result, inter alia, most Guernsey QROP schemes were delisted. Quite possibly because the advantages of the Guernsey QROPS were perceived to be too good from a UK perspective. Whilst Guernsey can only accept new transfers to QROPS for Guernsey resident members, members in Guernsey QROPS that were delisted in 2012 have the benefit of having their position effectively grandfathered by HMRC, maintaining a very favourable position not generally achievable in current QROPS.

“If a pension scheme that is a QROPS on 5th April 2012 no longer meets the conditions to be a QROPS on 6th April 2012, members of that pension scheme who have already transferred their pension savings will be able to remain as members and receive a pension paid from the sums transferred without incurring additional tax charges.” – HMRC Pensions Manual at the time.

This can be a complex area on which professional advice should be taken. The above statement is a simplified summary answer.

If you have any further questions, please do not hesitate to contact us on info@cgl.gg.

IMPORTANT

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 summary 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 summary.

The information in this summary 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.

Pensions Made Easy #2 – What is a Delisted QROPS?

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

Delisted QROPS are schemes that have been delisted by HMRC at the request of the scheme administrator or by HMRC and may still carry reporting requirements to HMRC and restrictions on investments, the exceptions are schemes that were delisted in early 2012, or before, which no longer have reporting requirements

Schemes delisted by HMRC may never have met the Recognised Overseas Pension Scheme (“ROPS”) requirements and members of such schemes may have tax issues to resolve with HMRC. This contrasts with schemes that choose to delist or nor longer meet new ROPS requirements. These delsited schemes may be advantageous for members. Delisted QROPS are usually a Overseas Pension Scheme (“OPS”) i.e. lacking in Q (“Qualification”) and R (“Recognition”). If they contain UK tax relieved funds they are also Relevant Non-UK Pension Schemes (“RNUKS”).

Any scheme that is a RNUKS can fall within the application of certain UK tax charges, despite the member no longer being resident in the UK, and even if the scheme has been delisted.

These charges may be completely avoided if the transfer to the QROPS was pre April 2017 and the member has been non-UK resident for more than 5 complete UK tax years.

This can be a complex area on which professional advice should be taken. The above statement is a simplified summary answer.

If you have any further questions, please do not hesitate to contact us on info@cgl.gg.

IMPORTANT

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 summary 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 summary.

The information in this summary 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.

Pensions Made Easy #1 – What is the difference between a QROPS and a QNUPS?

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

People use QROPS to transfer UK tax relieved pension funds overseas. QROPS are generally for non-UK resident members or for people who intend to be UK non-resident in the near future. QROPS have restrictions on investing in taxable property e.g. wine, stamps, vintage cars, residential property but QNUPS do not. QNUPS are often used both by UK resident and UK non-resident members. You cannot transfer UK tax releived pensions into a QNUPS without creating very significant tax charges. Only a QROPS can achieve a tax free transfer.

This can be a complex area on which professional advice should be taken. The above statement is a simplified summary answer.

If you have further any further questions, please do not hesitate to contact us on info@cgl.gg.

IMPORTANT

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 noting 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 his article.

The information in this document is based on our undertanding of current laws and practices, both of which are subject to change. Whilst every effort has been made o 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.

Guernsey Pensions – How do I avoid the Pension timebomb?

By | News, Pensions, Secondary Pensions | No Comments

By Roger Berry, Managing Director at Concept Group Limited

We all lead busy lives, by the time we have negotiated the latest road closures, picked the kids up and walked the dog it’s time for bed.  But to make long term plans and avoid long term difficulties, occasionally, we have to stop for a few minutes and make time. Leaving it until tomorrow means that lots of tomorrows pass and you end up in a right pickle.

If you have significant wealth or have a good final salary pension scheme – you are one of the lucky people for whom financing in your retirement is not a major headache and the options described under wont concern you.  But for most people and certainly the young, it’s one of those things you know can’t be put off forever, but somehow never quite gets done.

Unlike current retiring people, the generations to come have to face a demographic timebomb that has very direct consequences on retirement and pensions.

The infographic above demonstrates (in round terms) that people are living much longer and when you look at the effects on the population in the future, those working and paying taxes as a proportion to those not working is changing awfully.

This isn’t something unique to Guernsey but unfortunately we are not well placed and our demographic time bomb is worse than many others, including the UK.  The States recognise that people are going to need to do more themselves to avoid the worst of the timebomb that’s ticking.  Primarily that will mean having your own funds in retirement.

I know that planning for your retirement is right up there with doing your annual tax return and visiting the dentist, but actually it’s not a difficult decision.  in simple terms your options on retirement in Guernsey are pretty straight forward:

Rely on the States to look after you – Not so much of a plan but more of “it’ll be alright on the night” approach.  If this fits your circumstances, don’t be embarrassed, according to our States own statistics, this is what the majority of people are doing as apparently only 45% of our population have pension arrangements in place. So for the other 55% grasp the nettle yourself and start a Retirement Annuity Trust (RAT) or get onboard with the upcoming Secondary Pensions project, already passed by the States, that requires Employers to have a pension plan for you.  This reflects governments own concerns that its ability to support you in the face of the demographic timebomb is ever reducing.

Employer – they may have a scheme which they/you or both contribute to and they probably pay for it to be run – so that makes it cheap for you.  If the contributions being put in are insufficient for your retirement needs, you may be able to make additional contributions. Even if they don’t have a scheme now the Secondary Pension project will soon require them to offer one. 

Personal – you look after yourself.  There are no insurance companies offering personal pension plans here anymore so the choice is simple – access a local RAT plan.  They are pretty flexible and widely available.  You can choose to contribute as much or as little as you like, but up to £50k per year attracts tax relief, so the tax breaks are significant. You can take a loan from your plan before you retire.  You usually can access benefit from age 50 including the option to take a tax free lump sum of up to 30% of your fund.  Thereafter you agree a pension amount to take regularly which is taxable but your personal allowances may reduce or totally avoid tax. Although you could consider starting a family type arrangement to look after your kids at the same time?  If they have a plan set up for them it may well encourage them to contribute what they can afford over time and with pensions the earlier you start the better.

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 pensionsmadeeasy@cgl.gg or call 01481 723550.

IMPORTANT

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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6 DAYS LEFT!

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 – https://www.weareguernsey.com/finance-events/2020/london-pensions-virtual-roadshow-2020/registration/

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