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Trust and contract based personal pension arrangements such as QNUPS appear to be very similar, so what are differences between trust and contract pension product?

Both trust and contract QNUPS are managed to ensure that an individual scheme “member” (of a trust based scheme) and an individual “participant” (of a contract based scheme) will be entitled to the same lifetime and death benefit options.  So, for the member of either type of arrangement they will look and feel identical.

Typically, trust based QNUPS are a more widely recognised and frequently used form of personal pension product. UK based Self Invested Personal Pensions (“SIPPs”) and Qualifying Recognised Overseas Pension Schemes (“QROPS”) are frequent users of trust based pensions.

However, the use of Trusts generally is not advisable in some jurisdictions, because they may have tax legislation that focuses on trusts and creates tax liabilities that may be avoided, perhaps with contract-based pensions.

Some jurisdictions do not recognise trusts because they are civil law jurisdictions and thus conflict arises with the common law principles of a trust.

There are advantages in respect of civil law jurisdictions, to avoid trust based schemes which will not necessarily be understood or recognised within local law. This is where a contract based scheme may be considered more useful as this removes any uncertainty from the relevant jurisdiction which simplifies ongoing affairs for the individual.

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


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.