Have you heard of QROPS? They are qualifying recognised overseas pension schemes and they’re taking the expatriate and offshore pension world by storm. The only trouble is, there are so many providers all bidding for your business that the waters have been muddied with confusing explanations about what QROPS are, what benefits they offer, and what potential pitfalls QROPS savers should watch out for.
Confusion in the financial services industry is not a good thing! No one wants to worry that they’ve accidentally ‘offshored’ their pension and exposed it to a potential 55% tax charge by taking the wrong approach. So fortunately one jurisdiction’s QROPS providers have taken it upon themselves to remove some of the confusion that currently abounds.
Unfortunately the information available only pertains to QROPS in Guernsey – but it’s a very good place to start! We’re talking about the fact that a draft QROPS Code of Practice has been produced in Guernsey to remove confusion and create transparency in the offshore pension marketplace.
The Isle of Man is the latest jurisdiction to worry that some of their QROPS providers’ interpretation of Manx rules go against HM Revenue and Customs accepted practice. Commenting on how far rules have been potentially been stretched by some schemes, a member of the Isle of Man’s pensions committee recently commented that: “I would say that we are in ongoing communication with HMRC on this issue. As a rule we do not want to be provocative as a jurisdiction.” And so you can really see why Guernsey has sought to clarify what is and is not possible with QROPS, what the benefits are and the qualifying criteria.
Every reputable offshore jurisdiction wants to achieve the right balance between competitiveness and compliance – and Guernsey is no exception. It has an extremely successful QROPS business-base, and it wants to maintain its lead in this area of financial services.
In producing a code of practice, Guernsey is also ensuring it stays on the right side of HM Revenue and Customs. The code of practice was first discussed in principle last year, and it has just been released in draft format for interested parties to review and comment on. The final code should be available in April.
Anyone considering their pension options, particularly expats who want to transfer their UK pension offshore with them, should seek qualified advice from an independent financial adviser regulated in the jurisdiction they operate from of course. However, a code of practice that clarifies how a potentially recommended jurisdiction manages QROPS business is excellent data to enable an interested party to complete necessary due diligence before committing their money to an investment scheme.