Wednesday, 10 August 2011

Qualifying Non-UK Pension Schemes (QNUPS)

October 2011 Update

  • Get authorised and regulated advice

  • Remember that QNUPS is a Pension Scheme, with added benefits

  • Ideal for In-Specie Transfers
I’ve written posts about QNUPS before, when the response of readers is always good. There have been lots of queries and many people wanting to be referred to a qualified and regulated adviser by emailing me.

This contrasts markedly with the actions of large, well-known companies with big advertising budgets. Let me give you an example.

This particular company advertise extensively in all parts of Spain where expats live. From July to December 2010 they spent many thousands of euros on a substantial campaign to promote QNUPS. They also held many QNUPS seminars. At the turn of the year the QNUPS adverts stopped and have not appeared since in 2011.


I can speculate that there are three reasons;

  • They failed to embrace the concept of ‘in-specie’ transfers which I deal with later
  • They fail and refuse to disclose commissions even though they are regulated by the UK FSA
  • Irrespective of your individual circumstances, this company only promotes one investment solution for YOUR funds

I’m sure you don’t want to deal with a company like that, so please ask me for referral to a company who treats YOU as an individual. I will put you in touch if you email me.

In February 2010, HMRC confirmed that contributions to a Qualifying Non-UK Pension Scheme would be exempt from UK IHT. What this means is that as long as the QNUPS walks and talks like a pension, then the assets held in it will be protected from UK IHT.

This is not meant to be an exhaustive list, but I believe there are seven main categories of individuals who will most benefit from or should consider a QNUPS;

  1. Any UK resident who from 6th April 2010 became restricted on their UK pension contributions to basic rate tax relief.

  1. UK domiciled persons (that includes many UK citizens who have become Spanish residents), and UK residents who want to make pension contributions beyond the UK maximum limits.

  1. UK non-residents, including Spanish residents who already have a QROPS but want to add to their pension funds. A classic transfer would be UK savings receiving very little interest, including PEPs and ISA’s

  1. Individuals who want to build an IHT friendly investment, intended as part of retirement planning but not related to their income or employment situation. In fact, if IHT planning is the key component, even though this is a pension scheme, the ‘income’ from QNUPS can be nil

  1. Anyone looking for a way of consolidating their lifetime savings or investments without the restrictive rules of conventional pension planning. Though QNUPS is officially a pension scheme, it can be used more like a traditional savings or investment plan

  1. Any UK resident or domiciled individual who wishes to build up a pension fund in excess of the current lifetime limit

  1. Individuals irrespective of residency who want to move their existing plans, portfolios or other assets, to take advantage of the tax efficient QNUPS. This includes those who want to benefit from an ‘in-specie’ transfer

QNUPS provides an excellent opportunity for in-specie transfers. Investments you have built up, properties you own and other revenue producing assets can just as easily be a pension contribution. The investment does not have to be cash but cash is not excluded. Indeed the investments that can be held in a QNUPS are much less prescribed by HMRC than traditional pensions. Remember, however, that the QNUPS has to be a Pension Scheme but it is also a plan to defend assets from Inheritance Tax (IHT).

If any adviser suggests selling your assets and buying another financial structure beware. In-Specie Transfers offer a much more cost effective route, normally, and also selling assets can lead to an encashment charge or even a tax bill (eg Capital Gains Tax). To avoid this pitfall please speak to a recommended adviser. Please email me for details. Remember In-Specie Transfers.

There is also the opportunity to see 'QNUPS - Questions and Answers' which may deal with your own query

Also Remember the Regulators! I will only recommend an adviser who is authorised by one or more of the following;

Comision Nacional del Mercado del Valores is the principal financial services regulator in Spain and responsible for authorising investment products. A CNMV adviser can be recommended, please click here

Direccion General de Seguros y Fondos de Pensions is the Spanish regulator for insurance products which can be marketed in Spain. Email me to be referred to an authorised adviser.

The Financial Services Authority is the UK's financial services regulator. Many British clients prefer a UK adviser and have dealt with FSA regulated advisers in years gone by. For an introduction to recommended adviser, with experience in Spain, please click here .

I would also recommend the following which may give more information about items mention in this post;

You can write to me with your personal experiences or to be put in touch with a recommended adviser by sending me an email

David Goodall
Financial Pages in Spain