Tuesday, 17 April 2012

New Generation QROPS 2012


New Rules from 6th April 2012

Major changes have been made by the UK Government to the rules and regulations about Qualifying Recognised Overseas Pension Schemes (QROPS). Though only formally announced on 21st March 2012, these changes became effective from the start of the new UK Tax Year on 6th April 2012.


This now reflects the listing and delisting exercise carried out by HMRC on 12th April 2012

Many of the new rules are administrative and do not affect most pension plan holders but others are more fundamental. These are as follows;

  • QROPS must pay a maximum of 30% of the pension fund as a lump sum of cash, because 70% must be held to provide future income. It is no longer possible for 100% ‘cash-outs’ to be made

  • Jurisdictions, where the QROPS Trustees are sited, MUST apply the same tax exemptions on pensions available to both residents and non-residents. This helps to create a fair and open market. Though HMRC have disqualified Guernsey schemes which comply with this rule

  • Under the old rules once a QROPS holder had five full and complete tax years of UK non-residency, the Trustees no longer had to report withdrawals to the UK Tax Authorities (HMRC). This has been extended to ten years.

  • All payments made from a QROPS must be reported by the Trustees to HMRC within 60 days. This used to be a full year.

New Generation QROPS

Independent Financial Advisers, who I recommend, can offer clients a ‘Whole of Market’ solution. They are, therefore, pleased that immediately they have more than one major jurisdictions which meet the new rules and that we can offer solutions. Email me for a referral

Guernsey
Guernsey was the market leader for QROPS but is unlikely to continue to be so. Internal laws have already been put in place to offer a solution known as 157E, but HMRC has made a pre-emptive strike to disallow these. This is a pension plan, fully compliant with HMRC rules but still not allowed even though they available equally to both residents and non-residents of Guernsey.

I suspect we haven't heard the end of this. If you already have a Guernsey QROPS please contact me by Email initially

New Zealand
Because NZ had previously made 100% cash-outs available, many financial services people thought that they would no longer be able to offer QROPS. This, however, is not the case and new ‘products’ are emerging which satisfy all of the new rules.

NZ will strictly follow the new rules, especially no lump sums in excess of 30% and will continue to pay income without tax deduction. The new schemes will be available to both residents and non-residents.

Malta
When the original QROPS rules commenced in 2006, Malta was in no position to offer a pension plan which complied. However, by December 2010 the appropriate legislation in Malta was enacted which allowed QROPS.

Malta will be the biggest beneficiary of the new rules. It’s QROPS plans are now established and all potential objections removed as both UK and Malta are full members of the European Union (EU). To many clients in Europe, this is a big advantage especially as Malta’s currency is the Euro.


There is now, more than ever before, the need to get Professional, Independent Advice.

Trust their qualifications NOT their adverts

I have already ensured that only the best will be recommended. The individuals will have the appropriate qualities and qualifications and their organisations will have technical expertise and strong administration. You can email me in confidence for a recommendation.

You might also benefit from earlier posts on my Blog;

Getting Professional Advice

‘I thought about QROPS but it’s not for me’
Considering alternatives maybe New Generation QROPS are better?

UK Pension Scheme but you live in Spain


No adviser that I recommend ever charges an up front fee



David Goodall
Financial Pages in Spain