The crown dependency’s deputy treasury minister, Jan Kuttelwascher, said its treasury and resources department intends to propose an amendment to income tax law allowing inward transfers to a Qualifying Recognised Overseas Pension Scheme the same flexibility as the jurisdiction from which the funds originate.
The will ensure Guernsey’s compatibility with the full QROPS flexibility announced by the UK’s HM Revenue & Customs in December last year.
“Such a change would enable members in a Guernsey pension scheme that has QROPS status access to the same pension flexibility offered by the UK, and would extend both to transfers already made and to future transfers into a Guernsey personal pension scheme,” said Kuttelwascher.
Stephen Ainsworth, president of Guernsey’s Association of Pension Providers, said the news will remove Guernsey policyholders’ fears that they would not be granted full flexibility because of the restriction on transfers to QROPS with more flexible payment arrangements.
“We learned last December that pension flexibility would be available to QROPS, and now Guernsey has confirmed that local rules will be relaxed to enable this flexibility to be applied to QROPS transfers to Guernsey schemes in the same way as it will be applied in the UK,” he said.
He added that if a policyholder did still want to transfer to a QROPS scheme in another jurisdiction, “they should now be able to do so”.
“Resolves any issues”
Roger Berry, managing director at QROPS provider Concept Group, said the news resolves previous suggestions that transfers from Guernsey’s delisted QROPS to other jurisdictions should be allowed for those who wished to access pension flexibility.
“It seems clear that members’ interests are probably best served by remaining in a Guernsey delisted QROPS,” he said. “The Guernsey QROPS industry is receiving considerable support from the Government to ensure it retains its reputation.”
He added that the announcement “resolves any issues” for policyholders wishing to transfer out of schemes on the island to another jurisdiction.
Changes
HMRC’s December changes removed the previous need to use 70% of the funds in a QROPS to provide an income for life. They will bring the schemes in line with fully-flexible UK pensions from 6 April this year, when the pension reforms announced in last year’s Budget will come into force.
In January, Malta altered its local legislation to mean QROPS are now subject to UK HMRC rules rather than local legislation, ensuring their compatibility with full flexibility.
Gibraltar, another popular QROPS jurisdiction, is yet to respond to the changes, but a change to its Income Tax Act in 2014 leaves it “very well positioned” to introduce full flexibility.
Last month, Gary Boal, managing director at Boal & Co, said HMRC has yet to vary or remove the requirement for QROPS to provide 70% income for life contained within SI 2010/51, the UK legislation which ensures the schemes are exempt from inheritance tax (IHT).
He said the omission could mean that policyholders who attempt to take advantage of the new flexibility could find that it is no longer IHT-free.
In April 2012, HMRC de-listed all but three of Guernsey’s QROPS schemes.
