A week after the island’s authorities formally lodged legislation aimed at paving the way for such pensions to be handled by Jersey administrators, government officials said they had decided to hold off going ahead with the plans until HMRC had clarified its position with respect to third-country QROPS, particularly with respect to those held outside the EU.
The confusion follows Tuesday’s revelation that HMRC had told Guernsey officials that pension providers there would only be permitted to accept transfers of the UK pensions of Guernsey residents after 6 April, effectively putting an end to that island’s hopes of keeping its third-country QROPS industry going with a new pensions scheme, known as 157E.
The result is that as of this afternoon, HMRC’s official QROPS list contains only 3 schemes located in Guernsey, compared with 313 as of 13 March.
It is thought some Guernsey providers may be looking to set up operations in other jurisdictions, such as Malta, while Guernsey resolves the situation, which officials there are hoping to do.
“Our current position is that we don’t fully understand HMRC’s position, so we haven’t made a decision either way yet,” said Wendy Martin, director of tax policy in the Jersey Treasury & Resources department.
“The legislation recently lodged was for an international pension scheme. While it was assumed that initially transfers would come from the UK, it is intended to be [for wider use than just UK pensions]. As a result, the recent announcement by HMRC does not necessarily mean this law will not be implemented.
“We are going to meet with HMRC, and have been in contact with them already, to talk about it and to see what their problems are, and whether it’s something we can resolve.”
Martin said she was “confused” by HMRC’s position with respect to Guernsey, and “why they would take issue with something that is a proper pension scheme”.
“They apparently had concerns with some other jurisdictions, with ‘pension busting’, but you couldn’t do that with [our proposed] scheme. It’s very very strict.”
Current Jersey law permits the transfer to the island of the UK pensions of Jersey residents only. This means that the 138 Jersey QROPS listed on HMRC’s website, updated this afternoon, hold just the pensions of people who live on the island.
As reported, HMRC last week quietly removed that list, replacing it with a statement which notes that the list “will return in an updated form by 12 April”. The number of Jersey schemes is unchanged from a week ago.
To see the current list on HMRC’s website, click here.
Details of Jersey’s proposed scheme
Under Jersey’s proposed so-called Recognised Pension Scheme (RPS), benefits would not be paid out before the scheme member reached the age of 55, except in cases of the member’s death or the onset of "serious ill-health".
At least 70% of the funds in the scheme must be designated to provide the member with an income for life, and the benefits could only be paid out to what a summary of the new legislation called "a limited category of other people" on the death of the scheme member.
In order to comply with regulations recently implemented by HMRC, the new scheme would not provide Jersey tax relief on contributions made to an RPS, and no Jersey tax would be payable on benefits paid out of such schemes.
