At least, that’s what sources involved in the international pensions industry told International Adviser, explaining that there had been a widespread perception, particularly in certain onshore UK circles, that The Pension Regulator’s crackdown on pension liberation schemes would, at least in part, focus on offshore pension products, such as QROPS.
Instead, they noted, the cases being heard today were being brought by the UK authorities in an effort to determine what, exactly, constitutes an “occupational pension scheme” under the law. None of the schemes involved in the case was located outside the UK, and the point of law at issue was said to be whether people who did not work for a particular company were entitled to participate in the occupational pension scheme of that company.
“For once, it seems, onshore is looking rotten to the core, while offshore is clean as a whistle,” said the head of one offshore pension scheme administrator, who requested anonymity.
Another source, who also asked not to be named, noted that assumptions overseas pension schemes might be caught up in the regulator’s crackdown on pension liberation reflects a perception that "offshore" entities are in some way "dodgier" than their onshore counterparts, to the point where many people in offshore financial services avoid using the "’O’ word", in favour of "international".
The image of offshore pension fund administrators is seen by some to have got a boost recently, with the news, in June, that HMRC applied to withdraw its long-running case against a group of investors who were fighting a decision by the Revenue to pursue them for tax and charges of up to 55% of the amount they transferred to a Singapore-based QROP scheme known as ROSIIP.
As reported here in February, the UK’s Pension Regulator (TPR) and various other government agencies have been cracking down on companies that entice Britons to access their pension pots before the age of 55, in response, it is said, to a doubling in 2012 in the amount lost to such scams.
Roger Berry, managing director of the Guernsey-based (and thus "offshore") pension company Concept Group, said his company had seen a "marked increase in transfer requests" from clients who wanted to transfer their Guernsey schemes to " a number of UK-registered schemes".
"While on the face of it such schemes are bona fide UK schemes, as they carry HMRC registration, our robust due diligence procedures have increasingly highlighted tangible concerns, [and ] typically, the schemes causing us concern are occupational by deed, yet the member is not employed by the sponsor of the scheme," Berry said.
"The information provided by HMRC and the Pensions Regulator on pension liberation earlier this year highlighted areas upon which to concentrate [our] due diligence and, along with earlier court cases involving Dalriada, demonstrated useful patterns and links.
"Nonetheless, it is of concern to us that it appears HMRC are satisfied to allow registration of UK pension schemes without completing their own due diligence."
Final word…
Geraint Davies, managing director of Montfort International, a UK advisory firm which specialises in looking after individuals relocating to Australia and New Zealand, said he was "not a bit surprised" to hear that TPR was focusing on UK firms in its crackdown.
"The UK Pension Regulator has absolutely no control over offshore pension fund administrators," he noted.
"If a UK scheme were to let a pension transfer into a QROPS without checking to make sure it was a proper scheme, they would be concerned, but that would be as far as their concern would go."
