Is your client locked into a Guernsey QROPS? Our head of international pensions has a word of warning.
With the pension market opening up as the UK Government moves to create "Pension Freedom", it would appear that some Guernsey schemes might seek to prevent those who have transferred their UK Pension Funds to a (now closed) Guernsey QROPS from taking advantage of the new regulations.
One Guernsey provider commented (extract):
"We are starting to see requests from other QROPS clients who are interested in the new flexible drawdown rules, which Guernsey does not currently allow. The difficulty that we have is that the Guernsey tax rules and the [name removed] scheme rules do not allow the transfer of a pension to a scheme that is more favourable that the existing arrangements.
"We have spoken to the Guernsey tax office and they acknowledge that this is a problem, however there is no formal mechanism that I am aware of to facilitate a transfer other than a concessionary agreement from the Guernsey Tax Office.
"I suspect that this is will not be the first case you have dealt with so I will be interested to discuss your experiences with other Guernsey Trustees."
When the new UK rules are enacted, this could lead to all sorts of ramifications:
- Were clients made aware of this before transferring?
- Was this disclosed in the Key Features documents?
- Who gave the advice?
- What are the potential tax implications for clients who move to certain tax jurisdictions and remain locked into Guernsey?
If you have clients in Guernsey who might at some point wish to take advantage of Pension Freedom or the Tax Treaty Benefits offered by Malta, you may want to start asking questions now rather than later.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.