for financial advisors · vantage qrops pension ... our qrops can accept client pension transfers...
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Vantage QROPS Pension
The Vantage QROPS Pension is written under a deed of trust subject to Jersey law and is available to both Jersey resident and non-resident members. It has tax approval from the Jersey Comptroller of Income Tax and is recognised by HMRC as a QROPS.
BackgroundWith effect from 1st January 2015 amended legislation enables Jersey QROPS as an option to pension investors living off the island.
For many years the Island has had a large number of QROPS pension schemes recognised by HMRC however local law restricted these only to Jersey resident individuals. The revised Income Tax (Jersey) Law permits non-resident pension members to transfer their UK tax-relieved pension funds into the jurisdiction, offering a secure environment to protect your client’s pension assets.
JerseyJersey is one of the world’s leading International Finance Centres. Reliability, political and economic stability, and a sophisticated and comprehensive infrastructure of laws have kept Jersey at the forefront of global finance for over 50 years. The Island has a AA+ credit rating with Standard & Poor’s (S&P).
The Island’s status as a Crown Dependency gives the jurisdiction constitutional rights of self-government and judicial independence. This offers both businesses and investors the benefits of an independent international finance centre which is close to the United Kingdom and mainland Europe. Jersey is in the same time zone as London and daily flights are available there along with regular flights to other European centres.
Jersey remains one of the best regulated international finance centres, a position that has been acknowledged by independent assessments from some of the world’s leading bodies including the OECD.
Key Features of the Vantage Jersey QROPS
A secure environment to protect your client’s pension assets.
A wide range of “Open Architecture” investment choices and vehicles for the pension fund’s continued future growth.
The ability to consolidate more than one existing pension fund into a QROPS plan.
No maximum / lifetime limit on the amount held in the pension fund.
Ability to pass on pension funds to selected beneficiaries upon death.
No restriction imposed on the level or frequency of contributions – a single lump sum contribution / transfer can be made at commencement of the QROPS plan, or continued contributions can be made thereafter from wherever the member may be living in the world.
Multi-currency options – GBP, EURO, USD, etc.
Up to 30% tax free lump sum option can be taken.
A number of options on retirement; the choice of purchasing a traditional annuity from an insurance company, receive a regular income from the pension trust (at up to maximum of 150% of UK GAD rates).
Ability to transfer out to another recognised pension scheme (outside of Jersey) at any time in the future.
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Frequently Asked Questions
Establishment / Contributions
What funds can be transferred into the Vantage QROPS?
Our QROPS can accept client pension transfers from most forms of UK tax approved pension schemes, including occupational pension schemes (defined contribution or defined benefit), personal pension schemes, SIPPs and SSAS’s.
Is there a limit on pension transfers or contributions?
There is no limit to the number of different pension funds that can be transferred into a QROPS, however the transfer from a UK registered scheme to a QROPS is a benefit crystallisation event and at the point of transfer the UK pension fund value is tested against the lifetime allowance (£1m for 2016/17). If the amount transferred exceeds the lifetime allowance the excess will be taxed up to 55%. This tax charge will apply regardless of where your client is resident at that time. However, once in a QROPS there are no on-going limitations on the size of the fund that can accumulate within the pension plan.
Can clients make additional contributions into their QROPS?
Yes, but they must be from relevant earnings.
What are the charges for a Vantage QROPS?
The client charges are set out in our Fee Schedule. The advisor is responsible for advising their clients of their own fees, including any investment or fund management charges that may apply.
How long does it take to transfer a UK pension into a QROPS?
Generally speaking you should think in terms of the process taking a couple of months. However, this can sometimes be longer for more complex transfers, such as, from an occupational pension scheme.
Is there a minimum transfer value?
We will not consider pension fund values below £100,000.
Investments
How can the client’s pension fund be invested?
Vantage offer an “open architecture” investment choice for advisors and their clients (subject to trustee approval). Typical QROPS investment strategies include equities, bonds, investment trusts, funds and commercial property.
What investments are specifically not allowed?
Certain activities are expressly prohibited, including:
Investment transactions between the primary beneficiary (or any person connected with him / her) and the fund;
Investments in “tangible moveable property”, such as works of art, classic cars, yachts, fine wine, etc.
Purchased life annuities;
In addition, assets of the fund are not to be used for the personal benefit or enjoyment of the primary beneficiary (e.g. residential property).
Can the Trustee make loans?
The Vantage QROPS cannot make loans to pension members themselves but the trustees do have the discretion to authorise loans to other parties, subject to commercial terms being applied.
Can it invest in property?
Investment into residential property is not permitted, however, investment in commercial property is permitted.
Can transfers be made in specie?
Yes, it is possible for the Vantage QROPS to accept in specie asset transfers from a UK scheme. However, both the transferring and receiving pension trustees must be willing and capable of doing so and additional charges may be imposed for complex investment strategies.
Does the pension fund currency have to remain in Sterling?
No, the QROPS pension can be held in (almost) any currency, e.g. GBP, EUROs or USD.
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Frequently Asked Questions
Pension Drawdown / Retirement
When can clients take pension benefits?
UK tax relieved pension funds can be taken from age 55, and must be taken by age 75, however, it is possible for the client to commence benefits earlier if they are in serious ill health or are in a profession that customarily retires before the age of 55. Jersey pension law permits pensions to be taken at age 50 (mainly for local residents) however, this would trigger a tax charge.
Can clients take a tax free lump sum?
Yes. They can take up to 30% of their pension fund as a tax free lump sum from age 55 providing that they have lived outside the UK for 5 years or more (otherwise the figure is restricted to 25% - the standard UK pension limit). One unique aspect of a Jersey QROPS is that after members have taken their 30% tax free cash option, they can then take advantage of additional 30% tax free payments from additional contributions they have subsequently made.
What are their options at retirement?
The Vantage QROPS pension offers your clients a number of options at retirement, namely;
1. purchase a traditional lifetime annuity from an insurance company,
2. they can opt to receive a regular income from the pension fund (paid out by the trustees), known as an “annuity equivalent”, or
3. A combination of 1 and 2.
How is the “annuity equivalent” calculated?
The trustees will calculate the amount in accordance with a set formula adopting the UK GAD tables. Jersey pension rules permit payments up to a maximum of 150% of GAD tables. Regular payments are then made to the member (annualy or monthly) with the balance of the fund remaining invested. The trustees will recalculate this amount every three years.
What happens if the client dies?
Within a Vantage QROPS the member can select nominated beneficiaries of the fund on their death.
If they die before commencing to draw any benefits from the fund then the trustees will pay the pension fund value over to the member’s estate. If the client dies after starting to take benefits and they’ve taken the annuity equivalent option (i.e. not purchased an insurer’s lifetime annuity), then the remaining pension fund will pass to the nominated person(s). QROPS pension payments are not subject to UK inheritance tax.
Reporting & Taxation
Do you have to report pension payments to the UK Authorities?
The UK government require the trustees to report certain occurrences in respect of UK tax relieved pension funds. These include pension payments, an annuity purchase, another pension transfer or “unauthorised payments”.
HMRC reporting is required if benefits are paid to the member, or if the funds are transferred on to another QROPS scheme, if the payment or transfer takes place within 10 years of the original offshore transfer. Should payment (or an onward transfer) be made 10 years or more after the original transfer from the UK, then HMRC reporting is only required if the member is still UK resident, has been resident in any part of the tax year in which the transaction is made, or has been UK resident in any of the previous 5 full tax years.
Is the investment growth taxed?
No. Income derived from the investments and deposits of a Jersey QROPS is exempt from Jersey income tax.
Will the member’s pension payments be taxed on drawdown?
Under Jersey tax laws pension income payments are subject to 20% taxation (unless made to a member who is tax resident in a country with a Double Taxation Agreement, “DTA”, with Jersey).
What about tax on their death?
If the member dies before retirement then no tax is payable. Should they die after having taking benefits from their fund then Jersey law imposes a 10% tax levy upon paying the fund over to the deceased’s estate.
Other
What happens if the client returns back to the UK?
There is no obligation to transfer the QROPS back to a UK registered scheme, however, it may be more advantageous for the client to do so.
Can the pension be transferred away from Vantage at a later date?
Yes, providing the proposed scheme is tax authority approved and recognised as a QROPS and the accepting scheme rules permit transfers in. A transfer may be advantageous for the client in terms of lower taxation when they go into drawdown.
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The Vantage Commitment
An experienced and established provider of retirement planning solutions with a professionally qualified workforce. The provision of full pension trustee and administration services.
Vantage Limited is an independent, privately owned Jersey registered business and is regulated by the Jersey Financial Services Commission for the conduct of trust company, investment and general insurance mediation business. Vantage Pension Trustees Limited, a wholly owned subsidiary is licensed by the Jersey Financial Services Commission for the conduct of pension trust company business.
The information in this document is provided on our understanding of current law, practice and taxation which may be subject to change. No responsibility can be accepted by Vantage Limited or Vantage Pension Trustees Limited or their employees that may arise from the information contained within this document. It is the responsibility of the financial advisor (or other specialists) to provide all retirement planning, pension transfer, taxation and/or legal advice.
For a full list of all HMRC recognised QROPS schemes:
https://www.gov.uk/government/publications/list-of-qualifyingrecognised-overseas-pension-schemes-qrops
Vantage Pension Trustees Limited, PO Box 420, No.4 The Forum, Grenville Street, St. Helier, Jersey JE4 0WQ
Key Contacts
Follow VantageT: +44 (0)1534 758875 E: [email protected] www.vantage-pensions.co
Vantage Pension Trustees Limited is regulated by the Jersey Financial Services Commission for the conduct of Trust Company Business. Version: 7 (November 2016)
Chris HallDirector
D: +44 (0)1534 706515E: [email protected]
Martin HealeyPension Manager
D: +44 (0)1534 706512E: [email protected]
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