Guernsey: How Will UK Pensions Changes Hit International Pensions?
Last Updated: 20 March 2014

Tim Bush of Carey Pensions and Benefits in Guernsey comments on the UK budget changes announced on 19th March.

The seismic shift in UK policy towards pensions savings in George Osborne's budget is one that should boost pensions saving.

In one move, the UK has made pension savings dramatically more attractive by offering complete flexibility in drawing on your savings when you reach age 55. The tax incentives for saving in to a pension scheme still remain in the UK and this change means there's no longer onerous restrictions on drawing down your pension savings. The UK has also adopted more flexibility for smaller pension pots.

These changes take a whole host of negatives out of using pensions for retirement saving and should help boost the amount people put aside for their older years. Of course the additional flexibility may mean some are reckless when they reach age 55 and spend all their savings, but the majority will surely be better off. Governments around the world are struggling with ageing populations and the burden this places on supporting people in their retirement years. It needs radical thought and George Osborne looks like he's made a significant attempt at being radical.

As for the international impact, there is of course a large international pensions industry and Guernsey has historically been a key centre for this provision. Changes in UK legislation affected QROPS schemes two years ago but these latest UK changes look less likely to have a negative impact on International Pension Plans that will still attract employers who want to offer international workers flexibility as they move between locations, a broad and international investment choice and flexibility on retirement ages and drawdown. Of course, tax flexibility in International Plans remains unchanged and Guernsey plans have always had full flexibility in drawdown and retirement age which is what's made them so attractive.

QNUPS (Qualifying Non-UK Pension Schemes) should still be attractive to pension savers who have maximised their tax relievable investments in the UK or are close to their lifetime allowance and want a legitimate pension scheme that offers more investment flexibility than the UK.

The realisation that people need to make more preparation for retirement, as they expect to live longer, means the excellent Guernsey industry provision for international pensions looks set to continue to prosper.

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