Guernsey: QROPS, QNUPS and EFRBS – offshore pensions for high earners

Last Updated: 20 July 2010
Article by Adrian Howe

Most Read Contributor in Guernsey, September 2018

This article was originally published in Pensions Insight, July 2010

Adrian Howe, Pensions Director at Marlborough Pension Trustees, explains all when it comes to QROPS, QNUPS and EFRBS

Since A-Day in 2006, the UK has been going through massive changes as successive Governments have looked at savings and pensions for people in the future. The problem is that people in the UK are particularly poor savers, and the Government has been failing to incentivise people to put money into pensions, cutting tax relief and putting a limit on contributions. As a result, many in the UK are looking at offshore contracts from an employer's point of view and an individual's point of view because there is no choice in the UK. With limits on annual contributions and a lifetime cap of £1.8m, it is restrictive for high earners. The offshore pension arrangement we are involved with are becoming more important to those in the UK and to those leaving the UK for offshore islands such as Jersey, Guernsey and the Isle of Man. With capital gains tax and income tax rises on the cards, more and more people are asking themselves whether they want to be in the UK. High net worth individuals in particular are questioning whether they need to live in the UK in order to run their businesses in the UK, given transport links and the ease of moving to places such as the Channel Islands.

All about QROPS

It was the A-day legislation in 2006 which really allowed Qualified Registered Overseas Pension Schemes (QROPS) to take off. These rules outline how an individual in the UK who is planning to leave or who has already left can transfer their UK registered pensions out to an alternative offshore arrangement. A QROPS is an offshore pension which is registered in a jurisdiction qualified by HMRC and approved by the jurisdiction where the trustee is resident, although not necessarily where the individual is resident. What happens is that when a member applies to a particular scheme the trustees in the offshore plan have to apply to the onshore trustees for the transfer of the member's pension. The UK trustee will confirm with HMRC to see if it is an approved scheme. Approved means it is qualified in the UK for a transfer of registered pension, and must abide by certain rules to allow the transfer. There is no tax charge for the transfer to an authorised pension scheme. Following the transfer to the new scheme, the trustees have to abide by a five year reporting requirement from the date the individual leaves the UK. During that time the scheme trustees have to abide by UK pension rules such as retirement age and drawdown.

After the five years is up, the requirement to report back to HMRC on any transfers or payments to members during that year expires, and the plan falls into the jurisdictional rules of the offshore pension scheme. If your QROPS is registered in a non-EU country such as Guernsey, Jersey, the Isle of Man, or even in EU countries such as Malta which have relaxed pension rules, you will now have far greater flexibility in investment choice and in drawing benefits. And if you are resident outside of the UK in one of these zero tax jurisdictions, you will pay no income tax. You will get no tax relief for any additional contributions paid in, but you potentially pay no tax on the way out. So the QROPS structure is for transferring existing pensions, not for plans to which you are still contributing. And individuals who are looking to transfer into a QROPS need to take very good advice to ensure the structure is tax efficient in their country of residence.

QNUP is the new QROP

A related pension plan is the Qualifying Non-UK Pension Scheme (QNUP): a recent development made possible by new HMRC legislation (statutory instrument 51/ 2010.) A QNUP has the benefits of a QROP, but is in addition exempt from UK inheritance tax. Inheritance tax is relevant for anyone domiciled in the UK (whether they are resident in the UK or not) and immunity from this tax is a considerable benefit.

Another great benefit of a QNUP is that a UK resident can contribute to a QNUP from taxed income to increase their pension funds. You might consider doing this if you were a UK resident who has maximised their registered pension allowance and still wanted to make contributions; or if you are earning over £150,000 a year and consider the new anti-forestalling restrictions on tax relief so onerous that the benefits offered by a QNUP outweigh the slim tax relief back at home.

Understanding EFRBS

Employer Financed Retirement Benefit Schemes (EFRBS) are a completely different pension structure which can be advantageous for high earning UK residents. EFRBS were devised to incentivise senior executives and staff members, shareholders and directors. They allow a corporate to make a contribution to an EFRBS from untaxed income to provide pension benefits to members at a later date. The employer makes the contribution gross of National Insurance (although it is recommended not gross of corporation tax). There is no income tax liability as only the employer makes a contribution.

The benefit is that the money is in a pension scheme for the member with gross roll up until retirement, greater flexibility, no capital gains or inheritance tax and you can retire from the age of 55. At retirement, depending on your country of residency, you will pay income tax as usual at your personal rate. The one issue you need to be aware of is that in the UK some promoters offer EFRBS with corporate tax breaks and loan backs to members worth up to 80% of contributions; this is aggressive tax planning and will more than likely be attacked by HMRC. Indeed, HMRC have said that in the next 12 months they will be reviewing such employer sponsored pension schemes. This is why it is important that if you are setting up an EFRBS it must be constructed as a normal pension scheme in case the rules change.

For more information about Guernsey's finance industry please visit

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions