Guernsey: Bespoke QROPS – The Alternative To Multi-Member Schemes

Last Updated: 8 October 2010
Article by Neil Dorey

Most Read Contributor in Guernsey, September 2018

Originally published in Professional Adviser, 30 September 2010

Many people emigrate from the UK every year. Some of these individuals will be highly mobile professionals, for whom short-term residence in a country is the norm. Others will be embarking upon what amounts to a much more fundamental change in their lifestyles – leaving to make a new and settled life in another country.

Whatever the motivating factor for their move, one significant aspect of an individual's financial affairs that they should consider is the continuing relevance of retaining their pension fund in the UK once they, themselves, have left - whether or not to move that asset out of the UK, either to their new country of residence or to another overseas territory. That decision alone is not always straightforward – it will be influenced by a variety of factors – but many will choose to export their pension fund away from the UK's regulatory and fiscal systems.

Since 6 April 2006 the Qualifying Recognised Overseas Pension Scheme (QROPS) regime has brought a new dimension to the portability of UK pension arrangements. Broadly, a QROPS is a non-UK pension scheme approved by Her Majesty's Revenue & Customs (HMRC). QROPS status allows an overseas scheme to receive the inward transfer of an individual's UK pension rights, thus enabling a non-UK resident individual, or an individual leaving the UK, to benefit from the advantages of a non-UK pension arrangement.

Over the course of the four years following their introduction by HMRC, Guernsey has grown to become a key player in the QROPS arena. The Guernsey Income Tax Office has a professional working relationship with HMRC and this has led to the emergence of a well regulated and developed QROPS environment, with quite a number of financial services companies, each offering their own individually styled QROPS products. Many such products take the form of multi-member schemes, which undoubtedly represent a suitable solution for many people seeking to migrate their pension funds out of the UK.

Intertrust Guernsey (a member of the wider Intertrust global network) is a long-standing Guernsey based financial services business with a strong emphasis on private client, trust and corporate services. We act for many high net worth individuals who have emigrated from the UK and, as part of our wider financial and tax advisory/structuring capabilities, we advise upon the establishment of local bespoke QROPS. Such schemes take the form of a Guernsey Retirement Annuity Trust Scheme, approved under S.157A of the Income Tax (Guernsey) Law, 1975 as amended, the characteristics of which are such that the Schemes are also capable of obtaining QROPS approval from HMRC. In addition to advising on the establishment of the schemes, Intertrust, as a fully licensed fiduciary company, is able to act as scheme trustee and to provide a full administration service.

By the very nature of their wealth profile, our clients will have typically built up significant UK pension funds. Whilst a multi-member QROPS scheme may provide an adequate solution to their pension requirements, such clients will very often have a clear preference for a more bespoke, single member, arrangement – one which can provide them with maximum flexibility (within the appropriate regulatory parameters) and a degree of personalisation and tailoring which the multi-member option cannot generally achieve.

Guernsey based bespoke QROPS are suitable not only for Guernsey residents, but also for those residing outside of the Island. The philosophy behind such schemes is, as already noted, to offer a flexible and tailored arrangement. These characteristics manifest themselves in several respects, but most notably, perhaps, in the trustee's approach towards the investment strategy of the fund. In contrast to many multi-member schemes, investment choice is not limited to a narrow "in house" suite of funds or to a "preferred" investment manager. Rather, with bespoke arrangements there tends to be close interaction between the trustee and the member, whose views on the investment of the fund may often inform (though not dictate) the trustee's investment decisions and direction.

Very often, clients will be seeking an ability to have their fund invested in a wide (or, at least, less restrictive) range of asset classes, including direct property investments, private company shares, loans to the member himself, etc. A bespoke arrangement allows the scheme trustees to consider such specific and alternative investments in the context of the overall fund. It has to be recognised, however, that the level of flexibility and personalisation offered by a bespoke arrangement should not translate itself into the member's carte blanche control over the scheme funds. Fiduciary responsibility for the scheme fund rests with the trustee. In this respect, an important element of any bespoke arrangement should be the involvement of a professional, diligent and proactive scheme trustee/administrator with a specialist understanding of the (for example) Guernsey law trust instrument which underlies the QROPS.

A bespoke QROPS is not a "retail" product in the way that a multi-member scheme might be considered. Rather, by its very nature, it is a personalised scheme that is very much more aligned towards, and forms part of, a service driven, private client relationship. Often there is a high degree of interaction between scheme trustee/administrator and the scheme member. Intertrust's long history of private client services, wealth structuring and trust administration means that we are ideally placed to fulfil not only the fiduciary and administrative role that a bespoke QROPS requires, but to also meet the expectations of high net worth clients.

Guernsey's QROPS industry continues to grow, having seen a proliferation of multi-member scheme providers in the past two years or so. Whilst it is recognised that a well-designed multi-member scheme can present a very attractive proposition for many, it is not everyone's preferred solution. As a result of the ever hardening fiscal, political and economic environment, the UK is seeing an increasing number of high-profile and wealthy individuals leaving her shores to live abroad. Given that such individuals are more likely to have a preference for personalised arrangements it is perhaps not unrealistic to expect that the bespoke element of the Guernsey QROPS market is also set for a healthy future.

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.

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