Following the Income Tax (Amendment No. 44) (Jersey) Law 2014 (the Amendment) and the introduction of greater flexibility as regards international pension fund transfers, both to and from approved Jersey schemes and the ability of non-resident individuals to contribute into Retirement Trust Schemes (previously, these schemes were known as Retirement Annuity Trust Schemes and were solely for Jersey residents), Jersey is now a "QROPs friendly" jurisdiction, ie non-resident pension members can transfer their UK pension funds into Jersey. A QROPS (a Qualifying Recognised Overseas Pension Scheme) is an overseas pension scheme that meets certain criteria set by HMRC and which can receive the transfer of pension benefits under a UK pension, without incurring tax penalties (a transfer to a scheme without QROPs status can incur a penalty of up to 55% of the transfer value).
To qualify as a Jersey QROPs:
- the scheme must be approved as a pension scheme by the Comptroller of Taxes in Jersey;
- the rules must provide that at least 70% of the funds transferred in to the scheme will be designated by the scheme manager for the purpose of providing the member with an income for life;
- pension benefits must not be payable before age 55 or earlier ill health; and
- membership of the scheme must be open to Jersey residents.
To comply with the requirements of a QROPs, the scheme manager (ie the person or persons administering or responsible for the management of the scheme) must obtain a reference number from HMRC and must notify HMRC of certain information about the scheme, including the country where the scheme is established, confirmation of how the scheme meets the requirements to be a recognised overseas pension scheme and provision of evidence (eg by supplying a copy of the scheme rules) to show that the scheme is a recognised overseas pension scheme.
The scheme manager must also undertake to inform HMRC if the scheme ever ceases to be a recognised overseas pension scheme and comply with any prescribed information requirements that fall on the scheme manager, including answering information notices and providing HMRC with certain information on payments made in respect of certain scheme members.
HMRC publishes and updates regularly a list of schemes that have told HMRC they meet the conditions to be a QROPS and have asked to be included on the list. The list is for UK and overseas pension scheme administrators and managers, as part of their due diligence, to verify that a scheme that is on the list has notified HMRC it meets the conditions to be a QROPS and it should be noted therefore that inclusion of a scheme on the list does not mean that a scheme is a QROPs or that HMRC has checked all the information provided for any named scheme.
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.