At this point, commenting upon the economic forecasts or trying
to second guess the currency and investment markets is futile, but
I can comment upon how I see the UK's European Union exit
affecting the QROPS and QNUPS markets.
In 2006 legislation was first introduced; the self-certification
of Overseas Pension Schemes able to receive transfers from UK
"relevant transfer funds" without an "un-authorised
payment charge". This was primarily done to free up HMRC and
PSO from the voluminous amounts of paperwork they had to deal with
in individual applications.
It has always been possible to transfer your pension fund
abroad; it was just very time consuming and costly. By the way, all
UK pension funds set up since 2006 are also on a self-assessment
basis. At the time the legislation was written, HMRC never
expected QROPS to become a 'commercial business'. The QROPS
industry started to grow in 2007 with various jurisdictions and
Trust Companies applying for 'reference status'. As HMRC
saw the market develop, they tightened up on what were initially
'fairly lax and badly drafted, rules and regulations'.
This culminated in the removal of certain jurisdictions over
the years that either had lax regulatory oversight or whose
domestic pension legislation did not correspond closely enough with
those of the UK.
I believe that this will continue, and I would not be surprised
to see one of our larger Commonwealth countries removed from the
list in the next few months.
However, I do not believe that a repeal of the various Statutory
Instruments starting with SI206/2006 is on the cards. The QROPS
regime was not, as some would have you believe, developed to
accommodate the EU only (Malta only joined this market four years
later, in 2010) and I do not believe that with the UK opting out of
the EU, this will change.
Emigration from the UK to other EU member states may become
logistically more difficult; I am not sure that those governments
will want to deter the British expat from living in their country
and spending their money there. Also, we must remember that British
expats do not just emigrate to the EU.
The clients for whom a QROPS is the right
financial planning tool, should continue to seek independent
regulated advice, and I am confident that the solutions will remain
in place. For those with clients already in a QROPS, there is no
panic, but they may wish to re-visit their portfolios on account of
the changing investment climate.
On QNUPS, the outlook is a little more
difficult to predict. Statutory Instrument 51/2010, exempting
overseas pension scheme from IHT was, in part bought in to comply
with EU Law. For those UK resident and domiciled people who have
been sold a QNUPS thinking that this is a way of avoiding IHT, they
may be sorely disappointed. For those who have set up a QNUPS as a
pension replacement vehicle, and can evidence the reasoning behind
this and that they have taken qualified advice, should be safe.
I fundamentally believe that
Malta is still, and will remain, the "jurisdiction of
choice" for the vast majority of clients. Malta's pension
legislation, regulatory oversight and tax system ensures that it
meets not just the letter of the legislation, but also the spirit
of it, and pension funds established there will still meet the
requirements to be recognised as Oversea Pensions Schemes within UK
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