Battle Between Overseas Pension Jurisdictions

Pryce Warner International Group advises that QROPS overseas pensions are no longer available in Singapore or Hong Kong, leaving the Isle of Man and Guernsey battling for dominance of the overseas pensions market.

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Singapore & Hong Kong QROPS

Singapore Financial District

There is insufficient regulation and people looking to set up QROPS in those regions are often sold the pension on false promises.

London, UK (PRWEB UK) 16 August 2011

Pryce Warner International Group - QROPS overseas pensions were made available to British Expats in 2006 and are designed to give them a secure form of pension when retiring abroad.

Since that time numerous QROPS schemes have been set up and made available in many countries around the world. The principle benefits of QROPS overseas pensions are that they are currency and asset class diversified and therefore are good at withstanding fluctuations in the market. They also allow assets to be moved more easily and freely as well as enabling users to more quickly withdraw funds.

However, as of 23rd of May this year QROPS are no longer available in Singapore¹²³ and only in limited forms in Hong Kong⁴ , leaving the most popular regions for QROPS Guernsey and the Isle of Man.

The majority of QROPS providers offer the pension scheme through Guernsey or the Isle of Man as those locations offer better protection for consumers through a stronger regulatory system. Providers in Guernsey have also recently introduced a stringent code of conduct⁵ designed to strengthen the locations reputation as a safe and secure QROPS provider.

However the Isle of Man recently introduced new legislation that states that a tax of 20% will be taken on all pension withdrawals⁶ . This means that some Expat pension plan holders will have to pay tax at 20% even though they may live in a country where there are no, or lower rates of tax than the Isle of Man.

The Isle of Man legislation also states that in some cases they will not allow holders of IOM QROPS to transfer their pension assets to another jurisdiction unless they are resident in that location⁷⁸ . This effectively traps pensions schemes in the IOM at a higher tax rate.

According to Pryce Warner International, this law is particularly unfair as holders of a QROPS are rarely resident in the country that the scheme is based as they are specifically meant to be offshore pension schemes for Expats. It is fair to say that this position is being reviewed and will perhaps be changed, but as it stands it removes the portability pension plans from the Isle of Man to another jurisdiction unless the plan holder is resident there. This is making the Isle of Man less desirable for the jurisdiction of choice for overseas pension plan holders.

Click on the link for your free comprehensive >> QROPS Guide.

David Harra, a Financial & Investment Analyst with Pryce Warner International Group, a QROPS provider for Expats, commented: “We have never offered a scheme in Singapore or Hong Kong for precisely the same reason that the HMRC has now struck those providers off it’s approved list: there is insufficient regulation and people looking to set up a scheme in those regions are often sold the pension on false promises. QROPS are in no way a means to avoid tax, they are simply a means for Expats to ensure that they pay the correct amount of tax and have a secure income when retiring overseas.”

He continued: “The Isle of Man has historically been an acceptable location to hold a QROPS plan but the current situation is severely harming their reputation and is not acceptable to most Expat pension plan holders. The 20% tax is grossly unfair on Expats that live in jurisdictions with no income tax. There are some countries that have a dual taxation agreement with the Isle of Man, which allows taxes paid in the Isle of Man to be offset against their tax bill in their country of residence. The current lack of portability is also unacceptable. Plan holders who are considering the Isle of Man should consider the restrictions there, which do not exist in other jurisdictions.”

Pryce Warner International Group has over 40 years experience providing International Asset & Investment Management as well as providing QROPS & QNUPS Overseas Pensions for Expats worldwide. The QROPS Trustees used by Pryce Warner International Group in Guernsey are fully regulated and licensed by the Guernsey Financial Services Commission.

Attributions:

Singapore QROPS:

(1) Unaccredited, List of Qualified Recognised Overseas Pensions Schemes (QROPS), HMRC, 6th July 2011

(2) Simon Danaher, Equity Trust Loses High Court Battle with HMRC, international-adviser.com, 20th May 2011

(3) Darren Gibbs, HMRC court case deals fresh blow to members of Singapore QROPS, marlboroughtrust.com, 24th May 2011

Hong Kong QROPS:

(4) Gregor Watt, Treasury Shuts Hong Kong QROPS loophole, moneymarketing.co.uk, 14th April 2011

Guernsey QROPS code of Practice:

(5) Unaccredited, QROPS code of practice, Guernsey Association of Pension Providers, 31st March 2011

Isle of Man QROPS regulations:

(6) Unaccredited, Isle of Man as your QROPS jurisdiction, qrops-pension-transfer.co.uk, not-stated

(7) M Couch, Isle of Man approved pensions schemes update, Isle of Man income tax division, 27th October 2010

(8) Simon Danaher, Guernsey QROPS provider objects to IOM decision over transfer, international-adviser.com, 14th July 2011

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