Jersey QROPS Finally Open to Non-Residents
The Jersey Pension Association has been working on setting up a QROPS for non-Jersey residents for the last couple of years and now it is finally here. British expats living in Europe or anywhere else in the world can now transfer their UK pension to the security of Jersey and avoid all UK taxation as long as they live abroad.
QROPS trustees in Jersey are now offering a third party QROPS for non-residents living abroad. This means that British expats who retire abroad can transfer their UK pensions out of the UK tax net into the safeguard of a Jersey jurisdiction, but take up residence elsewhere in a different country abroad (outside of Jersey and the UK).
Their pension would be moved out of the UK tax net and parked in Jersey whilst they would receive their pension in a different country abroad where they live such as Spain or France, for example.
Jersey has amended its pensions legislation to allow “third party” QROPS business to be provided to pension investors who are living outside of Jersey. QROPS in Jersey for non-residents will take effect from 1st January 2015.
The amendment, specifically, Income Tax Amendment no.44 in Jersey Law, was aimed at increasing pension flexibility for residents of Jersey, making it possible for them to move their pensions in and out of the jurisdiction to increase labour flexibility for Europe and people from Jersey working elsewhere in the world. The new tax amendments also made it possible for non-Jersey residents to invest in pensions there.
For many years Jersey has had a large number of qualifying overseas pension schemes recognised by the Inland Revenue, however Jersey law has restricted these in the past to allow for only Jersey locals. The new Income Tax (Jersey) Law permits non-resident pension members to transfer their UK tax-relieved pension funds into Jersey. Jersey has built up a solid reputation as a safe place to safeguard assets over the years and many high net worth individuals already own bank accounts in Jersey. Large banks such as HSBC and Credit Suisse and UBS have Jersey offices for wealthy clients.
Whilst Jersey could only look at the Isle of Man QROPS and Guersey QROPS before with green eyes, now most Guernsey schemes are closed, it may be Jersey’s time to shine.
Jersey QROPS Providers
Early movers into the Jersey QROPS space include Vantage, Bedell and the Fairway Group.
The Vantage Personal Pension obtained QROPS approval on 16th May 2008, but have only been able to accept transfers from non-residents from Jan 1st, 2015.
The Vantage QROPS Pension is written under a deed of trust subject to Jersey law and is available to both Jersey resident and non-resident members. It has tax approval from the Jersey Comptroller of Income Tax and is recognised by HMRC as a QROPS.
Vantage established themselves in 2002 and are part of the Guernsey based Heritage Group of Companies.
The Jersey Personal Pension Trust also allows you to transfer any legacy UK pension schemes, corporate pensions and approved personal pensions into the trust. You can contribute to your Jersey Personal Pension Trust on a lump sum or regular monthly basis. The contributions are limited to 50,000 GBP per year from 2015.
Bedell Group have been in Jersey since 1939 and operate a trust company in Jersey for QROPS.
Please contact us for more information on the new Jersey QROPS 2015.
The Advantages of a Jersey QROPS for British Expats
- Take 30% lump sum rather than 25% in the UK
- Greater flexibility on how to pay out the 30% tax-free lump sum available from approved Jersey schemes;
- Can start taking at 55 years old
- The choice of purchasing an annuity or investing wherever you like into mutual funds, ETFs, bond funds, unit trusts, on all the major exchanges, etc.
- Keep in GBP or move to EUR or another currency of your choice
- The introduction of “flexible retirement”;
- Availability of partial fund transfers;
- Non-residents will be allowed to contribute into a retirement trust scheme (currently known as a retirement annuity trust scheme or a RAT)
Tax on Death of a Jersey QROPS
If you die after you have retired, i.e. taken your tax-free cash lump sum, the remaining pension assets from your Jersey Personal Pension Trust will pass to your estate, net of Jersey income tax at the standard rate.
If you die after you have retired, leaving a surviving spouse, then the remaining pension assets from your Jersey Personal Pension Trust will pass to your spouse, net of Jersey income tax at half the standard rate.
Alternatively, your surviving spouse has the option to leave your Jersey Personal Pension Trust in place and continue to draw benefits from it. The estate will ultimately be subject to tax at the standard rate of Jersey income tax when your surviving spouse dies.
Are Jersey QROPS for Non-Residents Only or Jersey Residents As Well?
While the Jersey Recognized Pension Scheme (RPS) may be used internationally in many different markets, it is estimated that accepting transfers from UK schemes alone could generate tax revenues of approximately GBP 1.2m per year and create an additional 120 jobs.
In line with the required changes, the Jersey RPS will also be available to Jersey residents, although in practice most Jersey residents will find it is more effective to save through existing domestic pension schemes, which offer immediate tax relief on pension savings.
Whilst we expect the Jersey QROPS to be popular for high net worth individuals who already have bank accounts in Jersey, we don’t expect it to become popular overnight with the majority of expats preferring Isle of Man, Malta or Gibraltar QROP schemes.