A) Definition: Not UK Based
Through out their career, expats in general live in a number of countries. Which each tend to have their own legal, tax and product regime regarding workplace pension plans.
In case expats are planning to retire abroad, it is understandable to look into the possibility of an international and offshore pension plan. The thought being that it might be good to prevent all those national regulations and to collect all claims in one international offshore pension plan.
The offshore pension fund industry was developed in the 70′s when UK-based financial institutions established non-domestic fund management providers for expatriated investors.
These Offshore funds and Pension Plans are specifically domiciled outside of the UK. They are therefore regulated by the authorities in the country where they are located. Established offshore investment centres such as the Isle of Man, Malta or Gibraltar with their independent legal, political and regulatory framework, offer many providers and options.
B) Possible Advantages
• For expats with UK pension claims, QROPS/QNUPS might lead to tax benefits;
• In case it is possible to have all and optimal investments at very low total costs, that would be a relevant factor to take into account besides other issues.
C) Possible Disadvantages
• Complex factual, legal, tax, investment situations which make it not directly transparent what is the best option;
• The costs tend to be (too?) high and not always transparant;
• The local regime might change in the future which can have a negative impact;
• Their might be (substantial) negative currency aspects.
D) Caution Advisable
International Offshore Expat Pension Plans might in the end be interesting. But as the (international) tax and investment issues tend to be complex, it is advisable to obtain qualified advice about whether or not to acquire them. We advise our clients not to go that way if it is not 100% clear that this would be their best option.
In this regard we caution you as we hear from clients that certain consultancy firms try to persuade clients to opt for these plans in order to make money themselves. Instead of placing the client’s interest central as the correct advisor will always do.
E) News March 2019
UK EXPAT PENSIONS: GUERNSEY ON BLACK LIST
As of January 1st Guernsey and The Isle of Man have been placed on the Dutch Black List re tax evation.
In practice some advisers mentioned in QROPS perspective that Guernsey might be interesting. If you focus on the sole interest of the client, Guernsey was often already not that interesting.
Best Advice re UK Pensions and QROPS: Make it simple, gather all facts, focus only on client interest and then decide!