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Delisted Guernsey QROPS – key considerations for existing members

A Qualifying Recognised Overseas Pension Scheme (QROPS) is an overseas pension scheme that meets certain conditions imposed by the UK revenue (HMRC). QROPS were introduced on 6 April 2006 to satisfy EU legislation in respect of the free movement of capital. They can receive transfers of UK pension benefits without incurring an unauthorised payment and scheme sanction charge.

In April and May 2012, however, HMRC introduced new regulations imposing a requirement that schemes enjoying QROPS status should be open to, and offer the same tax treatment to, local residents as well as non-residents. As a result, HMRC delisted over 300 Guernsey-based schemes which were open to both Guernsey resident and non-resident members from its approved list of QROPS such that any new transfers to them would have to be taxed for non-residents at the same income tax rate as local residents. QROPS for Guernsey resident members only were largely unaffected.

However, existing transfers to Guernsey-based pension schemes that had previously satisfied the requirements to be a QROPS were ‘grandfathered’ under the old QROPS regime in Guernsey. It was noted that members of such schemes could continue as members without issue and the associated benefits would remain intact, but no further transfers from a UK-registered pension scheme could be made.

“Members of Guernsey-based pension schemes that were formerly recognised as QROPS are generally now considered to be members of a Relevant Non-UK Pension Scheme (RNUKS)”

Members of Guernsey-based pension schemes that were formerly recognised as QROPS – including the Sovereign-managed Atlantica, Providence Capital and Taurus schemes – are generally now considered to be members of a Relevant Non-UK Pension Scheme (RNUKS). An RNUKS is defined as being “broadly, a non-UK scheme that contains funds that have benefited from UK tax relief”.

For the avoidance of doubt, there is no obligation for members of an RNUKS in Guernsey to transfer out of the scheme unless there is a specific issue and/or change in circumstances that they wish to address. It is permissible – and in many cases desirable – for members to remain within their existing RNUKS in Guernsey.

For example, unlike RNUKS managed in other jurisdictions such as the Isle of Man, Malta and Gibraltar, a Guernsey RNUKS is able to pay benefits to non-resident members without the deduction of any tax in Guernsey, regardless of their country of residence and without reliance on any double taxation agreements. The only tax consideration for a member will be in the country of their tax residence.

In addition, Guernsey also now has the ability under its local pensions legislation to permit flexible access drawdown (FAD) for members of a Guernsey RNUKS who satisfy certain conditions – notably that they are aged 55 or above, are not currently tax resident in the UK and have not been tax resident in the UK in any of the preceding five full, complete and consecutive UK tax years.

“It is permissible – and in many cases desirable – for members
to remain within their existing RNUKS in Guernsey.“

As a result, before seeking to request a transfer out of their existing Guernsey scheme, members should carefully consider the benefits of remaining within a Guernsey RNUKS against any benefits that might be obtained by transferring to a QROPS in, say, the Isle of Man, Malta or Gibraltar.

In those circumstances where a transfer to another jurisdiction may be appropriate, Sovereign Group is well placed to assist with free internal transfers to any other Sovereign-managed scheme, such as a Malta, Gibraltar or Isle of Man QROPS or a UK SIPP.

Contact Sean Gillease for more details


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Sovereign Trust (Gibraltar) Limited
Tel: +350 200 76173