Why Isle of Man?

The Isle of Man specialises in all aspects of international pension planning, from large multinationals to individual clients. All pension scheme administrators are regulated by the Isle of Man Financial Services Authority (FSA) and are subject to a rigorous approval process and on-going regulatory audit.

Pension providers in the Isle of Man are supported by a mature and highly developed international finance and professional services industry in such key areas as banking, insurance and investment management and trusteeship. A simple tax environment enables pension scheme members to maximise their savings and benefits. All pension funds on the Isle of Man are permitted to grow free of any Isle of Man tax.

The Island’s pensions regulations are robust but highly flexible, allowing corporate clients the freedom to tailor international retirement solutions to the diverse demands of their international operations. For senior employees, where traditional pensions schemes do not meet their requirements, a company may wish to provide a bespoke pension or long-term reward arrangement.

The Isle of Man is a successful jurisdiction for Qualifying Recognised Overseas Pension Scheme (QROPS), offering a diverse range of pension solutions that include group, individual and bespoke. A QROPS established in the Isle of Man can be highly attractive for individuals moving to the Island. The Island also has a growing network of international double tax agreements that can potentially enable scheme members to take pension benefits from an Isle of Man QROPS in a tax efficient manner.

Qualifying Non-UK Pension Schemes (QNUPS) are becoming increasingly popular for those members wishing to fund over and above any retirement planning already in place. There are no reporting requirements by a QNUPS to the UK tax authority (HMRC). QNUPS benefit from a UK IHT exemption in respect of UK tax-relieved pension funds that have been transferred to a QNUPS (which may also be a QROPS) and in respect of contributions to a QNUPS made by a current or previous UK resident and any assets held by a QNUPS.

There is presently no equivalent in the Isle of Man to the UK’s auto-enrolment regime (this is currently the subject of a government consultation) but the provision of occupational pension schemes is common along with group personal pension plans. Membership of the occupational schemes is therefore voluntary with no specific rules regarding mandatory or minimum member contributions.

A simple tax environment enables pension scheme members to maximise their savings and benefits. Investment income is exempt from tax if the scheme is an exempt approved scheme under applicable domestic scheme tax approval regimes and exempt from income tax if approved under applicable international scheme tax approval regimes. There is no capital gains tax applicable to investments in the Isle of Man.

Occupational plans are generally established under irrevocable trust and are mainly defined contribution arrangements.

Sovereign Pensions Limited is licensed as a Pension Trustee and Administrator by the Isle of Man FSA and is a member of Association of Pension Scheme Providers (APSP), which works closely with the Isle of Man government and FSA to promote change that will benefit the industry.

Isle of Man QROPS – Key Information

Isle of Man QROPS – Key Information

Investment Options Open architecture
Benefit commencement 55 years of age
Maximum Lump Sum 30%
IOM tax rate applicable to pension* 20%
Death Benefits Lump sum or survivor’s pension

If a member has commenced income drawdown prior to death, this will result in a 7.5% death tax charge being applied prior to any benefits being paid out to dependents.

* Isle of Man tax will not apply where the pension taxing rights are granted to the member’s country of residence under the terms of a double taxation agreement.

Sovereign Isle of Man QNUPS

Sovereign Isle of Man Occupational Pensions

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