I’ve returned to Guernsey after 12 years of working in London. I have a UK registered pension schemem and if possible I’d like to transfer this into a Guernsey pension scheme and continue to save. Is that possible?
Sean Gillease, business development manager, Sovereign Trust (Channel Islands) Ltd, replies:
YES, as a Guernsey tax resident it is possible to transfer from a UK registered pension scheme to a suitable Guernsey pension arrangement, but there are factors to consider to ensure that the transfer is an ‘authorised’ transfer and does not create any UK tax liabilities, both at the time of the transfer and going forward*. Firstly, does your employer in Guernsey provide you with access to a pension scheme?
If they do, ask whether their scheme meets the UK prescribed conditions to be a Qualifying Recognised Overseas Pension Scheme (QROPS) and if so, whether it is listed by HMRC.
If it is, you should be able to transfer your UK pension benefits to your employer sponsored scheme in Guernsey.
That will, in all likelihood, be the most cost efficient way for you to transfer your UK pension benefits to Guernsey. However, if your employer does not offer any sort of pension arrangement or the pension they provide is not a QROPS, you could establish a personal RAT (retirement annuity trust) which can be structured to meet the relevant QROPS conditions. The most significant condition that must be met is that the scheme must have a minimum retirement age of 55 to be consistent with UK rules (as opposed to age 50 under Guernsey rules.)
Some local pension providers offer multi-member RATS which are already listed by HMRC as a QROPS and so you can apply to join such a scheme and a transfer should be possible immediately.
If you make additional contributions to your Guernsey pension once it has received your UK pension transfer, your provider will be required to manage separately the respective funds, the UK transfer funds and the Guernsey contributions, as there are slightly different rules which will apply to them. This should all be explained to you by the pension provider.
* Transferring from a UK registered pension scheme to a QROPS in Guernsey, for a Guernsey tax resident, will be paid free of UK tax.
However the individual must remain resident in Guernsey for at least a further five complete and consecutive UK tax years from the date of the transfer in order to not give rise to a 25% UK tax charge.
Read the full Business Panel article here.