Le Mirabel-Suite No 507

4, Avenue des Citronniers

MC 98000, Monaco

Our telephone and fax numbers will remain the same:

T: +377 97 97 16 70

F: +377 97 97 16 69

The main proposed changes are:-

I.        The introduction of a new condition for QROPS qualification – that any exemption regarding the taxation of benefits for non-residents must also be available to residents in the territory in which the QROPS is based. This affects existing arrangements in Guernsey, The Isle of Man, Gibraltar and – depending upon the structure adopted - in Malta as well.

II.        Revised reporting requirements for all QROPS. It is proposed that the reporting period will be changed from the first five full fiscal years after the member becomes non-resident to 10 years from the date of transfer to the QROPS. This will affect all existing QROPS wherever they are based.

III.        Measures to prevent transfers to schemes which permit 100% commutation which HMRC views as against the spirit of the QROPS regime. This affects arrangements in New Zealand in particular.

To see the full article please click here.

Attached to the consultation document was draft secondary legislation proposing changes to the qualifying conditions for QROPS, together with increased reporting conditions for such schemes.  HMRC intends that, subject to any matters that arise in the consultation process, the new regime will start on 6 April 2012 – and will affect all current QROPS.

Against this background, we would highlight the following fundamental changes that HMRC proposes for continuing QROPS.

• From 6 April 2012 any tax exemption that is available in respect of benefits paid to a non-resident of the territory in which a QROPS is located, must also be available to residents of the QROPS territory
• QROPS managers will be obliged to make reports to HMRC for a total of 10 years from the date of transfer to a QROPS – as opposed to the current 5 years from the date of first becoming non-resident outside the UK
• More detailed reporting is required from QROPS administrators
• At least 70% of the funds transferred to a QROPS must be used to provide income in retirement

Pension Schemes wishing to qualify as QROPS or maintain their existing status will need to meet the above additional new conditions

To view the full article please click here.

In parallel, increased technology has caused redundancy. Occupations have changed, and people find themselves “old and cold” by their mid-fifties. By contrast, at the other end of the scale, there are plenty of young adults across the world who have very little prospect of employment at the current time. We have a further problem, therefore, as to how to provide for the period of middle to late life, given that so many people may be out of work from time to time and retirement may be imposed and not planned for.

I think that you ought to realise that, although life expectancy across Europe has gone up by 10%, in fact, the time spent in retirement has more than doubled. It used to be the case in England and Wales that a man of 65 left employment, “came up from the pit”, lived for seven years and then dropped dead! Now such a man has every prospect of living well into his eighties, and therefore we have got a considerable longer period of non income generation to be saved for. The flipside of longevity is extra cost!
 

To see the full article please click here.