All change this year for Malta QROPS, Malta Financial Services Authority (MFSA) have published revised Pension Rules, which take effect from the 1st January 2019.
We will cover a couple of the changes to Malta QROPS and follow up with another blog to cover other points.
Two important changes related to new investment and disclosure rules- the latter being an issue that we, at Tailormade, have been banging on about for ages .
Investments- Malta QROPS
For a while now, high risk ‘Professional Investor Only’ investments, such as derivative bases structured notes, have been sold to everyday retail investors who do not really understand the investments (the same could be said of many that sell them). Not only are they often far riskier than the investors were led to believe but they often make up the majority of the funds in the Malta QROPS. The result has been substantial losses for those that can ill-afford them.
From January 1st 2019, at a member level, no more than 30% of a client’s fund can be invested in structured notes within a Malta QROPS – And, no more than 20% from the same issuer of the note.
Effectively, going forward, Malta QROPS should only allow retail type investments, which should stop the sale of esoteric and toxic investments into dodgy accommodation funds, store pods, plantations in the southern hemisphere and viatical settlement funds to name but a few.
Disclosure- Malta QROPS
The Retirement Scheme Administrators must now provide full disclosure of all charges and commission paid by the member when they join the scheme and when they are sent the right to cancel.
Arguably, this means Malta QROPS offer greater transparency that many of the International SIPPs that are sold to expats.
The rules are extended to ongoing charges applying to funds, as well as commissions that are paid to the adviser. Should an adviser firm farm out the investment to a third party, such as a discretionary fund manager, that fund manager must disclose all fees and commissions to the member.
For those interested, the MSFA have released a feedback statement here
Summary- Malta QROPS
This is a welcome list of changes, that are well overdue and it is hoped that the rules are followed by all the Malta QROPS providers, but time will tell.
This is a niche market that should only be considered by those with large funds that may breach the £1.03 million lifetime allowance or where there are genuine tax advantages that are not available under the Double Tax Treaty with the UK and the residency of the investor.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was republished on 17th January 2019
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