A colleague of mine in Aisa International, a registered adviser in South Africa, is now coming across a number of ‘disgruntled’ Gibraltar QROPS investors in South Africa.
The concerns seem to follow a pattern of high fees that were not explained or disclosed, poor investment performance and requests to either cash the funds or to move the Gibraltar QROPS elsewhere before the charges gobble up the fund.
Can a Gibraltar QROPS be moved?
To consider whether a Gibraltar QROPS can be moved to another jurisdiction, including the UK which offers far clear fees, no longer allows toxic products and gives greater protection via regulation, we need to look at the following rules.
Section 14B covers this –
‘…….irrevocably bind the Pension Fund prevent the transfer of any part of the assets of the Pension Fund relating to any beneficiary of that Pension Fund to any pension Income Tax fund which is not approved in accordance with this subsection or does not contain irrevocable provisions which have the same effect as those required to receive approval in accordance with this subsection.’
In other words, the QROPS cannot be transferred to a jurisdiction that provides more flexibility than Gibraltar.
What about the UK (where the pension originated from) which has more flexible rules than Gibraltar and where pension charges are far lower than a Gibraltar QROPS, protections greater and taxes can be preferential?
There have been cases where the pension can be transferred to a UK pension, subject to maintaining the 30/70 rule. However, not without the permission of the Gibraltar Tax Office. Section 10.3 covers this.
No transfer from a scheme may be made without the prior approval of the Commissioner of Income Tax, who may set out from time to time his requirements for such approval.
Can a Gibraltar QROPS be encashed?
As is clear from the links above, encashment is not possible.
What options for the Gibraltar QROPS investor?
If the initial advice to move to Gibraltar was incorrect or the circumstances of the investor has changed, then the options are limited.
Moving to a more flexible location, encashment in full or moving to a jurisdiction with relevant Double Tax treaties are not options that are open to investors.
Also, those that are recommended to move to a Gibraltar QROPS really do need to think about where they will be retiring and the suitability of Gibraltar as a jurisdiction for their UK pensions. We have never recommended a single transfer to Gibraltar.
Invariably, the only option is to find a transparent charging investment adviser that looks to reduce the costs of the current arrangements, usually sold with an expensive insurance bond, and with good management and lower fees hopefully the returns can move into positive territory for some.
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 9th August 2019
- Gibraltar QROPS- Returning Expats
- QROPS and a Pension Returning to the UK- Part One- the Expat Returns
- New Zealand QROPS pensions – do they stack up for those not living there?
- Guernsey Pension. QROPS and Flexible Access Rules 2016
- QROPS in South Africa
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