Jersey QROPS are ready to take a slice of the offshore pension market for the first time.
Financial firms and the Channel Island’s government are ready to put the necessary laws in to place on May 16 to launch jersey QROPS as an option to pension investors living off the island.
QROPS information coming from Jersey suggests this is a rubber-stamping exercise and the island will open for pension business without any major issues.
Although Jersey has around 138 QROPS schemes registered, local laws only let them act for residents.
The largest market for QROPS is for pensions based in offshore financial centres that are English-speaking and with a long-term reputation for political and economic stability and regulation.
Termed a ‘recognised pension scheme’ (RPS), Jersey QROPS for off-islanders meet the new HM Revenue & Customs rules that are now in place -
- Up to 30% of any funds transferred in to the QROPS are available as a tax-free lump sum
- Except for special reasons, like poor health, no one under the age of 55 can draw down on their funds
- QROPS investors can live in any other country and host their pension in Jersey
- No income tax on pension benefits will be deducted in Jersey – which lets pension investors draw their benefits gross on retirement
The Jersey scheme is similar to that recently passed in nearby Guernsey, which is open to residents and non-residents but offers no tax relief on contributions. Alternative local schemes will offer pension contribution relief.
The Jersey QROPS has been on the drawing board for around two years, but the decision to go ahead was only taken comparatively recently.
“The RPS scheme would allow the pension industry to capitalise on the QROPS market, and diversify its existing offering to clients, including, but not only, from the UK,” said a statement from the Jersey government.
“While the RPS may be used internationally in many different markets, it is estimated that accepting transfers from UK schemes alone could generate tax revenues of approximately £1.2m per year and create an additional 120 jobs.”