Isle of Man Qualifying Recognised Overseas Pension Scheme (QROPS) savers look set to win the same pension freedoms that are available in the UK.
The Tynwald, the Isle of Man’s government has voted to back a motion supporting the introduction of flexible access pensions run on a similar model to those enjoyed in the UK since the start of April 2015.
Tynwald MPs fear the island’s financial services industry will lose ground to other QROPS centres if the measure is not adopted.
Currently, 40 financial centres offer QROPS to British expats and foreign workers who built up pension rights.
Only Malta’s pension regulator has so far moved to adopt flexible access, although no QROPS providers on the island let retirement savers access their funds under the new rules.
Government defeat
Gibraltar has also indicated flexible access is on the way, but so far, no official proposals have been announced detailing how or when the scheme may operate.
The Isle of Man is the world’s largest QROPS provider by number of schemes – with 193 of 832 offshore pensions on HM Revenue & Customs (HMRC) latest QROPS List.
A proposal by Treasury Minister Eddie Teare to wait and review how UK flexible access pension changes had worked at a later stage was defeated.
Teare explained to the Tynwald that the government was concerned retirement savers would withdraw all their money too quickly, leaving the state to pick up the bill for benefits and long term care in the future.
The members felt the motion put forward by Alfred Cannan arguing that Manx pensions were lagging in the market and needed to remain competitive was more compelling than the arguments put forward by the government.
Lagging the competition
The proposed rules are aimed mainly at the Isle of Man’s onshore pensions, but as QROPS rules follow local pension regulation, should apply to the expat pensions as well.
The defeat in the Tynwald means the government must bring forward draft flexible pension rules by October 2015.
“Our position is very disappointing compared with flexible benefit options already available in the Britain,” said Cannan.
“We need to make up our minds about how we are going on from here and to do it quickly or will find ourselves even further behind.”
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