Gibraltar QROPS have travelled a rocky road with a calm and serene public face masking years of frantic behind-the-scenes activity.
The saga started in September 2008, when Gibraltar’s QROPS providers voluntarily imposed a ban on transfers in as HMRC and the Gibraltar government squabbled over whether 0% was a real tax rate for pensioners.
Providers in Gibraltar feared that although their QROPS schemes were fully compliant, the government’s tax rate could cause problems for expats transferring funds in.
And so the saga has continued…
Gibraltar QROPS timeline
In January 2010, the providers announced they had reached an agreement with HMRC, followed by a green light to open the schemes in February, but still no transfers went ahead.
In November 2010, a progress report revealed the status of Gibraltar QROPS remained unchanged – they are listed by HMRC but still not accepting transfers.
By April 2011, the providers announced Gibraltar QROPS would be open for business by the end of the year…then HMRC announced the start of consultation on changing QROPS rules in April 2012.
At the end of 2011, nothing had changed in Gibraltar, where providers were now waiting to see what effect the new rules would have on their businesses.
In May 2012, the Gibraltar tax authority announced new laws were being drafted that brought the Rock’s tax issues for pensioners in line with HMRC’s thinking.
Instead of the 0% tax rate, the new legislation includes an income tax rate on pension payments of 2.5%.
Where are Gibraltar QROPS now?
Final ratification of the law is awaited to allow providers to open their doors to new retirement savers. But when? No one knows.
The suggestion from insiders in Gibraltar is the law will pass in to statute in September 2012. This will let providers invite clients to transfer pension funds out of the UK almost immediately as their schemes are already listed with HMRC. Several providers have hinted they have a backlog of transfer applications awaiting the green light.
Gibraltar QROPS – the future
Gibraltar’s issue is not the quality or compliance of their QROPS product but the tax treatment of pension payments to scheme members.
The QROPS pension product meets all the requirements laid down by HMRC.
Gibraltar remains a stable financial centre as a British overseas territory, conducts business in English and has a reputation as a solid jurisdiction.
If the Gibraltar tax authority can line up their ducks so the offshore financial centre’s QROPS scheme offers similar benefits and tax rates to resident and non-resident members, then there seems to be no reason why Gibraltar should not join the ranks of the leading global destinations for British pension funds.
The industry aims to provide Gibraltar QROPS for residents and ‘third party’ residents who will base their pensions on the rock but live in another country.
The odds are tax talks with HMRC will soon conclude as Gibraltar has had a change of government that wishes to encourage QROPS investment sooner rather than later.