IVCM GIBRALTAR QNUPS

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What is QNUPS?

QNUPS were introduced by the Statutory Instrument (SI) 2010/051 which specifically makes this type of overseas pension exempt from inheritance Tax (IHT).

QNUPS has become market terminology used to describe an overseas pension scheme that meets the QNUPS regulations but is not a Qualifying Recognised Overseas Pension Scheme (QROPS).

A QNUPS should be used as part of an overall retirement planning solution, and not solely for IHT purposes, although this is one of the main benefits for clients. QNUPS can hold a number of assets, including but not restricted to; direct residential property, portfolio bonds and cash. The client should understand the restrictions that come with holding these assets in a QNUPS.

QNUPS can be used to provide extra retirement provision for individuals that will have a pension ‘deficit’ but are restricted to using an existing UK registered scheme because of exceeding (or close to exceeding) the lifetime allowance or the annual allowance.

Withdrawals from QNUPS are subject to the rules of where the QNUPS is established.

IVCM GIBRALTAR QNUPS

BENEFITS & REQUIREMENTS

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Questions & Answers

A qualifying non-UK pension scheme (QNUPS) is defined in IHTA1984/S271A as a pension scheme that is not a registered pension scheme but is established in a country or territory outside the UK and meets the requirements of Regulations made by the Commissioners for HMRC (The Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 (SI 2010 No. 51)).

To be a QNUPS, a scheme must meet the following criteria, as set out in 2010 regulations (which closely follow the QROPS requirements):

  • It must be recognised for tax purposes in the jurisdiction in which it is established;
  • It must be available to the local population in the jurisdiction in which it is established; and
  • If the scheme is not an occupation scheme, it must have the same minimum retirement age as in the UK and at least 70% of the member’s funds must be designated to provide an income for life.
  • all QROPS are QNUPS, but not all QNUPS are QROPs
  • A QNUPS does not have the same reporting requirements as a QNUPS;
  • A QNUPS is unable to receive a transfer from a UK registered scheme without giving rise to unauthorised payment charges.

QNUPS are predominantly used to provide extra retirement provision for individuals that will have a pension ‘deficit’ but are restricted to using an existing UK registered scheme because of exceeding (or close to exceeding) the lifetime allowance (Currently £1m for 2017/18) or the annual allowance. (Presently £40,000 per annum if you earn less than £150,000 p.a.)

Like a QROPS and UK Registered Pension Schemes, death benefits from a QNUPS are entitled to the same exclusions from Inheritance Tax. Also, they are not subject to a death benefit tax charge, regardless of residency. Each individual Scheme may have different retirement and death benefit provisions than dependent on the jurisdiction in which the QNUPS is based.

A QNUPS has very flexible pension investment options. Long term investment growth is therefore less restrictive than growth in a UK registered pension scheme.

QNUPS can be funded by contribution or transfers from international pensions, therefore it’s attractive to clients that do not have a UK pension to consolidate and enhance their offshore retirement planning.

If structured correctly capital gains tax should not be taxed other than UK residential property.

Unlike a QROPS, a QNUPS cannot receive the transfer of UK Pension Benefits without incurring an unauthorised payment and scheme sanction charge.

QNUPS are not subject to the same restrictions on taking benefits. QNUPS do not have any reporting requirements to HMRC.

No, this can only be transferred into a QROPS. A QNUPS cannot be established without sitting alongside a QROPS

Yes, IVCM offer a wide range of retirement solutions including; QNUPS, SIPP, QROPS and company pension schemes.

The IVCM Gibraltar Retirement Annuity Trust is both a QNUPS and a QROPS dependant on your category of membership.  If you make a rollover from a UK registered pension scheme the contribution will be treated as a QROPS, if you contribute from any other source it will be treated as a QNUPS.

No, IHT avoidance cannot be the reason for using a QNUPS. It must be used for genuine retirement planning and provision.

A QNUPS is not appropriate for every client but is a useful retirement planning tool. Key considerations are;

  • Contributions offer no tax relief but a large proportion of the benefits are largely taxable (as a taxable income – dependent on jurisdiction)
  • Contribution levels have not been confirmed and must be pre-approved by IVCM before any contributions are made.
  • Additional fees by IVCM may be applicable

Yes. If you are over 18 years of age – you are eligible.

No, a QNUPS must be held in a single name.  Your beneficiary is your Estate.

No. However IVCM cannot provide you with personal financial advice. Therefore, we strongly recommend that you consult with an appropriately licensed financial professional.

A QNUPS cannot receive transfers from a UK Registered Pension Scheme. Transfers from a UK registered pension scheme can only be transferred into a QROPS. A QNUPS can only be funded by contributions.

As a Non UK Scheme, the contributions will not attract tax relief but an individual can contribute cash or many other asset classes including residential property but they cannot contribute their main residence or wasting assets.

As a result of the current IHT benefits of a QNUPS; HMRC state that the amount of contributions must be ‘appropriate’ to the individual’s circumstances. This is clearly to prevent large contributions being made solely for the purpose of IHT avoidance. However, HMRC do not specify what is ‘appropriate’ nor have they formally confirmed a QNUPS funding structure.

Contributions to a QNUPS cannot be excessive and must be relative to the individuals wealth and earnings. All QNUPS contributions must be pre-approved by IVCM. We have designed a funding calculator which uses former UK Inland Revenue’s previous method for calculating maximum pension funding. In brief, this is essentially 2/3rds earnings less any existing pension provision.

The earliest age benefits can be withdrawn from a QNUPS is age 55

Yes, dependant on the number of years the member has been non-UK resident, they may be able to take up-to 30% as a PCLS (Pension Commencement Lump Sum) payment. The remainder of the fund will be used to receive an income, which may be taxable dependent on the jurisdiction where the QROPS/QNUPS Trustee provider is based.

Gibraltar – 2.5% at source
New Zealand – 0%
Australia – 0%

Any additional tax due will be dependent on the jurisdiction in which the member is resident.

If you return to the UK you can continue to draw pension from the IVCM Gibraltar QNUPS.

Wherever member circumstances change, we strongly recommend reviewing the appropriateness of the QNUPS, any potential taxation and associated charges.

Any change in relation to your personal circumstances you are required to update IVCM Gibraltar Trustees Ltd immediately in writing.

IVCM Trustees (Gibraltar) Ltd
215B Neptune House
Marina Bay
Gibraltar

Tel: +350 200 69290
Fax: +350 200 69284
Email: gib@ivcm.com

Dependant on the jurisdiction in which your QROPS is based, you will need to contact the local office for clarification on what investments are and are not permitted.

Most QNUPS contributions are invested along-side the main investment vehicle used by the QROPS and are treated as a top-up.

No, you can hold all or part of your funds in your default cash account until you are ready to invest them. Please check with your financial adviser for the rate of interest currently available.

No.

The IVCM Gibraltar QNUPS is a member directed pension scheme and therefore all investment decisions are the responsibility of the member and their financial adviser. Neither IVCM nor any of its affiliates give advice relating to the suitability of investments and cannot be held liable for any losses because of investments held within the IVCM Gibraltar QNUPS.

Yes. A QNUPS gives you the flexibility to choose and change your investments when you want.

Yes, the IVCM Gibraltar QNUPS holds a cash account before money and investment decisions are instructed.

Retirement is the act of taking benefits, pension commencement lump sum or income, from your QNUPS. This can be done from your 55th birthday.

No. Once invested in a pension you cannot withdraw those funds until the minimum retirement age.

Minimum retirement age is 55 this may increase to age 57 from 6th April 2028.

There is no maximum retirement age for members of the IVCM Gibraltar QNUPS.

Gibraltar – 2.5% at source
New Zealand – 0%
Australia – 0%

Any additional tax due will be dependent on the jurisdiction in which the member is resident.

Yes. An annuity is a type of insurance policy that provides a regular income for life.

If you die before age 75 and you have not taken benefits from your IVCM Gibraltar QNUPS then your entire fund will be paid to your beneficiary as a tax-free lump sum.

If you die after age 75 and you have not taken benefits from your IVCM Gibraltar QNUPS then your entire fund will be paid to you beneficiary as a tax-free lump sum.

If you have further questions, please contact us:

IVCM Trustees (Gibraltar) Ltd
215B Neptune House
Marina Bay
Gibraltar

Tel: +350 200 69290
Fax: +350 200 69284
Email: gib@ivcm.com