A Dominion Transfer Trust is suitable for a non-domiciled individual who has accrued International Pension Plan (IPP) benefits from previous employment. In some cases, benefits from an IPP with a current employer can also be transferred; however, this is dependent on the terms of that IPP.

Key Features

International Pension Plans (IPPs) were established with “corresponding approval” from the UK tax authorities (HMRC) on the basis that members were not domiciled in the UK for income tax and were employed to work in the UK by a non-resident employer.

The rules of IPPs normally allow their trustees to make a transfer of accrued pension benefits from an IPP to an equivalent plan, known as a “Transfer Trust”, which can provide more flexibility, including:

• a wider range of permissible investments, including property, art, hedge funds, private equity and more
• provision of benefits in a more flexible manner whilst the member is a UK tax resident, including in some cases pension payments over a period of up to ten years, taxed as an annuity and not as a lump sum (and if those payments are made into a bank account outside the UK they will be taxable under the remittance basis rules)
• provision of tax-efficient benefits to members who are not UK-tax-resident at the time that benefits are provided – lump sum and annuity payments are not subject to UK tax (members who spend significant time annually in the UK during the five tax years starting with that of leaving the UK, so that they do not actually become non-resident, may be subject to UK tax on the benefits provided by the Transfer Trust) and the Transfer Trust is structured so that on the provision of benefit no withholding taxes can be applied by the trustees irrespective of whether any tax is due on the provision of benefit
• application of death or retirement benefits in a more flexible manner – Dominion’s Transfer Trust deed is drafted so that upon the member’s incapacity or death the trust assets can be transferred in specie to a discretionary trust for family beneficiaries (this can perpetuate the IHT and other wealth planning advantages of the Transfer Trust).
• Transfer Trusts can accept transfers from any correspondingly approved pension plan and should the member be a member of a number of IPPs, the member’s various funds can be consolidated into one Transfer Trust.

If you would like to discuss Transfer Trust please speak to Andrew, Ben or Stacy on our Wealth Management Team.