Gibraltar has officially been able to provide qualifying recognised overseas pensions since September 2012, following changes made to its law governing imported pension schemes which requires that pension and acceptable lump sum payments are limited to those over 55 years old and that pensions will be taxed at 2.5%, regardless of whether the pensioner is resident in Gibraltar or in a third country.
Acceptable lump sum payments are restricted to 30% of the value of the pension plan at the time retirement benefits first commence, with the remaining 70% of the fund being applied to support future pension payments.
With the introduction of flexi-access drawdown in the UK from 6th April 2015, it had been expected that regulations governing these schemes would be amended to allow all of them to provide retirement benefits on a similar basis.
However, the draft regulations to accommodate these changes were reversed shortly before they were passed, meaning that unregulated pension schemes situated in non-EEA countries must continue to ensure that at least 70% of a member’s UK tax relieved pension savings are used to provide the member with a pension income for life.
At the time the draft regulations were reversed, the UK Coalition Government stated that the reversal was a temporary measure designed to operate until such time as it could be decided how the regulations should best be targeted to accommodate unregulated overseas pension schemes situated outside the EEA.
Subsequently, the regulations were changed with effect from 6th April 2017 to allow schemes currently unable to offer flexi-access drawdown as an option to now do so provided they become regulated within their own jurisdiction. On 31st March 2017 Gibraltar introduced new legislation to allow schemes to remain as qualifying recognised overseas pensions beyond April 2017. However, they chose to retain the 70% rule and will not allow flexi-access drawdown.
Therefore, those seeking this facility will need to look towards countries and territories in the EEA with suitable domestic pension regulation to accommodate third country schemes able to accept transfers from a UK RPS (Registered Pension Scheme).
Malta, as an EU Member State since 2004, has a fully regulated domestic pensions environment which allows for local retirement benefit schemes recognised as a suitable scheme to provide flexi-access drawdown pensions to both residents and non- residents alike on exactly the same basis as a UK RPS whose rules permit benefits to be paid in accordance with the “pension freedoms”.
The Dominion Malta Retirement Plan 2010 (the “Plan”) allows this “pension freedom”.
Dominion has specialised expertise in structuring pension benefit distribution models to meet the requirements of individuals resident in various jurisdictions worldwide, and can also assist with succession planning should the member die while there are remaining assets held within the Plan.
Further information on flexi-access drawdown and the benefits of the Dominion Plan is available on request from our New Business Team. Please contact a member of the team on the details below for further information.