Legislation was introduced by the UK Government on ‘A day’ (6 April 2006) as part of a number of measures intended to simplify tax rules relating to pensions. This included the ability to transfer a UK registered pension scheme to a suitable overseas pension scheme (“OPS”).
There are certain requirements that an OPS must satisfy in order to be able to accept a transfer from a UK scheme. It is worth noting that the transfer of UK tax relieved pension savings to an OPS which fails to satisfy HMRC requirements is not a recognised transfer for UK income tax purposes and is subject to an unauthorised payment charge and surcharge, totalling 55%.
To complicate matters further, the Taxation of Pension Act 2014 introduced “pension freedoms” to the Registered Pension Scheme (“RPS”) regime with the effect that most countries and jurisdictions situated outside the EU will fail to meet the UK income tax regulations to permit flexi-access drawdown.
In selecting an appropriate OPS it is therefore absolutely essential to ensure that the scheme satisfies the UK tax regulations to properly be regarded as a qualifying recognised overseas pension scheme and to establish whether it will be permitted to make pension distributions in line with the UK “pension freedoms”.
The Dominion Malta Retirement Plan 2010 (the “Plan”) is a Pension Scheme established in Malta as a registered personal retirement plan, which is presently regulated by the Malta Financial Services Authority in accordance with the Retirement Pensions Act 2011.
The Plan, which meets the HMRC criteria in order to accept transfers from UK RPS, is designed for individuals who wish to improve upon the tax and wealth management profile of their UK RPS. This could be in order to plan against a subsequent Lifetime Allowance Charge when pension funds are designated to provide retirement benefits or to limit the incidence of UK income tax payable on pension distributions or to achieve other specific wealth management objectives.
There are also a number of non tax advantages offered to members of the Plan which can be analysed on a case by case basis.
Individual circumstances will dictate why someone might benefit from transferring pension rights from a UK RPS to the Dominion Malta Retirement Plan 2010. The in-house technical team at Dominion can work with both advisors and potential plan members to determine the exact benefits (and any potential drawbacks) concerning a possible transfer.