According to the BBC, Guernsey Finance has described changes made to QROPS pension schemes by HM Revenue and Customs (HMRC) as an “unjust attack” on the island.

Read the BBC’s report on the jurisdiction’s reaction to HMRC’s delisting here

According to deVere Group, many pensioners will decide to move abroad following the new changes to the QROPS legislation published in the 2012 UK budget. They also offer a word of caution about the age-related personal subvention, which represents fewer incentives for people to keep pensions in the UK.

Retirees will move their pensions to warmer and sunnier jurisdictions “to protect their retirement funds from the government’s on-going raids” says chief executive Nigel Green.

The changes mean those born after 5 April 1948 will see their tax-free income limited to the new £9,205 that will be imposed to people under 65 from April 2013. Any extra income is taxed at 20%, 40% or 45%, which is the new top tax rate.

Individuals born before 5 April 1948 will see personal allowance frozen at the 2012-13 levels. For those born between 6 April 1938 and 5 April 1948 this will be £10,500; for people born before 6 April 1938 it will be £10,660.

An estimate states that five million people will lose £63 a year on the average existing pension. This suggests, that approximately 360,000 pensioners will lose £285 per year, while 230,000 more may be forced into paying income tax.

Read more about how the 2012 Budget may provoke pensioners move abroad

HMRC have published two major changes on the QROPS legislation. These changes are as follows:

1 – Reporting Period – Previously QROPS providers were required to report any distributions to an individual from the scheme, within the 5 tax years in which the individual is non-UK taxresident. However, since the new rule disclosed on the 6 April 2012, the requirements change to 10 years from the date of transfer.

2- QROPS Qualifications Rules – A QROPS is obliged to meet the requirements stated in a new condition, called “Condition 4“, in which the scheme has to treat residents and non-residents of a jurisdiction equally for tax purposes.

Read more about STM Free Pension Transfer solutions

The global IFA, deVere Group, has bought a 24% stake in STM Group, the London-listed multi-jurisdictional QROPS and financial services provider.

A £1.59m deal of purchasing new shares into the company was recently signed off, subject to regulatory approval.

Nigel Green, CEO of deVere Group, said: “I believe the new pensions guidelines [from HM Revenue & Customs, expected this week] will lead more clients to move their pensions to Malta, which is part of the European Union, and has 59 double taxation treaties. STM is extremely well placed to look after these clients and provide them with the best possible benefits.

Read the full article about deVere and STM Group at STM Group News

2012 Budget – Impact on expat pensions

Expats found themselves at the sharp end of some of Chancellor George Osborne’s decisions in his 2012 Budget, as areas such as Qualifying Recognised Overseas Pension Schemes (QROPS) came under the microscope

HM Revenue & Customs is concerned that while the letter of the rules on QROPS is being adhered to, the spirit is not. It has made changes to the regime which will take effect from April 6, and those schemes already transferred are hit by the new regulations.

Essentially, HMRC wants to be sure that when a pension is transferred to a QROPS, the way in which a pension was intended to be used will still be abided by – which means it provides you with “an income for life”, not a means to get your money out as a cash lump sum. So from April 6, any scheme allowing this will no longer be considered a QROPS, and your fund could be subject to additional tax charges.

However, it appears that will no longer be the case. You will be able to take 30 per cent of your fund as a tax-free lump sum – an improvement on the 25 per cent you can take in UK schemes – but you will need to use 70 per cent of the fund to provide an “income for life”.

The funds being transferred will still need to meet the lifetime allowance under the UK rules, which is £1.5 million for 2012/2013, and anything over this will be taxed at 25 per cent. You will pay UK tax on your payments from a QROPS for up to five years after you leave the UK.

If you transfer your pension to a scheme which does not qualify as a QROPS, you will face a tax charge of 40 per cent on the amount transferred, and you may face an additional surcharge of 15 per cent in some circumstances. Pension scheme administrators in the UK may face an additional 15 per cent charge if they authorise the transfer to a non-QROPS qualifying scheme, which could make it harder to have your pension transferred in the first place.

Read the full story at The Telegraph

Will George Osborne’s ‘Granny tax’ cause an expat exodus?

George Osborne’s so-called Granny Tax will lead to an increasing number of Britain’s retirees moving abroad, according to personal finance advisers.Nigel Green, CEO of the deVere Group, says that English-speaking, EU countries are increasingly attractive for retirees in light of Budget cuts.

It was announced in last week’s Budget that the age-related allowance for people turning 65 is to be scrapped from April 2013, meaning that there are now even fewer incentives to hold pensions in the UK.

“With this benefit being removed, and as people seek to protect their retirement funds from the Government’s ongoing raids on the money they’ve prudently put away, more Britons than ever will be looking to retire to countries in which they’ll be taxed less,” Mr Green said. “We fully expect Cyprus and Malta to be increasingly popular destinations for those who want to enjoy their retirement in the sun, and who want to safeguard the money they’ve been putting aside all their lives.”

Regarding the new QROPS rules, Mr Green points out that tighter regulation will encourage such pension schemes to be professionally run and more accessible. “The QROPS modifications are further evidence that transferring pensions is becoming increasingly mainstream,” he said.

Financial legislation in Malta has made it increasingly attractive for high earners. The introduction of the Highly Qualified Individual Rules last year meant that a number of individuals came to live in Malta and pay a flat rate of 15% tax on their income for a five year period.

Read the full story at The Telegraph

Key changes to QROPS in HMRC’s draft legislation

On Tuesday 6 December, HMRC issued draft legislation in the form of the Overseas Pensions Regulations 2012. The new proposed rules and regulations are due to come into force as of 6 April 2012 and will affect many expatriate, non-domicile and UK resident individuals who are considering moving overseas. There is a consultation period up until 31 January 2012, although in the form that the legislation has been drafted, this is unlikely to be amended.

Read the full article on Malta QROPS