Session four, track one: International pensions a practical Financial Planning tool? Robert C. Hair CFP CM Turcan Connell International Pensions a practical Financial Planning tool? Bob Hair Head of Financial Planning 15 th November 2011 1
Agenda 1. Introduction 2. QROPS 3. QNUPS 4. EFRBS 5. Tax traps & common myths 6. Questions About Turcan Connell Chambers Sole Band 1 ranking Private Client Charities Joint Band 1 ranking Land & Property Family Law Legal 500 Sole Band 1 ranking Personal Tax, Trusts & Executries Charities Joint Band 1 ranking Agriculture & Estates Family Law "Turcan Connell leads the market for private client matters." Legal 500 "Turcan Connell is the market leader in private client work its strength and depth are unrivalled It does more work and of a better quality than anyone else in this market. Chambers UK 175 2
About Turcan Connell Services for Private Clients Tax and Succession Planning Philanthropy Land and Property Family Law Employment Law Financial Planning Investment Management Pensions Tax Compliance Trust Administration International Trust Services International Pensions Services for Charities Creation, dissolution and merger of charities Duties of Charity Trustees Land and Property Employment Law Investment Management Regulatory Compliance 176 About Turcan Connell Services for the Owners & Managers of Land Purchase, sale and lease of property Agricultural Law Land Management Alternative uses of land Residential Renewable Energy Employment Law Tax and Succession Planning Asset Management 177 3
About Turcan Connell Turcan Connell Wealth Management: c 1bn funds under advice c 650m under discretionary management 8 Certified Financial Planners (average 17 years exp) 5 Non-exec Investment Advisory Board members 10 Investment Managers (average 12 years exp) 2 Risk Analysts 8 Middle Office/Paraplanners 29 support staff Edinburgh London Guernsey - Geneva QROPS Introduced on 6 April 2006 Overseas pension scheme in s.150(7) Finance Act 2004 ch14 of RPSM Technical pages 4
QROPS overview Qualifying Withdrawals from age 55; 70% must provide an income for life; No more than 30% can be taken as lump sum; 5 year reporting period Recognised On HMR&C list Overseas Pension Schemes QROPS benefits Income Payable gross in QROPS jurisdiction; BUT not gross until expat for 5 years Inheritance Tax not applicable No annuity required Up to 30% tax free lump sum available Investment choice But take care with taxable property Currency 5
QROPS jurisdictions Australia Guernsey Norway Bangladesh Hong Kong Portugal Barbados bd Hungary Russian Federation Belgium Iceland Slovakia Bermuda India South Africa Canada Ireland Spain Bulgaria Isle of Man Sri Lanka Czech Republic Italy St Lucia Denmark Jamaica St Vincent Finland Jersey Sweden France Malaysia Switzerland Germany Mauritius Trinidad & Tobago Gibraltar Netherlands Turkey Greece New Zealand USA QROPS suitability UK Expats or emigrating Generally DC schemes Annuity vs drawdown Tax efficiency Income tax on withdrawals Lump sum death benefit surcharge Inheritance tax 30% tax free lump sum Lifetime allowance 6
QROPS risks Jurisdiction The Singapore shuffle loss of status; Tax on income/death benefits in country of residence; Double taxation agreements; Provider Inadvertent breaches; Custody of assets; pushing the envelope rules interpretation Advice Return to UK; Comparison with Flexible drawdown? QNUPS QNUPS = Qualifying non-uk pension scheme; February 2010 - Inheritance Tax (Qualifying Non UK Pension Schemes) Regulations 2010; 7
QNUPS overview Withdrawals from age 55; Greater investment freedom as taxable property rules do not apply and no reporting on transactions; No statutory limit on contributions or fund size (care!); Loan to member possible (up to c25%); Tax free lump sum possible (Counsel s opinion); UK income tax only applies on 90% of income; Free of UK inheritance tax immediately; Currency and jurisdiction of choice QNUPS suitability Anyone with cash and an inheritance tax liability; Over age 55; Seeking an income; And investment freedom BUT the funds are tied up. 8
EFRBS Employer Financed Retirement Benefit Schemes Son of FURBS Unapproved scheme set up by employer Discretionary Trust using independent trustees Typically non-uk resident Disguised remuneration rules Son of EFRBS?? Example EFRBS Cash or assets EFRBS Company Director A Director A sub-fund (leave offshore for tax free growth & provision of retirement t benefits) OR Loans 9
Tax traps & common myths QROPS After 5 years the rules don t matter Definition of residence pushing the envelope on income and lump sums Trust busting Tax free income (eg: Malta DTA) Taxable property/permitted investments No need for investment advice HMRC Anti-fraud unit Scheme rules Tax traps & common myths QNUPS The reasonable test QROPS QNUPS cash transfers after 5 years POAT rules? Gift with reservation? Death bed planning? 10
Questions? IMPORTANT INFORMATION Information provided in this document and any opinions expressed are for general use and not personal to your circumstances, nor are they intended to provide specific legal or financial advice. No information in this document should be viewed as an offer or recommendation to dispose of or acquire any investment or undertake any specific transaction. If you are unsure as to the suitability of any investment you should contact a Financial Planner who will provide tailored advice. All information provided is based on our understanding of current legislation which is subject to change. You should remember that the value of investments and the income derived from them may fall as well as rise and you may not get back the full amount you invest. Past performance is not a guide to future performance. Taxation is based on individual circumstances and is subject to change. We have taken all reasonable care to ensure information contained within this document is accurate however we give no guarantee to the accuracy and completeness of the information or to any errors and omissions that may occur due to circumstances beyond our control. Turcan Connell Solicitors & Asset Managers is authorised and regulated by the Financial Services Authority for investment business, reference number 184739. Registered office Princes Exchange, 1 Earl Grey Street, Edinburgh, EH3 9EE 11