I have long wanted to live on an island (well - my own island - but that's another story) and The Isle of Man seems just the place. My best-selling novel, A LOST TALE, is set on the Isle of Man, and the other two parts of the (as-yet-unpublished-what-is-wrong-with-publishers?) trilogy have dealings with the island. A nice movie deal would give me pension enough to settle there. A nice A LOST TALE movie deal would be most fitting. I have seen The Isle of Man across fifteen or so miles of Irish Sea from the coast of Wales. I did once valiantly attempt to get there, but plane and boat schedules were against me in the window-of-opportunity offered. And anyway - I want more than a weekend.
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A warm Isle of Man welcome for pension potsTax changes mean the Isle of Man hopes to edge ahead of its offshore rivals. by Mike Goodman. Recent tax changes on the Isle of Man have made the island increasingly attractive to offshore savers Photo: JoeFoxIOM / Alamy
It is nearly five years since the UK Inland Revenue first allowed British expatriates to transfer their UK pension pots offshore. Initially, the vehicle was the QROP (Qualifying Recognised Overseas Pension Schemes) but as from last year, an alternative, the QNUP (Qualifying non-UK Pension Scheme) has been available, which also provides opportunities for inheritance tax planning.
A survey by Close International, the Guernsey-based QROPs administrator, suggests £1.3 billion-worth of pension money has been transferred so far, but the potential market for transfers is more than £400 billion.
Whatever vehicle they want to use, British expatriates who want to move pension pots offshore will find a warm welcome in the Isle of Man.
Three months ago, the Isle of Man Treasury finally allowed pension and other employee benefit payments paid to people outside the island from a Manx-domiciled pension scheme to be exempt from Manx income tax.
Before this change, some Isle of Man QROP providers domiciled their schemes in Guernsey, where local tax laws already allowed benefits to be paid out gross.
Gary Boal, managing director of Boal & Co, Manx-based actuaries and pensions experts, said: “Now the Isle of Man can give Guernsey and Jersey and other jurisdictions a run for their money. In fact, it puts the Isle of Man at an advantage, because it is widely regarded as a well-regulated jurisdiction.”
Boal & Co has already launched a QROP scheme which takes advantage of new legislation, allowing income to be drawn gross and which also allows expat pensioners to draw a much higher proportion of their pension “pot” as a cash lump sum than is allowed under current UK pension legislation.
In a move which reflects the importance of pension business, an Isle of Man Association of Pension Scheme Providers was set up last month.
The founder chairman, Stuart Clifford of Baker Tilly, said that there are 18 member firms, all registered pensions administrators. He added: “The island didn’t have a pension body which can liaise with government on behalf of the industry. These are exciting times to be in our line of business. Recent changes to pensions legislation in the Isle of Man have removed some barriers, and possibly even given the jurisdiction a competitive edge over others in the provision of non-resident pension schemes.”
The association would not be involved with consumer protection, according to Mr Clifford, but he pointed out that the Isle of Man runs a Financial Services Ombudsman scheme, which addresses complaints against financial institutions.
Even before QROPs came on the scene, the island was an attractive domicile for international corporate pensions and employee benefits. John Batty, business development manager at Isle of Man Finance, the island’s financial promotion body, said: “We are not only a QROP destination, but an international pension destination, and that’s how we are marketing ourselves. There are now 500 company employee benefit schemes domiciled here.”
He added that the government regulated life assurance and pensions business through a separate life and pensions authority and has specific pensions legislation. “So we are perceived as a more regulated jurisdiction than some of our competitors,” he said.
The island’s offshore life assurance companies also report an upsurge in business, and the continued popularity of single premium investment bonds. For example, Royal London 360°, reported a 24 per cent increase in business, while rival Friends Provident International also reported strong growth. Improved investor confidence is one reason, as is an increase in business from Asia, but the curbing of UK tax relief on pension contributions by high earners has made it attractive for wealthy UK residents to supplement their pension arrangements with offshore bonds.