Until now, the pensions industry has been in total darkness about which countries were receiving the bulk of UK pension transfers. This information, obtained via a Freedom of Information Act request, is therefore expected to cause a sensation, even if it largely confirms some experts’ suspicions.
The figures show that Australia has received the most transfers of any jurisdiction since 2007, the first year for which HMRC provided data (and probably the tax year 2006/2007 though this is not clear, and Concept said it is seeking clarification).
According to the data, it has received 47% of the transfers, by number of transfers, more than twice as many as its nearest rival, New Zealand, with 23%, which in turn took more than twice as many as the No. 3 jurisdiction, Guernsey (10%).
A look at the transfers that were made in the first part of this year, however, shows a very different picture, with Guernsey in the lead with 32%, followed by New Zealand (28%), Australia (20%) and Isle of Man (5%).
Importantly, Guernsey differs from Australia, and in part from New Zealand, in that it is primarily a “third country” QROPS destination, meaning that most of the QROPS transferred there are for people who have left the UK to live elsewhere, such as in Europe or Asia.
By comparison, says Roger Berry, managing director of Guernsey-based QROPS specialist Concept Group, “Australia’s QROPS market is [comprised] almost totally of people going to Australia to live, while New Zealand is a mixture of both” third-country QROPS and those of people moving there permanently from Britain.
Interestingly, the Isle of Man, another notable third country jurisdiction which recently tweaked its pension laws to improve its QROPS offering, has seen its QROPS market share increase in 2011 compared with its four-year performance.
Malta, which only received HMRC approval as a QROPS destination in 2010, for now has less than a 1% market share.
Berry said the data showed that “prudent jurisdictions are the winning business model and should continue to thrive”.
Among other key revelations contained in the Concept Group data is that the total value of pensions transferred into QROPS as of 2010 was £1.3bn ($2.1bn), confirming an estimate made by Close International at the end of last year. The value of transfers made has increased every year since 2007, when it totalled £121.5m, and almost trebled the following year.
This year the market is projecting as much as “half a billion pounds’” worth of transfers into QROPS may be made, assuming a 6% increase over 2010, according to Berry.
Nevertheless, he added, a total of less than £1.5bn worth of pensions transferred in the course of four years represents quite a small figure compared to other areas of financial services, such as investment banking. This, he added, would appear to suggest that as the industry matures, it is likely to evolve increasingly into a business dominated by a handful of jurisdictions with a strong expertise in the area.
Note: This article contains the correct data for the number of QROPS transferred to Australia and New Zealand between 2007 and 31/06/2011. In the September issue of International Adviser, these numbers were reversed, due to incorrect data supplied by Concept Group. For more on the Concept Group data, and Roger Berry’s analysis of it, see pages 8 and 9 of a special QROPS section that accompanies the magazine.
| Jurisdiction | % of total transfers (by numbers transferred) btwn 2007 and 31/06/2011 |
% of total transfers (by number transferred) in first part of 2011 only |
| Australia | 47% | 20% |
| New Zealand | 23% | 28% |
| Guernsey | 10% | 32% |
| Isle of Man | 2% | 5% |
| Hong Kong | 1% | 1% |
| Malta | <1% | <1% |
| Others combined | 17% | 15% |
