The legislation is due to be taken to the Gibraltar Parliament “within six to eight weeks”, according to a statement released this morning.
Among the features of the new legislation are that benefits paid by pension funds transferred to Gibraltar and administered under the new legislation would be taxed at a rate of 2.5%.
The legislation also provides for a maximum commutation, or so-called pension-commencement lump sum, of no more than 30%; a minimum retirement age of 55, except "in very specific circumstances relating to chronic ill health"; and it prohibits schemes imported into Gibraltar from being transferred to another scheme outside of Gibraltar "which does not comply with the original requirements" of the Gibraltar scheme.
There is also a retrospective element to the scheme that is designed to enable what is described as a "small number of pension schemes imported into Gibraltar" since 6 April 2006 "to comply with the requirements of other jurisdictions which allow exporting of pension funds", according to the statement, which was released by Gibraltar’s Ministry of Financial Services.
The statement stresses that the changes to Gibraltar’s pension regulations contained in the proposed legislation "will not affect in any way the benefits which Gibraltar pensioners get from their current pension schemes".
"The proposals only apply to certain pension schemes established outside Gibraltar, and which are subsequently imported," the statement says.
It adds: "These amendments do not affect the rules governing those occupational pension schemes which have been or may be established in Gibraltar where distributions are taxed at a zero rate."
It is understood that the fact that Gibraltar taxes its own residents over the age of 60 at 0% – which, it insists, is not the same thing as "no tax" – that caused HMRC to express concerns over the Gibraltar QROPS regime in effect in 2009, which subsequently led Gibraltar pension administrators to suspend all pension transfers to the jurisdiction.
New government
Gibraltar’s decision to seek to attract the transferred UK pensions of people who are leaving Britain for good is seen as an outcome of recent elections that brought a new government into power in the British overseas territory in December.
In its favour as a QROPS jurisdicition, Gibraltar is, unusually for a British overseas territory, considered a member of the EU for most things, including financial services – unlike Guernsey, Jersey and the Isle of Man. It is also said to have a more flexible, and thus attractive, regime for QROPS administrators than some other popular QROPS destinations.
In March, Gilbert Licudi, Gibraltar’s new minister for financial services, told International Adviser that his office was working on developing a new pension regime that would address the specific concerns of HM Revenue & Customs that effectively caused Gibraltar to get out of the QROPS business three years ago, while at the same time ensuring “that what is done in Gibraltar is competitive [with respect to] other jurisdictions”.
In today’s statement, Licudi said: "This is an important piece of legislation for those in the finance centre industry involved in the administration of pension schemes. It opens up a line of business which has, previously, been out of reach for Gibraltar.
"It will create work for pension scheme administrators, and will also create income from taxation for Gibraltar, in respect of distributions from imported pension schemes."
New bill ‘meets HMRC’s rules’
Steven Knight, chairman of the Gibraltar Association of Pension Fund Administrators, said the new legislation met HMRC’s new rules on QROPS, which took effect last month.
