The new code, developed by the Gibraltar Association of Pension Fund Administrators (GAPFA), is aimed at ensuring that the jurisdiction avoids becoming known for permitting potentially reputation-damaging practices, including “pension busting schemes being transferred in[to] Gibraltar from other jurisdictions that exceed limits of cash distribution set by the Government and UK Inland Revenue”, GAPFA said, in statement this morning.
It said the code would help to ensure that Gibraltar’s QROPS business is handled "in a fully compliant way, and upholds the reputation of Gibraltar as a key financial centre".
Among the areas the new code addresses is the potential for money laundering, which, GAPFA notes in its statement, is a facet of the pension transfer business "little spoken of within the industry".
For this reason, the new code states explicitly that Gibraltar pension trustees "should be particularly aware of ‘layering’ arrangements, ofthen involv[ing] funds being transferred from another jurisdiction".
It continues: "The use of investment processes, sometimes in the form of private limited companies, EIFs, or bond wrappers permitting private loans in excess of 50% are all possible areas where abuse can occur.
"Members accepting funds, even in a limited investment capacity, should be most wary, and ensure they know the original source of funds and any subsequent on-going transfer, so they have complete knowledge of the entire transaction chain."
Amendments to tax regs
The introduction of the code of conduct comes months after the Gibraltar Parliament approved amendments to the territory’s income tax legislation that were designed to enable pension transfers from the UK to be resumed. Such transfers were voluntarily suspended almost three years ago by Gibraltar QROPS trustees, pending resolution of what were understood to be concerns by HM Revenue & Customs about the way pensions in Gibraltar were taxed — or rather, as HMRC was said to believe, were not.
As reported, Steven Knight, chairman of GAPFA, outlined plans for an industry code of practice in June, during a seminar attended by industry participants, government officials and others.
On Tuesday, Gibraltar’s minister for financial services, Gilbert Licudi, told delegates attending a London investment industry event that Gibraltar’s QROPS providers will be responsible for ensuring that their schemes comply with HMRC’s rules.
Some 10 Gibraltar QROP schemes currently appear on HMRC’s online list, all of which pre-date the recent changes to the income tax legislation. At least one company, London & Colonial, is hoping to launch a scheme in the jurisdiction imminently. It had been close to setting one up in Gibraltar in 2009, when the decision to suspend pension transfers there was taken.
To read the GAPFA statement issued today about the new code of conduct in full, click here.
