The ubiquitous QROPS is, for many, THE international pension product.

But whilst there is no denying that QROPS are a fantastic and flexible product (and in the best interests of many of ex-pats) what of the other types of offshore pension provision?

What about the client lucky enough to have a fully funded pension? True, a QROPS can take contributions with no ceiling but what about the limited investment choices? I get asked on a weekly basis if a client can purchase a buy-to-let portfolio (and fine wine seems to be a popular choice at the moment). However, due to the Taxable Property provisions that affect Investment Regulated QROPS these cannot be placed into a QROPS (and if any QROPS provider claims to offer a non-investment regulated scheme make sure you demand independent proof because I am yet to see a scheme that would hold up to scrutiny). So what would you suggest?

Enter the new(er) kid on the block – QNUPS. I’m not going to go into too much detail here on the ‘key features’ of each of these products, I assume that if you’re reading this supplement that you will have at least a basic understanding of QROPS and in simple terms a QNUPS is just a QROPS without the Taxable Property restrictions. Clearly there are greater idiosyncrasies but word count will not allow me to delve too far in this forum.

So a QNUPS could be the obvious choice for a client with more diverse investment needs, they’ll still benefit from tax-free roll up and IHT protection but with the added benefit of virtually no investment restrictions. But are there any drawbacks to a QNUPS? Well the obvious concern is the fact that they are based upon UK legislation and as we know all too well, HMRC likes to ‘tinker’! The tinkers! Bear in mind though that a QNUPS will largely only be attractive to a UK domiciled individual.

So if you’ve looked at QROPS and QNUPS and they still don’t quite tick all the boxes how about an International Pension Plan (IPP)? Unlike their offshore cousins mentioned above, IPP’s are nothing new and I’m sure that most of you will have used them in the past. However, IPP’s seem to have fallen out of favour since the Q denominated bully boys of the acronym world came about – for any of you that have seen my Blogs or read previous articles you’ll know that I have a bit of hate hate relationship with acronyms but try as I might, I just can’t escape them! – Anyway, IPP’s. For the truly mobile individual there are few better products around. We write all of our business from Guernsey which is a tax neutral jurisdiction, this coupled with some of the simplest pensions legislation anywhere in the world can provide mobile clients with the comfort that not only do they have a tax neutral pension product, there is also much less chance of an overly officious government looking to change the rules at the drop of hat. IPP’s can be very flexible and are suitable both for individuals and as group schemes, which leads us on nicely to the next product in the armoury, Section 615 Plans.

Again, Section 615 pension plans are nothing new and the snappy title draws it’s imaginative name from Section 615 (6) of the 1988 Income Tax Act. Despite their provenance, 615 Plans are still unheard of to a lot of people. The basic premise is that a UK employer with an international workforce needs to be able to provide benefits in a secure and tested manner. By utilising a 615 plan, the non-resident member can salary sacrifice very reasonable levels of salary into the plan without deduction of UK tax and thus reduce the amount on income they become taxed on in their current jurisdiction. Unfortunately, once again the revenue decided they were due for review. Until the disguised remuneration provisions came out last December it was possible to receive the entirety of the contributions back in the UK tax-free. There was a very simple justification for this – protectionism. The UK government clearly didn’t want UK money going to fund other countries coffers so to encourage the members of 615 plans to spend their contributions back in the UK they offered the tax break. Alas, the powers that be decided that was far too generous in these times of austerity and bought the benefits back under the UK tax net. Despite this, 615 plans are still great for the right people and should always be considered along with group IPP’s for corporate clients.

With all of the above in mind I could forgive the reader for thinking that I might in someway be adverse to QROPS. Nothing could be further from the truth and in fact they are the bread and butter of Marlborough’s business. We have an extensive & colourful client base and there are never 2 clients the same. The brilliance of QROPS is their almost universal appeal to ex-pats with UK cited pensions. The diversity of our client base for QROPS never fails to amaze me, we have individuals from every walk of life, from chimney sweeps to fighter pilots and I can guarantee that everyday will bring a new individual with a new life story that is looking to maximise their hard earned capital.

I get rather protective about QROPS and it annoys me that so much of the press written about them is negative, whether that be sensationalist headlines about the next mis-selling scandal or rival product providers bickering about who’s read the most legislation. The simple truth is that QROPS are a great product but like all financial services are open to abuse and with the complexity of the legislation there will undoubtedly be conflicting views on interpretation. It’s about time advisors and providers accepted that the market place is so enormous that we couldn’t possibly deal with it all on an individual basis.

Whichever product you look to to meet your client’s needs the single most important thing is to remember is the client is king. There is a very basic principle of trust law that states a provider should manage their client’s interests ‘as a father would for his family’. We all have a duty of care to provide the best levels of service for our clients, without them we would all be unemployed and therefore squabbling over who knows the most, has the cheapest fees, has managed to ‘bend’ a few more rules is an exercise in futility. Apart from anything else, we all sleep better knowing we have done a good job!