Retirement Planning in the Isle of Man

Saving for a comfortable and prosperous retirement should be at the top of anyone’s financial planning list, wherever they live and work. Pensions are also one of the most tax-efficient ways to save, particularly for higher-rate taxpayers. A flexible retirement arrangement can help you accumulate long-term capital and provide a worthwhile return, while taking advantage of pension-related tax benefits.

The Isle of Man specialises in all aspects of international pension planning, from large multinationals to individual clients. All pension scheme administrators are regulated by the Isle of Man Financial Services Authority (FSA) and are subject to a rigorous approval process and on-going regulatory audit.

The Isle of Man’s pensions legislation provides a regulatory framework that not only encompasses domestic schemes available to Isle of Man residents, but also provides a broader framework enabling multi-national or global businesses to use the Isle of Man as a centre from which to manage retirement benefits schemes for employees who may reside anywhere in the world.

All pension scheme administrators are regulated by the Isle of Man Financial Services Authority (FSA) and are subject to a rigorous approval process and on-going regulatory audit.

Isle of Man pension providers are supported by a mature and highly developed international finance and professional services industry in such key areas as banking, insurance, investment management and trusteeship.

A simple tax environment enables pension scheme members to maximise their savings and benefits. All pension funds on the Isle of Man are permitted to grow free of any Isle of Man tax.

The Isle of Man’s legislative framework provides a solid foundation for international retirement planning by ensuring that schemes are operated by fit and proper persons who are appropriately regulated, that they adopt strong internal governance, and that certain members’ rights are enshrined in law.

However, the legislation also includes flexibility regarding specific benefit design, leaving scheme designers free to develop a bespoke benefit structure that can be adapted to suit an international business’s specific objectives, or to incorporate multi-jurisdictional requirements.

The suite of pensions solutions available is as follows:

• Group Pensions – The Island’s pension regulations are robust yet highly flexible, allowing corporate clients the freedom to tailor international retirement solutions to the diverse demands of their international operations. Being in a respected and mature international finance centre, the Isle of Man’s scheme administrators, and support services such as banks and investment managers, are well used to the rigours of multi-currency, cross border pension arrangements.
• Personal Pensions – For expatriate individuals who are looking to save for their retirement, Isle of Man pension companies provide a range of individual arrangements to suit their savings needs, from short-term to long-term, and from regular payments to lump sums.
• Bespoke or Non-pension schemes – For senior employees where traditional pensions schemes do not meet their requirements, a company may wish to provide a bespoke pension or long-term reward arrangement. Both national and global employers alike are increasingly looking to use specialist vehicles for equalising reward schemes across national frontiers. Many have preferred the Isle of Man recognising the stability, long established Trust and Company law, as well as the security offered by the island’s regulatory regime.
• Qualifying Recognised Overseas Pensions Scheme (QROPS) – A QROPS is the name used to categorise a non-UK pension scheme that can receive the transfer of UK pension benefits. To qualify as a QROPS, the overseas pension scheme must meet certain conditions as prescribed by HM Revenue & Customs (HMRC), the UK tax authority. The pension scheme must also comply with the local pension’s legislation in its own operating jurisdiction.Sovereign has been at the forefront of QROPS since enabling legislation was first introduced in 2006 and has one of the broadest QROPS propositions in the marketplace. A QROPS established in the Isle of Man can be highly attractive for individuals moving to the island.In addition the Island has a growing network of international double tax treaties which potentially enable scheme members to take pension benefits from an Isle of Man QROPS in a tax efficient manner.
• Qualifying Non-UK Pension Scheme (QNUPS) – A QNUPS is a pension scheme based outside the UK that qualifies for an exemption from UK Inheritance Tax (IHT). QNUPS are a particularly attractive additional retirement savings plan for UK resident individuals who have reached the permitted limit of their domestic UK annual and lifetime allowances, but who wish to make further provision for their retirement.As a recognised pension jurisdiction, the Isle of Man is well placed to provide these schemes which can be tailored in line with individual requirements. There are no reporting requirements from the QNUPS to HMRC, and QNUPS benefit from a UK IHT exemption in respect of UK tax relieved pension funds that have been transferred to a QNUPS (which may also be a QROPS), contributions to a QNUPS by a current or previous UK resident, and assets held by a QNUPS.

• Isle of Man pension providers have a long history of providing pension schemes for both individuals and corporates.
• Financially secure and politically stable jurisdiction in a convenient time zone.
• Extensive range of pension solutions.
• Pensions specific legislation and regulation with a dedicated regulator, the Isle of Man FSA, which focuses on the specific needs of the pensions market.
• A highly developed and mature financial services industry providing support to the pensions industry in such key areas as banking, insurance and investment management and trusteeship.
• A simple tax environment, which enables maximisation of pension savings and benefits