Key Facts of the Guernsey Retirement Plan

Key Facts: The Guernsey Retirement Plan - A Qualifying Recongnised Overseas Pension Scheme

What is the Guernsey Retirement Plan (GRP)?

GRP is a Trust set up specifically to accept transfers from UK registered pension schemes for individuals who wish to retire abroad.
The GRP has received approval from Her Majesty's Revenue & Customs (HMRC) to become a Qualifying Recognised Overseas Pensions Scheme (QROPS). Therefore, any transfer to a QROPS is a "recognised transfer" and no tax charges will apply on transfer, provided that the transfer value is under the lifetime allowance, capped in April 2010 at 1.8 million GBP for 5 years.

What are its aims?

To provide a cost effective, tax efficient and safe Trust for its clients, and ultimately for their beneficiaries.
To provide a wrapper that can encompass all the clients retirement planning investments, and ensure that these investments are properly managed
To enter into a "Spirit of Co-operation" with HMRC to ensure that the pension provides an income for the life of the client, once the client is in retirement.

What Commitment do you make?

To transfer your existing pension plan(s) to the Trust and abide by the Deed of Adherence of the Trust. If, however, you ultimately decide to retire in the UK, the pension funds may be transferred back to a UK scheme.
To pay the Trust fees.

How does the Trust work?

From 6th April 2010, you cannot draw an income from your Pension Trust fund until age 55. At this point you may take up to 25% of the funds as a tax free lump sum. The balance is then used to provide an "income for life".
The income is paid gross, however, you will be subject to the income tax laws that cover the jurisdiction that you have chosen for retirement.
The amount you may drawdown is not fixed, however it is at the discretion of the Trustees, who will typically use the Government Actuaries Department (GAD) rules on pension drawdown as their guide lines.

What Happens when I die?

You are asked to name your beneficiaries on the GRP application form. They may inherit the residual fund as a capital sum, or, typically with a spouse, decide to keep the Trust in place, continue to drawdown the income, and ultimately leave the residual funds to the children or grand children.

Can you share the policy with someone else?

Your pension funds belong solely to you and must be strictly segregated from another persons pension funds. However, the GRT have a special discounted charging structure covering 2 Trusts for a couple who reside at the same address.

What Assets can the Trust hold?

Typically the Trust will be used to purchase an Offshore Personal Portfolio Bond (PPB). A PPB is an offshore wrapper that can hold the ideal spread of investments suitable for a pension portfolio.
A PPB a very effective administration vehicle.
A PPB also provides a very cost effective method of buying and selling investment funds within the portfolio. Because the PPB provider buys and sells large volumes of investments the usual initial spreads are avoided due to the PPB providers bulk purchasing power.
All investment growth in a PPB is rolled up tax free.
An Offshore Personal Portfolio Bond may hold the following assets:
Currency deposits.
Stock, shares and fixed interest securities.
Approved authorised Unit Trusts, OEICs, UCITs, SICAVs and Investment Trusts.
Eurobonds.
The Trust may also purchase investment property, however specialist advice should be sought in this area due to the costs involved.

What are the risks involved?

If you transfer out of a final salary scheme, also known as a defined benefit scheme, you will lose the "guarantee" of the original scheme.
Like any investment the value of your holdings may go down as well as up and past performance does not guarantee future performance.
If, in the future, you decide to close your QROPS and transfer your retirement funds elsewhere, the personal portfolio bond will levy an exit penalty in the early years. Please see PPB provider literature for more information on PPB charges associated with this investment.
You should always seek independent professional financial advice on whether a transfer to a QROPS is suitable for your circumstances, the Guernsey Retirement Plan and ATC Trustees accept no responsibility for any advice given by third parties.

Who are the Trustees?

The Trustees are ATC Trustees (Guernsey) Limited, part of the ATC Group, a global fiduciary group originally established in 1893 and now with offices around the world.
Visit www.atcgroup.info for more information on the ATC group, or email trustco@atctrust.gg for any specific questions you may have.

QROPS Direct News:December 15, 2011