The Isle of Man has introduced the Retirement Benefits Schemes Act 2000, (“The Act”), and the Retirement Benefit International Regulations. The Act aims at providing tax neutral (that is to say that the Isle of Man authorities receive no tax revenue from these schemes) international pensions in a regulated environment for individuals or corporations who are resident in any jurisdiction other than the Isle of Man.
If any of the below points describe you or your company, then an International Pension located in the Isle of Man may provide you with a cost effective and robust solution:
The flexibility of International Pension Schemes means that there are many different circumstances in which they can provide a solution to the needs of a corporation or individual. These include:
Some key characteristics and benefits of International Pensions are:
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There are no restrictions on whom the pension provider may admit to membership of an IPP other than that the member must not ordinarily reside in the Isle of Man.
It is the only offshore centre with such a formal statutory framework, and the only offshore centre having “OECD standards” for pensions.
The Isle of Man has over 1,000 years of its own stable government – Tynwald. It has its own dedicated pension's regulatory authority – the IPA (the Insurance and Pensions Authority and a highly respected, secure and well regulated financial services sector. This combination of factors has culminated in it being awarded an “AAA” rating by Moodys and Standard & Poors.
Subject to any restrictions or requirements of the existing pension scheme and the tax authorities where the scheme is regulated, transfers of existing pension schemes to an IPP can be achieved.
One of the benefits of an IPP is that the member can decide where he is to retire without prejudicing his final retirement location, by his choice of pension.
The benefits offered by the IPP are not limited by the IOM legislation, although it is envisaged that the standard IPP will effectively offer a Money Purchase type benefit (Defined Contribution Scheme).
The flexibility of the IPP is such that a member can elect who should benefit from his/her share of the pension fund on death.
Provided you do not move to the Isle of Man, you may change jobs and/or jurisdiction and continue making contributions. Your new employer may also make contributions into your existing IPP – you may decide that this is a prerequisite for moving!
There is no prescribed age. Each Scheme can be tailored to suit the requirements of both the employer and member.
There are no upper or lower limits to the contributions which may be made by either the employer or the employee. Similarly you can take a pension “holiday” at any time should your circumstances change without penalty.
There are no limits as to final pension pot, nor how benefits may be taken (once in drawdown).
Any tradable currency may be used, our partners have experience in managing IPPs in USD$, Can$, Euros, and Sterling.
The contributions made by the employing company may be, treated as trading expenses in the profit and loss account and therefore qualify for corporation tax relief. Subject to the applicable tax regime in the lands in which the company operates other trading expenses in relation to the scheme may also include such items as professional services (e.g. legal, financial or investment advice), and could also be considered to include the salaries of anyone employed to administer the pension arrangement. They may therefore be an effective means of reducing the taxable profit of the company.
Are there any other tax implications? In the Isle of Man the scheme may also benefit from the gross roll up of assets (provided capital appreciation is achieved).
What other benefits does an employer company stand to gain from establishing an IPP? There are administrative costs savings in terms of time, money and efficiency in holding offshore pensions for individuals in the one place, and by one well regarded and independent provider and administrator.
There is no need for pension plans to follow the member as he pursues his career in differing overseas localities for the same employer.
International Personal Pensions provide third party impartial oversight and stable long-term independent management. The recent demise of ENRON in the United States, and the earlier Maxwell saga in the UK, serve to highlight the point that some international companies were addressing minimal levels of governance in certain pension related areas of their operations.
There is no requirement to purchase and annuity.
There is considerable flexibility with regards to the assets held by the fund. In accordance with the Statement of Investment Principles these may include:
In the Isle of Man the scheme may also benefit from the gross roll up of assets (provided appreciation is achieved). It is possible for certain residential property investments to be considered.
The normal period of time is between 2 and 3 months.
OCRA Trustees (Isle of Man) Limited will act as the trustee. In addition the member can be a trustee or can nominate another individual or legal entity to be a trustee. If either the member or his nominee is to act as trustee then the Isle of Man Insurance and Pensions Authority will have to approve them as accredited trustees.
Full “Know your customer” information will be required from the Company and/or employee(s).
A bespoke 'offshore' solution can be complex and requires careful planning and execution. We therefore encourage our clients to contact us directly, without obligation.
While all of our consultants in our offices provide a Free Initial Consultation, the office and consultant listed below has particular expertise in this area and will gladly assist with advice on how to approach your unique challenge.
Alternatively, to select one of our multilingual offices, click here for a list of our office contact details.
Languages spoken in this office: English, French, German, Russian, Ukrainian, Greek and Italian
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