There is a pension revolution going on in Jersey right now, and it's one that might affect every islander for the rest of their lives.
Changes in the Pension law in Jersey have allowed the introduction of Retirement Annuity Trusts, a title which has been abbreviated to the unfortunately named RAT. Quite simply, a RAT offers further choice and flexibility to Islanders who want to be in control of their own pension pot, both before and after they retire. They can also be a cost effective way to access top flight investment management and are available to savers from virtually all income brackets.
It has been 20 or so years since Personal Pensions were first introduced to the island, and many of those considering an investment into a RAT may well have experience of these 'old style' investments. At that time the investment management of these pensions was controlled by large insurance companies, and over recent years more specialised investment houses have been invited to add diversity to the mix.
Many of the insurance companies previously offering Jersey personal pensions have now departed the island and are no longer open for new business locally, with the result being a serious gap in pension provision.
Thankfully, the introduction of new legislation and the cooperation of intermediaries, Trust companies and selected investment management groups have delivered a pension product which, in many cases, is a better option than that offered previously.
Innovative intermediaries are taking the pension formula designed for the local market and building overseas pension schemes which have already seen inflows of business.
Greater investment choice is always an advantage to those looking for a pension, and the more prudent investor will see that employing an active investment manager who will spread money into the right asset at the right time is likely to pay dividends over the long term.
A manager who is able to allocate funds into a variety of asset classes, sectors and geographical regions and who is not constrained by having to follow benchmarks could well be the answer for those entering the RAT race.
By Tom Zambon, regional sales manager for the offshore islands at Ashburton.IFAonline
Following 2016 thematic review
December 2018 or early 2019
Feasibility study due
'Let’s be bold enough to demand change'
Joint life second death option added to relieve tax burden on couples gifting assets