QROPS interview: Gary Boal

How does it feel to have won the Innovation in QROPs award?

It feels nice because we feel vindicated. We did something very different when we launched our Trinity 50C QROPS, and because it was so radically different initially some people had a problem with it (until they checked the legislation).

It is good to see the product has stood up to scrutiny from HMRC and it is great to be recognised by the industry.

Tell me about Trinity QROPS?

There’s quite a history to this. Since QROPS came onto the scene, Guernsey was initially able to assume pole position as a result of having a TEE tax position so pensions, lump sums and death benefits could be paid free of overseas tax.

The problem we faced in the Isle of Man (IoM) was we operated (like the UK) from an EET tax position. We did (with others) lobby the IoM government to change this but we were told this wouldn’t be an option.

We then brainstormed during 2010 internally in Boal & Co and looked at finding an alternative solution to the tax problem. We came up with the idea of a separate IoM pensions tax system ideal for QROPS  alongside the current one, and believed that would give us a very strong competitive proposition.

At Boal & Co we already have a very strong international company pension proposition, running schemes for multi-national companies and their international work forces, including employees working in countries where they are unlikely to be able to have an occupational pension scheme.

We operate these IoM schemes under what is known as the 50B tax system. We put together a proposal to the IoM government to say if we could operate on a similar basis to 50B, suitably modified, then we could develop a good platform for QROPS.

The IoM Department for Economic Development was keen to see the IoM achieve its potential in the QROPS arena so developing the additional tax model was good news to them. By developing  the new 50C legislation, we have been able to come up with an IoM pension model which mirrors the UK requirements and is fully compliant with QROPS requirements.

Essentially any QROPS is a marriage between two different countries’ pension rules, and in the past these haven’t been similar.

The IoM, for example, was traditionally set up along the same lines as Guernsey, in that tax free cash could be no more than 30% of the fund value with benefits taken by age 75. Under the new 50C legislation, though, expatriate retirees can potentially get more than 30% of their pension out as a lump sum.

Under the rules, at least 70% of any UK transfer value paid across into Trinity has to be used to provide a pension for life. However, the excess of the pension fund over and above this amount can be used to provide an additional retirement lump sum.

All of the investment growth achieved within Trinity after transfer can, at retirement, be paid as a lump sum.

What kind of feedback have you had from the industry about Trinity QROPS?

Trinity was launched on 22 October 2010  the very day the 50C legislation came into place. It was, the first ever 50C QROPS. We received very positive feedback, though it did take time for the industry to digest all of the details as it was so radically different.

Some advisers embraced Trinity from the outset, having read the extensive technical material we provided to them. Others held back to wait for the dust to settle. 

It is logical for us to be asked, now that Trinity is no longer the only 50C scheme on HMRC’s QROPS list, why advisers should use Trinity and not one of the other schemes that will no doubt be launched in the future.

To that question, our answer is that clients’ interests are protected and maximised if advisers deal with the firm who had the knowledge and foresight to move the QROPS market in the way that occurred with Trinity/50C.

QROPS knowledge is something which is not just relevant at point of transfer.

Instead, knowing the rules and legislation intimately is the key to keeping QROPS clients on a safe path after transfer, making sure that no one is permitted to do anything (in terms of drawing benefits or making investments) which leads to penalties or which is not permitted by the legislation.

This is something we pride ourselves on.

What’s next for the QROPS market?

We are about to make certain enhancements to the scheme involving the use of trusts. We are listening to what the market wants and there are some very clued up advisers out there we are committed to responding to their needs.

As far as the wider QROPS market goes then that’s quite a tricky one. The first year or two of the QROPS market was tarnished by some ‘providers’ (and I use that phrase loosely) who were basically abusing the new regime to do pension busting.

Reputable advisers were initially deterred from QROPs business in these early days. However, since then, a proper market with a handful of professional providers has emerged, and the adviser market has become better informed.

Gary Boal is managing director at Boal & Co

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