QROPS domiciled in Malta will benefit from the full flexibility which is to be afforded to UK pensions, after a change to local pension legislation.
An amendment issued by the Malta Financial Services Authority means that all Maltese Qualifying Recognised Overseas Pensions Schemes (QROPS) will now be subject to UK HM Revenue & Customs’ rules rather than local legislation.
This will allow the schemes to utilise HMRC’s proposal to allow up to 100% lump sum withdrawals out of QROPS from April this year.
The change, which was issued in December last year, was widely recognised as bringing QROPS in line with the flexibilities announced for UK pensions in last March’s Budget, which will also come into force in April.
With this news, Malta becomes the first QROPS jurisdiction to alter its local legislation in line with HMRC’s proposals.
When HMRC’s changes were first announced, experts said it was “unlikely” that Malta would amend its legislation, because it had recently implemented a scheme called “programmed withdrawals”.
Programmed withdrawals provide more flexibility than afforded by the current requirement of a scheme holder to use 70% of their funds to provide an income for life.
Experts also said that QROPS providers operating in the jurisdiction would likely have to raise the minimum retirement age for schemes to 55 from the local minimum of 50.
This would bring the schemes in line with HMRC’s requirement for QROPS benefits to be payable no earlier than they would under the UK’s minimum age of 55, which was also included in the proposals.
The island jurisdiction negotiated individually with the US in order to conclude a FATCA agreement after the European Commission’s attempts to adopt a common approach for all states did not work.
FATCA is part of the US Hiring Incentives to Restore Employment Act. It ensures that US persons, wherever they are located and in whatever investment vehicle they hold their assets, are paying the correct amount of US tax.