Following consultations between the MFSA, the Maltese Inland Revenue and the UK HMRC, it is now possible for Maltese pension schemes to obtain recognition as ‘Qualifying Recognized Overseas Pension Schemes’ (QROPS) from Her Majesty’s Revenue & Customs (HMRC). The QROPS international pension scheme was launched in April 2006 and allows for non-UK tax residents who are overseas and currently hold a UK pension which is registered with HMRC to transfer these pension assets to a QROPS without suffering severe tax liabilities on the transfer. These types of funds need to be approved by the UK Treasury in order to attain the status of a QROPS.
In order to get QROPS status, one needs to set up a retirement scheme under the Special Funds (Regulation) Act of 2002. The retirement scheme will need to appoint an asset manager (unless the Board of Directors is competent to conduct the management of the assets of the retirement scheme), and a scheme administrator. Both the asset manager and the scheme administrator need to be licensed under the Special funds (Regulation) Act. Alternatively, the MFSA may on a case-by-case basis exempt a person from the need to register under the Special Funds (Regulation) Act if such person is already licensed under the Investment Services Act. This obviously helps in avoiding duplication in registration requirements and serves to expedite the whole licensing process.
The MFSA may require the appointment of a custodian to a retirement scheme. This may occur if a retirement scheme does not invest its members’ contributions in a retirement fund or funds, while at the same time not engaging the services of an asset manager. The custodian is entrusted with the safekeeping of the assets of the scheme, and to monitor the retirement scheme administrator in the undertaking of their duties.
After getting a license as a Maltese pension scheme under the Special Funds (Regulation) Act, the scheme can apply for recognition as a QROPS. The HMRC seeks to make sure that a UK pension can only be transferred to an overseas scheme that pays out benefits broadly on a par with a UK Registered Pension Scheme, in line with the UK Finance Act 2008.
Interest in Malta as a jurisdiction in order to host QROPS has been very high ever since recognition was obtained. Malta’s firm but fair regulatory approach, which emphasizes the importance of flexible solutions over prescriptive legislation, together with the applicable fiscal regime, make Malta a very attractive jurisdiction for the set up of such schemes.
