When QNUPS were announced to be exempt from UK inheritance tax in February of 2010, the financial services industry was wildly enthusiastic about them. However, there is more to a QNUPS than the fact that it can be used as part of an inheritance tax planning scheme.
It should not be forgotten that QNUPS can also be used as effective retirement planning vehicles in their own right.
Firstly, much has been made of the wide variety of assets that the schemes can hold. The real headline grabbers are the “exotic” assets that can be held, including antiques and fine wines. However, these will probably not be relevant for most investors. In real terms, QNUPS investors will benefit from the fact that QNUPS are available in a variety of countries that permit flexible pension structures, like Guernsey and the Isle of Man.
Other advantages include the fact that there is no maximum limit on the amount that can be contributed to a QNUPS in the investor’s lifetime. This is in direct contradiction to the UK system, where there is a cap (albeit a relatively high one), on how much can be counted as “pension assets” that attract tax and regulatory benefits.
There is also no maximum age at which contributions can be made, which is a welcome relief when we are on one hand being told that we should squirrel as much away into our pensions as possible but on the other hand limited to making those contributions by a certain birthday.
Finally, there is no rule that says that QNUPS contributions have to be from income earned from employment. So it may be that you can contribute assets that have themselves been inherited into the schemes. With an aging population where it will become common to have two generations of the same family in retirement, this scenario is going to become widespread.