Every now and again, a new financial product hits the shelves, so to speak, that seems like a great deal for investors.
When Qualifying Non UK Pension Schemes were introduced in February of this year, they were welcomed by investors everywhere who dreaded paying nearly half of their assets in inheritance tax after their death. The schemes were originally designed to clarify a mistake in the previous legislation which left the matter unclear.
However, when the February regulations came out, it was clear that a new class of pension had been born. QNUPS, as they have become known, is a type of overseas pension that includes the QROPS and ROPS that were already available. However, they have other advantages that investors may not have been able to benefit from previously.
Firstly, QNUPS have no lifetime or annual maximum for contributions, which means that you can save as much as you can into your overseas pension scheme. There is also no annual limit, although of course these things may change with budgetary announcements.
Secondly, QNUPS are not limited to contributions that come from income that has been earned in employment. Accordingly, other assets may be contributed.
Thirdly, there is no maximum age for contributing to a QNUPS. Given all of the discussion in the media about working ages and how long people expect to be working, this fits with modern ways of living.
Finally, and perhaps most importantly, there may be significant tax advantages to getting a QNUPS. Aside from the IHT exemption, assets in QNUPS grow free from CGT, although they may of course attract tax in their own jurisdiction. However, this is something that can be managed and explained to your in advance by your QNUPS adviser, so as long as your tax bill is small and not a surprise, QNUPS can work for a wide range of people.