UK - Multinationals are setting up group pension schemes on the Isle of Man in a bid to reduce tax and increase flexibility.
Manx authorities have given 35 firms the go-ahead to set up schemes on the island in the past 18 months.
These include eight UK companies while another eight are global pension scheme administration businesses.
One of the largest schemes to be approved is the Emirates Group Provident Scheme which has more than 2000 members mainly based in Dubai.
And the Isle of Man’s Insurance and Pensions Authority – which was set up 18 months ago – is keen to attract more applications.
It says the island’s jurisdiction is “well regulated yet highly flexible” making it attractive to multinational companies with members around the world.
IPA pensions project executive Mike Lightfoot said: “We focus on what we believe is good governance without going for anything that is overly bureaucratic – and companies like that.
“We control what companies are doing while allowing scheme designers to develop solutions specific to their needs. The legislation makes it easy for international companies to manage a single fund for employees working in various parts of the globe.”
Lightfoot says companies are also attracted to the fact profits made by fund managers and third-party administrators of experienced and professional investor funds are exempt from tax and VAT.
To set up on the island, a scheme’s trustees and administrators must be based there reporting directly to the IPA.
OPRA spokesman Nick Edmans gave the development a cautious welcome.
He said: “If it is a legitimate tax avoidance exercise, this is a useful option for those able to take advantage of it.”
But Mercer Human Resource Consulting principle David Formosa cast doubt over whether the island offered less bureaucracy for schemes.
He said companies with UK members would still have to meet the terms of the government’s Pensions Act.
“To allow their members to retire in the UK, they would still need to meet the conditions set for other UK schemes.”
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