International Pension Plans (IPPs)

International Pension Plans were devised to assist employers in providing effective pension planning for mobile executives. IPPs focused on individuals working outside of their country of origin who were engaged in the UK by an international employer (non‑UK domiciled individuals employed in the UK by a foreign employer and resident or ordinarily resident in the UK for tax purposes). The Ardel Personal Pension Plan was established for the specific purpose of meeting the ongoing needs of these individuals. The plan provides a facility to allow accrued pension entitlements to be transferred to an independent scheme away from an umbrella arrangement made by a former employer.

Background to International Pension Plans

Prior to 6th April 2006 (Pensions ‘A Day’) IPPs were commonly formed and used as a means to provide tax efficient remuneration to highly paid internationally mobile executives.

Employers were able to make significant contributions to retirement benefit arrangements (no earnings limits applied). In particular, IPPs provided an attractive mechanism to allow the tax efficient distribution of executive bonus pools (often by way of “bonus sacrifice”) and were commonly associated with employees in the investment banking and hedge fund industries.

IPPs were established by an employer making pension contributions in respect of an executive or executives of a company. The IPP was often offshore and allowed income and gains to accumulate in a tax neutral environment.

The introduction of the pensions ‘A‑Day’ legislation withdrew the advantages previously enjoyed. A requirement was introduced for the individual to have been an existing member of the IPP before his arrival in the UK and to have been previously entitled to tax relief on contributions to the IPP in the country in which he was formerly resident. In practice, the majority of individuals benefiting from such arrangements were already UK resident and the requirement for new IPPs all but disappeared.

There were, however, significant numbers of IPPs established before the ‘A‑Day’ provisions came into effect. Members of these plans continue to enjoy significant benefits albeit under possible restriction and inconvenience of a former employer’s umbrella scheme.

Advantages

• Established to qualify for the exemptions from Guernsey Income Tax under Sections 40(0), 40(p) and 40(ee)(ii) of the Income Tax Law
• Freedom from the plan and pension arrangements of a former employer (which are administered by a trustee service provider on behalf of the former employer company)
• Flexibility – a wide range of permissible investments
• The absence of conflicts of interest.  Ardel is an independent organisation and is able to offer true impartiality always acting in the best interests of the member
• Security – Ardel is one of the largest independent trust companies in the Channel Islands with many years experience in administering pension arrangements
• Professional Indemnity insurance of £25m
• Network of independent pension professionals and advisors