In 2000 the Isle of Man enacted new pensions legislation in the form of the Retirement Benefits Schemes Act 2000, and established the Insurance and Pensions Authority (IPA) as the supervisory body for pension schemes applying to or run from the Isle of Man. This was a 'framework' Act which did not go into immediate effect, pending the issue of various sets of Regulations envisaged by the Act.
The Act established two types of pension scheme: 'domestic', applying to IOM residents (and others), and 'international', applying only to non-residents. The key differences between the two types, apart from the people they apply to, are the tax treatment of domestic v international schemes, and the lighter prudential standards applied to international schemes. Schemes applying to IOM residents are subject to a tax and regulatory regime not dissimilar to that applying in the UK, much of whose pensions legislation has been transferred wholesale into Manx law. International schemes have a tax status equivalent to that of exempt companies, and are not subject to any minimum funding requirement, among other freedoms.
The provision of retirement benefits to expatriate or other lowly-taxed individuals is becoming big business, and the Isle of Man is anxious to set up a regime which will appeal to multinational companies and globe-trotting individuals, while still maintaining high standards of regulatory supervision.
The IPA has now released a Consultation Document on draft regulations for international retirement benefits schemes to be made under the provisions of the Act.
The closing date for comments on the draft regulations is the 6th July 2001. It is the Authority's target to ask Treasury to make such regulations effective from the 1st September 2001 with a view to laying them before Tynwald at its October sitting.
The Retirement Benefits Schemes Act is concerned with the operation of all schemes in or from the Isle of Man and when in force will apply universally to all schemes, regardless of their status as international or domestic. The Act will be brought into force following the making of the international and domestic regulations, as appropriate. Regulations for domestic schemes are currently being prepared and further consultative documents in respect of these schemes will be issued in due course.
The specific draft regulations issued for consideration at this time comprise of:
The Retirement Benefits Schemes (International Schemes) Regulations 2001
The Retirement Benefits Schemes (Exempted Schemes) Regulations 2001
The Retirement Benefits Schemes (Management and Miscellaneous Provisions)
Regulations 2001
Whilst regulations will recognise the different characteristics of international
and domestic markets the Authority's prime objective is the protection
of scheme members' interests, wherever they reside.
In addition to the main international regulations, the consultative document includes regulations concerning the exemption of schemes from the provisions of the Act and the general administration of schemes. The Exempted Schemes regulations exempt specified government guaranteed schemes and certain international insurance products established by exempt insurance companies regulated by the Authority. The Management and Miscellaneous Provisions regulations are primarily concerned with the appointment of scheme administrators and independent trustees.
The release of the consultative document coincides with the recent restructuring of the IPA to bring greater focus on the two separate elements of the Island's insurance sector, life and non-life products.
The consultative document and the Act are being made available to all
interested parties and copies may be obtained either from Tax-news.com Resources Section, the Authority's
offices or directly from its website at: http://www.gov.im/ipa/noframes/Regulation.html
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