1.  Arrangements have been made, on a reciprocal basis, to facilitate the transfer of pension rights where, on a change of job, an individual moves from Guernsey to the United Kingdom or vice versa.  There is no formal starting date for the arrangements, and if desired a transfer payment may be made under them in respect of an individual who has moved in the past so long as he was given at the time preserved pension etc. benefits and did not receive a refund of his contributions.  Details of the arrangements follow.

NB: Schemes under sections 40(o) and 40(ee) of the Income Tax (Guernsey) Law, 1975, as amended, are NOT within the terms of these reciprocal arrangements nor will transfers to or from such schemes be authorised by the Pension Schemes Office.

Transfers from Guernsey to the United Kingdom

2.  Where an employed or self-employed member of a Guernsey pension scheme becomes a member of a United Kingdom pension scheme which is

     (a) a "statutory scheme", as defined in section 612(1) Income & Corporation Taxes Act 1988, or

     (b) accepted by the Board of Inland Revenue as an "exempt approved scheme" for the purposes of Chapter 1, Part XIV, ICTA 1988, or

     (c) a Personal Pension Scheme approved under Chapter IV, Part XIV, ICTA 1988 (but not a "transfers only" scheme as described in paragraph 3.1b of IR 76)

a transfer payment may be made in respect of him from the Guernsey scheme to the United Kingdom scheme.

3.  Under Section 153 and section 157C of the Income Tax (Guernsey) Law, 1975, as amended, no Guernsey tax will be payable in respect of the transfer payment.

4.  The service in respect of which the transfer payment was made will be treated as if it were service in the United Kingdom for the purposes of the charge to United Kingdom tax under section 598 or 599 ICTA 1988 in the event of any subsequent refund to the individual of his own contributions or of the commutation in special circumstances of the whole of his pension or for the purposes of determining Schedule E liability on the pension if the individual resides outside the United Kingdom after retirement.

5.  It will not be possible for a transfer payment to be made from a Guernsey scheme to a United Kingdom scheme which is not within one of the 3 categories described in paragraph 2 above.

6.  Before a transfer payment is made by a Guernsey approved scheme the administrator must ascertain from the trustee or administrator of the receiving scheme the section and Act under which it is approved in the United Kingdom and inform the Administrator of Income Tax in Guernsey quoting the full title of the scheme and the Pension Schemes Office reference number.

Transfers from the United Kingdom to Guernsey

7.  Where a member of a United Kingdom occupational or personal pension scheme becomes an employed or self-employed member of a scheme in Guernsey which is

     (a) a statutory scheme, or

     (b) a scheme authorised by Resolution of the States of Guernsey, or

     (c) a scheme approved or deemed to be approved under section 150 of the Income Tax (Guernsey) Law, 1975, as amended, or

    (d) a scheme approved under section 157A of the Income Tax (Guernsey) Law, 1975, as amended

a transfer payment may be made in respect of him from the United Kingdom scheme to the Guernsey scheme.

8.  No United Kingdom tax will be payable under section 598 or 599 ICTA 1988, in respect of the transfer payment.

9.  Under section 153 of the Income Tax (Guernsey) Law, 1975, as amended, the service to which the transfer payment relates will be treated as if it were service in Guernsey for the purposes of any charge to Guernsey tax in respect of a refund of the individual's contributions or of a commutation payment, or of any annuity or pension.

10.  The Pension Schemes Office will require the Guernsey scheme to give an undertaking that the rights arising from the transfer payment will not subsequently be transferred to a scheme under section 40(o) or 40(ee) of the Income Tax (Guernsey) Law, 1975, as amended.

TRANSFERS TO OVERSEAS SCHEMES

7.  There has been a misunderstanding of the expression “a change of job” in the opening sentence of forms PS 119, 120 and 121 and this note is to clarify the position.    The phrase should be interpreted to mean:

i. a complete severance of the employment (or self-employment) arrangements in one jurisdiction,  and

ii. the commencement of employment with another separate employer (or self-employment) in the other.

The phrases “a change of employment”, in the opening sentence of form PS 122, and “leaving UK employment”, in Part B of Appendix VI of the Practice Notes IR12 (1997), are to be taken to have the same meaning.

(Crown Copyright 1998)

(The text of this PSO Update may be freely reproduced in newspapers, magazines, house journals, etc., provided the source is acknowledged.)

(PSO Updates amplify or amend Occupational Pension Schemes Practice Notes IR12 (1997) and Personal Pension Schemes Guidance Notes (IR76 (1991) and should be read in conjunction with those publications as appropriate.)