Everlake Guide to International Pension Transfers by Everlake Ireland

Everlake Guide to International Pension Transfers

Contents Introduction ......................................................................................................................... 2 Potential benefits of transferring .......................................................................................... 3 Qualifying Pensions Ireland .............................................................................................. 3 Transferring a pension from Ireland: Is it legal? ................................................................... 4 Overseas Transfer Payments Regulations (Ireland) ........................................................... 5 Irish Revenue’s position on overseas transfers .................................................................. 5 Application Process ........................................................................................................... 6 Prior reference to Irish Revenue ........................................................................................ 7 Pensions Authority Oversight (updated in 2021 to reflect SI 128) ..................................... 9 Conclusions ..................................................................................................................... 10 Regulation – Malta ............................................................................................................. 11 The Investment Manager of the Scheme ......................................................................... 11 Investment Restrictions of a Personal Retirement Scheme (“the Scheme”) ..................... 12 Can I join an occupational scheme (IORPS) in Malta? ..................................................... 13 Marketing of funds .......................................................................................................... 14 What are the options for investors ...................................................................................... 15 Comparison ITC Malta Occupational Scheme and TFM Calypso Personal Pension .......... 15 Switching subsequently from Occupational to Personal Pensions ................................... 16 Conclusion .......................................................................................................................... 18 Appendices ......................................................................................................................... 19 Appendix A Background to Malta .................................................................................... 19 Appendix B The Calypso International Retirement Scheme (CIRS) ................................. 20 Appendix C ITC Malta Pensions Ltd ................................................................................ 21 Regulatory Disclosure Statement ........................................................................................ 22 Disclaimer ........................................................................................................................... 23

Introduction On reaching retirement an investor has a number of options to consider: 1. 2. 3. 4.

Take a tax free lump-sum Secure their income in retirement in the form of an annuity Invest you retirement savings in an Approve Retirement Fund (ARF) Transfer your pension to another EU jurisdiction

This guide looks at the International Pensions Transfer option. If you are interested in ARFs or Annuities please ask for our relevant guide. The guide aims to summarise the issues to consider in respect of International Pension transfers from Ireland in order to assist in the consideration of the various trade-offs. Important The level and bases of taxation are based on current legislation (tax year 2023) and may change in the future. If you are in any doubt about the suitability of these conclusions, we recommend that you consult with a suitably qualified tax adviser to confirm these assumptions. The Central Bank of Ireland does not regulate tax advice. This document has been prepared for information and educational purposes only and should not be relied upon by any individual without seeking specific guidance on the suitability of any course of action for their unique circumstances.

Potential benefits of transferring Malta is a key market for overseas transfers from Ireland. It has a similar language and legal system and has established itself as a key player in the international transfer market. It also brings the security of being a full member of the European Union. Potential benefits include: • • • • • • • • • •

Can access your pension at 50 Access to a wide range of investment opportunities Availability of fixed price pension trustee contracts which are rarely available in Ireland resulting in potential cost savings for Irish investors Diversification benefits of having counterparties in different jurisdictions Protection against future unfavourable changes in Irish legislation such as the introduction of another pension levy in the future. Tax Efficient – Malta has around 70 Double Tax Treaties (DTA’s), for residents of countries that have a DTA with Malta Lump sums available – Legislation introduced in the Finance Act in 2022 has brought foreign pensions into line with Irish Pensions meaning that the first €200,000 is tax free with the next €300,000 taxable at 20%. No tax to pay on assets within scheme (with exception of immovable property in Malta) Can nominate beneficiaries on your pension which allows you pass on pension assets directly to beneficiaries1. Protection against future potential reductions in the Lifetime Allowance for pensions in Ireland as the pension is tested against the Lifetime Allowance at the time the transfer is made rather than at Retirement.

Qualifying Pensions Ireland Only occupational pension transfers are effectively possible, either Defined Contribution or Defined Benefit. You are not able to transfer Personal Pensions, PRSA and Buy Out Bonds. However, it is possible for a Personal Pension to transfer to a PRSA and for a PRSA to transfer to an occupational pension. It is also possible for a buy-out bond to transfer to an occupational pension. Once a client has retired their benefits to either a vested PRSA or an ARF, it is too late to consider a transfer.

EU rules on inheritance do not determine which authority will handle or which law will apply to certain

matters linked to succession, such as the inheritance taxes that your heirs will have to pay on your estate

Important Due to the investment restrictions designed to ensure diversification that apply in Malta we have discovered that the occupational pension structure is unworkable in Malta. Therefore, only a transfer to a personal pension is recommended

Transferring a pension from Ireland: Is it legal? Transferring a pension out of Ireland should be relatively straightforward, particularly if that transfer is to another EU country. Both the fundamental treaties of the EU and the various decisions of the European Court of Justice have upheld the rights of individuals to move within the EU and to take their pensions with them. The position gets a little more complicated when the desire is to move a pension fund without any intention of the individual to relocate. Although the principle of free movement of capital enshrined in the EU treaties would suggest that such activity should not be prohibited, the principle of subsidiarity, coupled with the tax reliefs granted by individual Member States, means that this issue is also subject to the rules of each State. The ruling of the landmark case of Michael O’Sullivan V Canada Life Assurance (Ireland)2 Limited now means that any personal Irish pension scheme can theoretically be transferred overseas irrespective of whether you have employment overseas or not.

O’Sullivan v Canada Life Assurance (Ireland) Limited [2014] IEHC 217

Overseas Transfer Payments Regulations (Ireland) Specifically in relation to International Pension transfers, in 2003, the Minister for Social and Family Affairs, Mary Caughlan T.D., approved the Regulations providing for the transfer of Pensions to an Overseas Arrangement that provide for Retirement Benefits (The Overseas Pension Scheme and Personal Retirement Savings Account [Overseas Transfer Payments] Regulations, 2003 – S.I. No. 716/2003). These Regulations were made by the Minister in exercise of powers conferred by the Pensions Act 1990 and provide the ability for Irish Residents to transfer their pension benefits to a pension in other European Jurisdictions without having to be a resident in that jurisdiction.3 Note however, that due to a quirk in the tax legislation, no exemption from tax exists for transfers from PRSAs to an overseas arrangement. It is potentially treated as a taxable withdrawal. In these circumstances, therefore, it is advisable for any transfer to be made from an occupational scheme only.

Irish Revenue’s position on overseas transfers 4 Whilst it is therefore clearly possible to affect a transfer, the Regulations as introduced do not deal with the tax consequences of making overseas transfers. Thus, it is still necessary to refer to the Tax Acts, the Revenue Pensions Manual, and other Revenue literature in order to determine the tax consequences of any proposed transfer. Revenue issued circulars in 2009 and 2012 in relation to overseas transfers. Specifically, the 2012 circular required individuals seeking a transfer to complete a declaration confirming that the transfer “is for bona fide reasons and is not primarily for the purpose of circumventing pensions tax legislation and Revenue rules”. The use of certain transfer arrangements relating to PRSAs, to circumvent Revenue rules on the tax treatment of retirement benefits (e.g. transfer payments to the UK and back again to Ireland) are explicitly not permissible5.

http://www.irishstatutebook.ie/2003/en/si/0716.html Source Revenue Pensions Manual Chapter 13 - https://www.revenue.ie/en/taxprofessionals/tdm/pensions/chapter-13.pdf 5 This was known as the “Heathrow ARF” 4

Application Process A member who directs their pension provider to make a payment to or transfer assets to an arrangement for the provision of retirement benefits outside the State (i.e. an overseas arrangement) under the provisions of the Occupational Pensions Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003) must, prior to any transfer, sign a declaration to the effect that the transfer conforms to the requirements of the regulations and Revenue pension rules, is for bona fide reasons and is not primarily for the purpose of circumventing pension tax legislation and Revenue rules. It is the responsibility of all trustees to ensure full compliance with the requirements of the Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003. Prior to making any overseas transfer payments, the trustees must be satisfied that: a) the member has requested a transfer b) the overseas arrangement provides relevant benefits as defined by Sec.770, TCA 1997 c) the overseas arrangement has been approved by the appropriate regulatory authority in the country concerned In order to comply with (b) and (c) above, the trustees should obtain written confirmation from the administrator of the overseas arrangement to which the transfer is to be made. If the transfer is to another EU Member State, the overseas scheme must be operated or managed by an Institution for Occupational Retirement Provision ( IORPS), within the meaning of the EU Pensions Directive, and must be established in a Member State of the European Communities which has implemented the Directive in its national law. The scheme administrator must be resident in an EU Member State. If the transfer is to a country outside the EU, a transfer may not be made to a country other than the one in which the member is currently employed.

Prior reference to Irish Revenue Transfers that comply with all of the above requirements may be made without prior reference to Revenue. However, a transfer to an overseas pension scheme is a Benefit Crystallisation Event (BCE) as defined in section 25.4 (4) of chapter 25 of the Revenue Pensions Manual 6. When a BCE arises, a capital value must be attributed to the benefit and this is tested against the individual’s SFT or PFT by the scheme administrator. In the case of an overseas transfer, the capital value is the actual amount transferred to the overseas arrangement. Revenue has not issued any guidance as to what constitutes a bona fide transfer. In the O’Sullivan case, the court also considered the implications of the bona fide requirement for overseas transfers. The bona fide condition was introduced in 2009 in a bid to stop PRSAs being used to facilitate 'artificial' transfers of occupational pension schemes outside of Ireland and back again. In 2012 the Revenue Commissioners were advised by the pensions industry that many requests for transfer of pension schemes overseas were in response to advertising by international scheme providers in Ireland. These schemes sometimes work by way of a "dual transfer" - an individual's pension fund is transferred to an overseas arrangement which meets the requirements of S.I. No. 716/2003, whereby it is then immediately transferred to another jurisdiction to allow for easier access to the funds. The increase in overseas transfers raised concerns concerning the potential flight of pension funds out of the country, the risk to the pension holders and an undermining of the primary purpose of tax relief for pensions, i.e., to encourage individuals to save for retirement. This supposes that pension funds are 'locked away' and not accessible until retirement. The Revenue, as part of the reforms under the 2012 circular, introduced the requirement to include a signed declaration that the transfer being sought was bona fides. It is the Revenue Commissioner's position that the inclusion of this declaration by the PRSA holder is not conclusive evidence of bona fides. The PRSA provider can still make further enquiries to assess the validity of the proposed transfer and is under no obligation to "blindly accept a signed declaration" as the only evidence.

https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-25.pdf

A member of an occupational pensions scheme or a PRSA contributor who directs the trustees of the scheme or the PRSA provider to make a payment to, or transfer assets to, an arrangement for the provision of retirement benefits outside the State (i.e. an overseas arrangement) under the provisions of the Occupational Pensions Scheme and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003) shall, prior to any transfer, sign a declaration, in such form to be determined by the Revenue Commissioners, to the effect that the transfer conforms to the requirements of the regulations and Revenue pension rules, is for bona fide reasons and is not primarily for the purpose of circumventing pension tax legislation and Revenue rules. From the Judge’s summary in the O’Sullivan case. “I do not think that the defendant (the pension trustee) is under an obligation to engage in an investigation of the motives of the plaintiff. Provided there is nothing in the facts of the case as presented to the company to give rise to suspicion as to the bona fides of the transaction, the defendant company is free to implement the wishes of the owner of the fund. Having said that, I am not sure that it is possible to lay down a general rule. Everything depends on the circumstances of the particular case. It is sufficient to say that in this case there appears to be no basis for questioning the motives of the applicant and that his declaration in the approved form is therefore sufficient. The defendant company does not have any reason to be uneasy and is not required to verify the factual circumstances behind the application or to make some general exploration of the applicant's motives. This condition is not accordingly a legitimate ground of refusal.” It is therefore recommended that a prior application is made to Irish Revenue asking the question if they have any objection to the proposed transfer in order to seek to establish the bone fides of the transfer. The application will be dealt with by: Revenue Commissioners Large Cases Division Financial Services Pensions Ballaugh House 7579 Mount Street Dublin 2 Note that Revenue have now changed their position such that they will only accept documentation relating to overseas transfers from the entity responsible for the ceding scheme in Ireland.

Pensions Authority Oversight (updated in 2021 to reflect SI 128) Transfers from scheme or trust RAC to IORP in another Member State 151B. (1) The trustees of a scheme or trust RAC may, in accordance with this section, transfer all or part of the liabilities, technical provisions and other obligations and rights as well as corresponding assets or cash equivalent thereof, of that scheme or trust RAC to a receiving IORP. (2) The trustees of a transferring scheme or trust RAC who intend to transfer all or part of a scheme’s, or trust RAC’s, liabilities, technical provisions and other obligations and rights, as well as corresponding assets or cash equivalent thereof, to a receiving IORP shall not make that transfer unless the trustees have obtained the prior approval to the transfer by – (a) a majority of: (i)the members, and (ii)the beneficiaries, of that scheme or trust RAC, and (b )the sponsoring undertaking, where applicable. (3) The trustees referred to in subsection (2) shall, for the purpose of obtaining the prior approval referred to in subsection (2): (a) notify, in writing, the members and beneficiaries of the transferring scheme or trust RAC of the intention to transfer, and (b) provide information in that notification concerning the conditions of the transfer. (4) A transfer referred to in subsection (1) shall require: (a) the prior consent of the Pensions Authority, and (b) when the prior consent referred to in paragraph (a) has been obtained, the authorisation of the competent authority of the receiving IORP. (5) Where the Pensions Authority receives an application for authorisation under this section of a transfer from the competent authority of the receiving IORP, the Pensions Authority shall assess whether: (a) in the case of a partial transfer of the scheme’s or trust RAC’s liabilities, technical provisions, and other obligations and rights, as well as corresponding assets or cash equivalent thereof, the long term interests of the members and beneficiaries of the remaining part of the transferring scheme or trust RAC are adequately protected, (b) the individual entitlements of the members and beneficiaries are at least the same after the transfer, and (c) the assets corresponding to the scheme or trust RAC to be transferred are, in accordance with this Act, sufficient and appropriate to cover the liabilities, technical provisions and other obligations and rights to be 9

transferred. (6) Where the Pensions Authority is satisfied of the matters set out in paragraphs (a) to (c) of subsection (5), it shall, within 8 weeks of the date of receipt of the application for authorisation of a transfer from the competent authority of the receiving IORP, communicate to that competent authority that it consents to the transfer. (7) Where the Pensions Authority is not satisfied of any of the matters set out in paragraphs (a) to (c) of subsection (5), it shall, within 8 weeks of the date of receipt of the application for authorisation of a transfer from the competent authority of the receiving IORP, communicate to that competent authority that it does not consent to the transfer In the case of a disagreement about the procedure or content of an action or inaction of the Pensions Authority or the competent authority of the receiving IORP, including a decision to authorise or refuse a cross-border transfer, the Pensions Authority may request EIOPA to carry out non-binding mediation in accordance with point (c) of the second paragraph of Article 31 of Regulation (EU) No. 1094/2010.

Conclusions The obligation to seek approval of the majority of the members of an occupational scheme could potentially make it virtually impossible to make a transfer from a large occupational scheme with multiple members. However, single member schemes would be unaffected. The three steps to obtain Pension Authority Approval would appear to simply represent an additional bureaucratic hurdle. 1. In the case of a single member scheme there are no remaining members 2. The entitlements are at least the same after transfer 3. The assets transferred represent 100% of the liabilities of the scheme and therefore the position is the same both pre and post transfer

Regulation – Malta7 The Investment Manager of the Scheme The Investment Manager of the Scheme may either be: a) the Retirement Scheme Administrator if it is not undertaking the custody function for the Scheme itself and if duly licensed under the Act to carry out investment management services for a Scheme; or b) an entity licensed to carry out investment management services to Schemes under the Act; or c) an entity already licensed under the Investment Services Act, 1994, as a Category 2 or 3 Investment Services Licence Holder subject to an abridged application process; or d) an investment manager established in another Member State or EEA State and duly authorised for this activity in accordance with Directives 2009/65/EC 2014/65/EU, 2013/36/EU, 2009/138/EC or 2011/61/EU, as amended from time to time, and carrying out its activities pursuant to the respective Directives, as applicable; or e) in the case of an entity established in a non-Member State or non-EEA State, an entity which the MFSA considers to be subject to an equivalent level of regulatory supervision in the jurisdiction where its operations take place, for it to undertake investment management activities. Important The practical impact of this is that only a MIFID regulated Investment Manager with discretionary investment management permissions may operate an investment portfolio in Malta. The only practical exception to this is if an investor qualifies as a Professional Investor.

7 These full documents can be found on the MFSA website https://www.mfsa.mt/wp-

content/uploads/2019/04/Personal_Retirement_Schemes_PartA_B-Final.pdf

Investment Restrictions of a Personal Retirement Scheme (“the Scheme”) 3.2.1 Personal Retirement Schemes shall comply with the following investment restrictions: i.

ii.

the Retirement Scheme Administrator or the Investment Manager, as applicable, shall invest the assets of the Scheme in the best interest of the Members and Beneficiaries. In the case of a potential conflict of interest, the Scheme Administrator, or the Investment Manager that may appointed to manage the Scheme’s assets shall ensure that investment activity is carried out in the sole interest of the Members and Beneficiaries; the Retirement Scheme Administrator or the Investment Manager, as applicable shall ensure that the assets of a Scheme are properly diversified in such a way as to avoid accumulations of risk in the portfolio as a whole; iii. the Retirement Scheme Administrator or the Investment Manager, as applicable, shall ensure that the assets of the scheme are sufficiently liquid and/or generate sufficient retirement income to ensure that retirement benefits payments can be met closer to retirement date for commencement of retirement benefits;

Part B – Standard Licence Conditions for Personal Retirement Schemes 31 iv. subject to paragraph (vi), a Scheme shall not engage, directly or indirectly, in transactions with, or grant loans to, any of its Members or connected persons thereto; v. a Scheme shall not engage, directly or indirectly, in borrowing in connection with property purchases on behalf of any of its Members or connected persons thereto, other than on fully commercial terms, provided that the Scheme may borrow up to 50% of the amount of property purchased which must be valued by an Independent Qualified Valuer; vi. immovable property held by the Scheme may be used by the Members or connected persons thereto provided that it is on fully commercial terms which must be valued by an Independent Qualified Valuer; vii. the Retirement Scheme Administrator or the Investment Manager, as applicable, shall ensure that, with the exception of the embedded derivative component within structured notes, a Scheme shall not make use of derivative financial instruments for speculative purposes; viii. the Retirement Scheme Administrator or the Investment Manager, as applicable, shall ensure that where structured notes are included in the Scheme’s assets, these will be permitted up to a maximum of 15% of the portfolio’s total value, with no more than 10% of the Scheme’s assets to be subject to the same issuer default risk; ix. the Retirement Scheme Administrator or the Investment Manager, as applicable shall ensure that the assets of a Scheme shall be invested in order to ensure the security, quality, liquidity and profitability of the portfolio as a whole8. 8

Note that ITCIP has agreed with the MFSA not to hold more than 50% in any one UCITS manager. This is not a general restriction and DOES NOT apply to TMF

3.2.2 The provisions set out in SLC 3.2.1 are to be complied with by the person responsible for the investment management function in the Personal Retirement Scheme, which is to be carried out by the Investment Manager appointed by the Scheme, unless such function is carried out by the Retirement Scheme Administrator itself as permitted in terms of SLC 1.4.2. 3.2.3 The investment policy shall be clearly specified or agreed, as the case may be, with the Member and there shall be clear disclosure to the Member of all applicable risks. Important The practical implication of this is that a portfolio of UCITS funds is a highly appropriate way of meeting the MFSA diversification regulations.

Can I join an occupational scheme (IORPS) in Malta? IORPS means Institutions for Occupational Retirement Provision and there is a question around how members from different occupations can be associated with a single occupational scheme operating in Malta. There is some helpful guidance from the UK in this respect: Ghost” employment contracts - Kent vs HMRC 11th December 2009 ‘For membership under an occupational pension scheme, there must be a genuine employment relationship in force. A contract of service exists if these three conditions are fulfilled, namely: The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in performance of some service for his master. He agrees, expressly or implied, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master. The other provisions of this contract are consistent with its being a contract of service.’ Important This opinion would certainly put a question mark over the ability of employees from different sponsoring employers in Ireland all joining a single occupational structure in Malta.

Marketing of funds Certain fund managers (e.g. Vanguard) are not satisfied for their funds to be sold to Maltese trustees, where the trustees are instructing on the trades. In a Discretionary Fund Manager (DFM) scenario this falls away. Under Manufacturer-distributor agreements with fund managers, this is becoming a significant issue due to the requirements for platforms (as distributors) to indemnify the manufacturer (the Manco) that target market assessment has occurred or being appropriately delegated. Platforms need to push this downstream to advisors, which is fine in jurisdictions where funds are authorised for marketing. However, in jurisdictions where funds are not authorised for marketing (e.g. Malta), the platform requires the decision maker (the Trustee) to be advised by an advisor licenced to provide such advice, and also for the underlying investor to be located in a jurisdiction where the funds are authorised for marketing. Important This issue is resolved entirely by appointing a DFM as there is no requirement to provide KIID documents which for jurisdictions like Malta in particular is essential since it has shockingly low coverage of funds with marketing passports into it.

What are the options for investors At this time, we have investigated two options in detail offering the potential for pension transfers to Malta 1. ITC International Pensions 2. TMF International Pensions See Appendices B and C for more details

Comparison ITC Malta Occupational Scheme and TFM Calypso Personal Pension ITC Malta IORPS Initial Charge Annual Fee

€1,250 0.50% min €1250

Exit Charge

€2,700 year 1 €1,250 within 5 years €700 after 5 years Yes, making portfolio management practically unworkable No

Investment Restrictions

Prior Revenue approval for application

ITC Malta Personal €1,250 0.50% €1,250 €2,700 year 1 €1,250 within 5 years €700 after 5 years

TMF Calypso9 €2,150 €2,500 for a €1m pension with one investment account N/A

Maximum 50% in any one UCITS

None if using DFM service with Conexim

Yes

Note that ITC exit charge effectively negates the cost differential around set up charges.

Prices correct as at 1st December 2023

ITC Malta Vs TMF Annual Pension Trustee Charges 1.40% 1.20% 1.00% 0.80% 0.60% 0.40%

0.20% 0.00%

ITC Malta

TMF

Our analysis indicates that the breakeven fund size is therefore €500,000 and for larger pension funds, TMF has a clear advantage.

Switching subsequently from Occupational to Personal Pensions What happens if you decide not to follow this analysis or you are in the position that you only find out about the availability of a better option subsequently. What happens when you realise the error and wish to transfer from, say, ITC to TMF? It is our understanding that Irish Revenue have raised concerns around the possibility of an Irish Pension scheme being transferred to an occupational scheme in Malta and then onto a personal scheme. This could potentially make sense since this would potentially circumvent the current position of the ceding trustee having to approach Revenue prior to moving overseas to establish if they have any objection to the transfer to a personal pension. Although it also seems logically inconsistent to allow transfers to an occupational pension without the need to notify Revenue to then retrospectively seek to enforce “approval” given that the pension would, by then, would have already left the State. Whatever about the legality of the position or otherwise, ITC has in any event confirmed to Revenue that they would not be facilitating such transfers from their Malta Occupational Pension (“ITCIP”). Under these conditions in order to effect a transfer out of the occupational pension into the personal pension with TMF, ITCIP as the ceding scheme is going to make an application to Revenue to establish if they have any objection to the onward transfer of a foreign pension in another jurisdiction to another foreign pension in the same foreign jurisdiction. 16

Whilst this might be considered to be prudent by the ceding trustee in practical terms it amounts to a delay of some months during which time the member of the pension will remain subject to the investment restrictions and potentially higher charges of the ITCIP structure. To avoid this situation, we would therefore strongly counsel against the perceived “convenience” of the occupational pension structure.

Conclusion We conclude that it is certainly possible for some Irish investors to transfer their pension to Malta and that it is perfectly legal to do so and provided the transfer is made for bona fide reasons there should be no objection from Revenue. In our view, it would be prudent to obtain a statement in advance from Revenue that they have no objection to transfer and this is analogous to seeking Revenue approval for a new executive pension scheme. In our experience, investors should allow 6 to 9 months for this process. Having considered the investment restrictions that apply to an occupational pension structure in Malta and the fact that these do not apply to a personal pension structure, we do not see any benefit in taking the IORPS transfer route (aside from the time taken to obtain a reply from Revenue) and consider that there is a potential risk associated with not flagging the transfer to Revenue in advance. Given that the TMF contract is demonstrably lower cost for many offshore pension transfers we would consider that the TMF Personal Pension should be preferred to the ITCIP pension.

Appendices Appendix A Background to Malta The Malta Financial Services Authority (MFSA) was established by law on 23 July 2002. It is a fully autonomous public institution and reports to Parliament on an annual basis. The MFSA has taken over supervisory functions previously carried out by the Central Bank of Malta, the Malta Stock Exchange and the Malta Financial Services Centre to become the single regulator for financial services. The sector incorporates all financial activity including banking, investment and insurance. The MFSA also manages the Registry of Companies and has also taken over responsibility as the Listing Authority. Over the past decade, Malta has moved from being an offshore to an onshore jurisdiction. It has completed a programme of reforming all its finance sector legislation in line with international best practice and was one of the first six countries in the world to reach an advanced accord on fiscal matters with the Organisation for Economic Cooperation and Development (OECD). As a result of this agreement Malta is NOT considered as a tax haven. It is actively involved with the OECD, the EU and the Commonwealth in modelling global regulatory policy. Malta’s finance industry has benefited significantly from the country’s national policy of moving to the mainstream. Financial Services is the fastest growing sector of the Maltese economy and one of the most important employers of trained professional staff. This is one of the key reasons that Malta QROPS have become so popular and seem to be well liked by HMRC. The Insurance Business Act, 1998, and the Insurance Brokers and Other Intermediaries Act, 1998 regulate the insurance sector. The Banking Act, 1994 and the Financial Institutions Act, 1994 regulate the provision of banking and financial services. Under the Prevention of Money Laundering Act, Malta established a financial intelligence analysis unit (FIAU), which reports to the Attorney General.

Appendix B The Calypso International Retirement Scheme (CIRS) TMF Group was founded in the Netherlands in 1988. Over the next 20 years it expanded rapidly across the world culminating in 2011 in its merger with Equity Trust, an established global leader in trust and fiduciary services. Today TMF Group operates in more than 125 offices in over 83 countries and employs more than 7,000 qualified accountants, lawyers, corporate secretaries, HR and other professionals. This trust is registered with the Department of Inland Revenue (Malta) registration number 910016933 The trustees are TMF International Pensions Ltd, a wholly owned subsidiary of TMF Group. CIRS is registered in Malta by the Malta Financial Services Authority (MSFA) pursuant to article 4 of the Retirement Pensions Act, 2011 (Cap 514) to carry out the activities of a Retirement Scheme set up in the form of a trust. There is no statutory provision for compensation in the case where the Scheme is unable to satisfy the liabilities attributed to it.

Appendix C ITC Malta Pensions Ltd ITC International Pensions Limited is a joint venture between Lower Hatch Holdings Limited (“LHH”) headquartered in Dublin Ireland and Bastion Holdings Limited (“Bastion Holdings”) headquartered in Malta. Both Joint stakeholders own other licensed regulated companies in their respective jurisdictions. LHH owning: • Independent Trustee Company Limited (“ITC Dublin”). ITC Dublin is a leading provider of self- administered pension structures in Ireland administering over €1b of client funds in 3,000 pension structures. It also acts as trustees of self-administered pensions schemes, which typically have one member but it also act as trustees to larger occupational schemes, which can have a large numbers of members, and private trusts. Bastion Holdings owning: • Fexserv Investment Services Limited – a licensed MIFID entity authorised for nominee services (omnibus), trade execution, as well as financial advice on Collective Investment Schemes and Transferable Securities. • Fexserv Financial Services Limited - Launched in Malta in 1995 with its core foreign exchange business, FEXSERV (formerly Fexco), has evolved into one of Malta’s leading financial and investment services organisations providing a whole range of financial services. • SGGG Fexserv Fund Services Limited forms part of the SGGG network operating out of Toronto, the Cayman Islands, and Malta. Globally SGGG has greater than CAD13 billion under administration for more than 200 individual clients. It services more than 400 different fund products for more than 190,000 investor accounts. ITC International Pensions Limited has appointed SGGG Fexserv Fund Services Limited as its Back Office Administrator. • Bastion Wealth Limited - registered and authorized in Malta as an Alternative Investment Fund Management Company as well as Investment Managers, providing Investment Management Services to Retirement Schemes. ITC International Pensions has appointed Bastion Wealth Limited as its Investment Managers

Regulatory Disclosure Statement We have been extremely critical of the lack of regulatory oversight of transfers out of occupational pensions and are directly aware of poor standards of advice in Ireland in this area. We are therefore delighted that the Pension Authority has been given statutory powers of oversight in EUROPEAN UNION (OCCUPATIONAL PENSION SCHEMES) REGULATIONS 202110 In matters of Financial Advice, the Investment Intermediaries Act 1995 (IIA) in Ireland only applies to regulated activities related to investment services connected with investment instruments. The list of investment instruments includes Personal Retirement Savings Accounts (PRSAs) therefore if the Pension is not a PRSA, IIA does not apply. The Pensions Authority in Ireland governs the operations of Pensions in Ireland however they do not have any requirements placed on Financial Advisers with respect to providing advice on pensions. We wrote to the UK Financial Conduct Authority (FCA) asking the question; would a UK resident who previously held an Irish Defined Benefit Pension scheme but had now moved back to the UK, need a UK Pension Transfer Specialist to provide advice? Their response: "'The mandatory advice requirement legal framework actually bites on trustees of pensions scheme in Great Britain and Northern Ireland by requiring trustees to check that a member seeking to transfer has taken independent advice (see sections 48 and 51 of the Pension Schemes Act 2015). A member of an Irish scheme would not necessarily need to obtain advice from a UK authorised adviser.” Therefore the regulatory oversight if an investor undertakes a transaction to move their occupational pension to Malta by either the Central Bank of Ireland, The Pensions Authority of Ireland or the UK Financial Conduct Authority is extremely limited. The Central Bank of Ireland does not regulate Taxation Advice

Statutory Instrument No. 128 of 2021

Disclaimer This document has been prepared for educational and information purposes only and does not represent a specific recommendation for an individual to follow. Taxation References to Taxation have been obtained from sources which we believe to be reliable and are based on our understanding of Irish Tax legislation at the time of writing. We cannot guarantee its accuracy or completeness. The rates and bases of taxation may change in the future. We recommend that you obtain specific tax advice for your own personal situation. We will refer you to a suitably qualified tax consultant on request. Investments As with any investment strategy, there is potential for profit as well as the possibility of loss. Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors’ interests. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. We do not guarantee any minimum level of investment performance or the success of any portfolio or investment strategy. All investments involve risk and investment recommendations will not always be profitable. Warning: the value of your investment may do down as well as up. This service may be affected by change in currency exchange rates. Past performance is not a reliable guide to future performance. Printing Please consider the environment and only print this guide if necessary.