With Malta suddenly becoming a premier option for pension scheme operators following recent rule changes by Her Majesty’s Revenue and Customs, local professional service providers are accelerating their efforts to handle this new business.
The whole strategy has changed following HMRC’s regulation changes. We are seeing a spurt in growth.
One is Capstone Advisory Co Ltd of Swatar. The advisory company had been in talks with Isle of Man-based Momentum Pensions since 2010, with a view to service pension schemes from Malta. Licences and regulatory approval for Momentum Pensions Malta Limited were granted in May last year.
Momentum Pensions, and a controlling interest in Momentum’s Malta company, have now been acquired by BW Oakfield Group, another Isle of Man-based operator, which plans to maximise the synergies, expertise and experience of both organisations. The transaction is subject to the approval of the Insurance and Pensions Authority of the Isle of Man and the Malta Financial Services Authority.
“The whole strategy has changed following the recent HMRC changes in regulations and we are seeing a spurt in growth,” Capstone director David Borg told The Times Business. “Momentum’s merger with BW Oakfield came at the right time as it gives us much more depth and width. It brings on board people with extensive capabilities and experience within the pensions sector. This development will mean significant transfer of expertise and knowledge to Malta, which is crucial for the pensions industry’s growth here as well as within the wider context of financial services.”
Domestically, Capstone Group is also awaiting approval from the MFSA, sanctioning its joint venture with Alliance Trust Co Ltd, a company licensed to provide trust and fiduciary services. Alliance Trust is affiliated with Fenech Farrugia Fiott Legal.
BW Oakfield, a licensed trust and fiduciary business, currently has over €3 billion under administration. With Malta now gaining considerable prominence among international pension operators, the company is keen to hit the ground running here and is already assisting Momentum Malta in dealing with client enquiries. John Batty, head of pensions, is currently conducting in-house training for Capstone Group’s team.
“The changes introduced by the HMRC in this part of the world mean operators like ourselves need to identify a jurisdiction with sound pension legislation and a good number of double taxation agreements to be able to administer qualifying recognised overseas pensions schemes. Malta ticks both boxes,” Mr Batty explained. “Momentum’s partnership with Capstone means we have administrative resources in Malta, within Momentum and within BW Oakfield. We have yet to map out the exact structure but there is a clear business plan. The teams in the Isle of Man and Malta will collaborate closely. BW Oakfield will be selling several products internationally, and we will bring other products to Malta besides QROPS. We will be exchanging extensive knowledge.”
After the Guernsey jurisdiction was essentially dropped by the HMRC, there is a requirement from international advisors and their clients to find a suitable and well regulated jurisdiction to place their QROPS business and many are now looking at Malta. There is a considerable opportunity for European Union, Middle East, and Far East to have their pension schemes serviced from Malta.
HMRC’s new rules, Mr Batty explained, mandate a 10-year reporting requirement from operators from transfer of pension schemes to other jurisdictions, and tax equalisation.
Malta, he added, fit the specifications because pensions were taxable whether clients were residents or non-residents, unless they were based in countries with which Malta had a double taxation agreement.
“The QROPS business will increase Malta’s standing in the world of pensions, and will provide Malta with the knowledge and, eventually, the experience it needs to build a talent pool for all types of pensions,” he pointed out.
Alliance Trust Co Ltd director Tonio Fenech outlined the new collaborative-based approach he is spearheading within the professional services network known as the Trust Alliance Project.
This initiative develops and encourages collaborative partnerships with firms in diverse sectors including advisory, accounting, legal, and IT industries. Dr Fenech welcomed the involvement of BW Oakfield with Momentum Group, saying it was a further affirmation of Malta’s standing in the financial services sector with wide prospects for the jurisdiction.
Dr Fenech believes the knowledge gained by the Maltese regulator and local professionals could also contribute to fine-tuning the domestic pensions framework which continues to be a ‘work in progress’.
As an economy and a jurisdiction, Malta completes its infrastructure through knowledge, which it can foster further, and through experience which it has yet to gain. Now was the time to act in earnest, Dr Fenech stressed.
“We need to make sure that the pensions industry’s ramp-up can be handled well,” Dr Fenech added. “As a lawyer, it is important for me to understand how the pensions industry works in other aspects apart from its legal facet.
“That all-encompassing philosophy on knowledge is at the core of the Trust Alliance Project.
“This organisation is about building bodies of knowledge through shared resources, training and interaction between different disciplines.
“Internally, we plan to tweak our strategy to factor in the recent changes to the pensions sphere and we have to accelerate our plans. It is important that as service providers and as a jurisdiction we are proactive and reactive.”