New year's resolution - saving for your pension
At Crossways Trustees Limited, we do not have a ‘brochure’ as such because the flexibility of a Retirement Annuity Trust (RAT) means that what may be required by one person is completely different to another. A very brief outline below gives an idea of how a RAT works and what we, as Trustee, can provide but should you wish to take things further, we would recommend that you call us or come in for a chat so that we can establish what is may be appropriate for you in your circumstances.
How does a RAT work
Very simply, a Guernsey RAT is a scheme that we use to provide local clients (known as the Scheme Members) with a flexible pension vehicle to pay them an annuity in their retirement. Funds usually come into the trust via a cash transfer of existing pension arrangements and can be topped up with contributions (should you wish) during the life of the scheme, prior to taking annuity payments. Annual pension contributions are eligible for tax relief of 20% on the lower value of either 100% of your taxable income for that year, or £50,000 (restricted to £50k for per married couple).
RATS are governed not only by the terms of the Trust Deed and Trust law but also by legislation set out by the Income Tax Office and, more recently, the GFSC and we as Trustee ensure that the Trust is administered and run in accordance with that legislation. We can also offer QROPS compliant schemes for Members should there be a UK based pension arrangement to transfer.
An annuity may be taken between the ages of 50, or 55 for QROPS schemes, and 75 (at which point it becomes compulsory to draw down) and can be tailored to your circumstances and requirements (subject to Tax Office approval). Members are entitled to a 30% tax free lump-sum from the fund (payable in instalments or a lump amount) from the trust or, prior to the age of 50 (55 for QROPS), a loan of the same percentage value.
What happens if I die?
One of the main reasons that people elect to have a RATS is due to the funds, upon the Member’s death, either passing to their estate (to be dealt with in accordance with their will) or remaining in the trust to be used by any remaining scheme Member (usually a spouse). If a traditional pension scheme is being used then your pension assets will pass to the pension company and will not be kept for the benefit of your family. If an annuity is being taken then there is a tax element to consider but the remaining assets will not be swallowed up or lost as they commonly are with an insurance based product or occupational scheme.
About Crossways Trustees
We are a small team of three administrators who look after a portfolio of approximately 180 to 200 RATS, of all shapes and sizes, which are overseen by the four Directors of the company. As Trustee, we are completely independent from any third party investment providers and are happy to involve Members as much or as little in the selection of investments within the scheme as their requirements and knowledge allow. We can also put you in touch with a number of investment service providers who can be considered to take care of the trust assets on a managed basis via a formal agreement (or of course, you may wish to suggest a preferred party to deal with).
Our fee menu can be viewed in the RAT services section of our website. We have a standard charge for setting up a RAT to the point of accepting inward transfers and our minimum ongoing fixed annual fee (pro-rated for the year of set-up) is attributed to very simple structures where funds have been fully invested on a managed, medium to long-term basis. More bespoke or frequently changing arrangements can offer members more freedom to be involved in the investment side of things but, due to the nature of the increased administration and work involved, does prove more expensive.
The States of Guernsey website link below will take you to the Practice Notes from the States to give further information regarding how a RATS operates.
Anyone wishing to find out further information regarding any of the above, or indeed with the setting up or transfer of a Guernsey Retirement Annuity Trust should get in touch with me or any of the directors.
Paulina Batiste T.E.P C.A.T.
This article has been prepared as a general guide. It is not a substitute for professional advice. Neither Collenette Jones Limited nor its directors or employees accept any responsibility for loss or damage incurred as a result of acting or refraining to act upon anything contained in or omitted from this article.