STM has launched an Employer-Funded Retirement Benefits Scheme (EFRBS) in Gibraltar.

The EFRBS is a flexible retirement arrangement, allowing employers to provide a wider range of employee benefits than conventional registered company pension schemes.

One of the key benefits of the STM EFRBS is that it can be invested in any class of asset, such as equities and gilts, residential property and works of art. Contributions do not count towards the employee’s annual allowance, nor does the fund accrued count towards their lifetime allowance.

David Erhardt, Director of STM Fidecs Life, Health and Pensions Ltd, commented, “With the new 50% top rate of income tax in the UK from 6 April this year, coupled with the restrictions on tax relief for pension contributions to registered pension schemes, employers need to find a more efficient way of remunerating and incentivising key employees.

“The STM EFRBS is an ideal way to reward highly-paid employees because income tax is deferred until income is drawn – it could be charged at a lower rate, or could even be nil, depending on the employee’s personal tax situation at that time.

“In addition, contributions and benefits are unlimited, members do not pay income tax or NIC at the point of the   employer’s contribution, and investments are unrestricted.”

The STM EFRBS – a flexible option

When a member retires, they can receive the fund in a variety of ways, including:

• 100% lump sum (this may be taxable in the UK, depending on the member’s personal tax situation)
• as income or an annuity (the member can decide depending on their personal circumstances).
  

It is particularly suitable for employees who enjoy large discretionary bonuses and do not need immediate access to the funds, are non-UK domiciled, particularly those seeking to mitigate the impact of the £30,000 remittance basis charge and those who are considering retiring abroad.

The EFRBS is also worth considering for employees who receive income over £150,000 and will be restricted on claiming higher rate tax relief on pension contributions, or who are approaching the lifetime allowance cap for registered pension schemes.

The STM EFRBS is open for non-Gibraltar resident employers to set up for non-Gibraltar resident employees and directors between the ages of 18 and 75, regardless of the nature of their business. Gibraltar residents cannot be members.

Please contact us in Gibraltar for more information about the STM Employer-Funded Retirement Benefit Scheme.

We recommend you seek advice in all circumstances. The STM EFRBS is administered in Gibraltar and income tax exemption in Gibraltar is provided in accordance with Rule 3(27) of the Income Tax (Allowances, Deductions and Exemptions) Rules 1992.