02.11 – Retirement Funds

Any pension scheme or other retirement arrangement established in the UK and described in Article 3 (General Definitions) of the UK/US Double Tax Convention (2001) will have no reporting obligations and Reporting UK Financial Institutions will not be required to review or report on accounts held by such pension schemes or other retirement arrangements. This exemption includes separate nominee companies of exempt pension schemes.

Under the UK/US Double Taxation Agreement a “pension scheme” is defined as any plan, scheme, Fund, Trust or other arrangement established in the UK which is:

  1. generally exempt from income taxation in the UK; and
  2. operated principally to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such arrangements.

This will include all UK registered pension schemes including those deemed registered by HMRC, and pension funds or pension schemes covered by IRS Announcement 2005-30, 2005-1 C.B. 988, on the Mutual Agreement on UK Pension Agreements.

(http://www.irs.gov/irb/2005-18_IRB/ar10.html#d0e1440)

The Pension Protection Fund is also an Exempt Beneficial Owner and is to be treated as a Non-Reporting Financial Institution.

Example 1

A Trust based pension scheme purchases a Trustee Investment Plan (TIP) from a Reporting UK Insurance Company. As the TIP is purchased by an Exempt Beneficial Owner, the Reporting UK Insurance Company is not required to review or report on this account.

Example 2 Management of Registered Personal Pension Schemes

Where an Insurance Company acting as a pension scheme trustee or administrator invests into a fund on behalf of individual investors a Reporting Financial Institution holding these funds on behalf of the Insurance Company, will not be required to review or report on that account as it will be treated as an account of an Exempt Beneficial Owner.