The STM Fidecs EFRBS
EFRBS provide a wider range of benefits to employees than a conventional company pension scheme. As the name suggests, The STM Employer Funded Retirement Benefits Scheme ("STM EFRBS") is an employer sponsored, flexible retirement benefit arrangement which is permitted under UK tax law.
It 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.
The STM EFRBS allows employers to provide retirement benefits to their employees or former employees and it is free to invest in any class of asset such as equities and gilts, residential property and works of art etc.
It can also provide a wider range of benefits to employees than a conventional company pension scheme and contributions do not count towards the Annual Allowance nor does the fund accrued count towards the Lifetime Allowance.
Why use The STM EFRBS?
The new top-rate of Income Tax of 50% that will apply in the UK with effect from 6th April 2010, coupled with the restrictions on tax relief for pension contributions to registered pension schemes, mean that employers need to find a more efficient way of remunerating and incentivising key employees.
The potential advantages of using the STM EFRBS for rewarding highly paid employees are as follows: Although there is no immediate Corporation Tax deduction available to the employer on the contributions, such contributions do not attract Income Tax or NIC liabilities for the members, thus minimising tax liabilities on remaining employ- ment income received.
Income Tax is deferred until income is drawn (and could be charged at a lower rate, or could even be nil, depending on the employee's personal tax situation at that time - e.g. if the employee has become a non-resident of the UK);
- There are no limits on the level of contributions that can be made to the STM EFRBS and no restrictions or limitation of how often a contribution can be made - thus contributions and benefits are unlimited.
- There are no investment restrictions;
- The whole fund can be taken as cash (this may be taxable on the individual member depending on their personal tax situation);
- Accordingly, the STM EFRBS is suitable for the following types of employees:
- Employees enjoying large discretionary bonuses who do not need immediate access to the funds;
- Non-UK domiciled employees (particularly those individuals seek- ing to mitigate the impact of the £30,000 remittance basis charge);
- Employees considering retiring abroad;
- Employees with income over £150,000 and who will be restricted on claiming higher rate tax relief on pension contributions;
- Employees approaching the Lifetime Allowance cap for registered pension schemes.
We recommend advice is sought in all circumstances.
STM Fidecs Pension Trustees Limited is regulated by the Gibraltar Financial Services Commission - License Number: FSC00845B
STM Fidecs Life, Health & Pensions Limited is regulated by the Gibraltar Financial Services Commission - License Number: FSC00996B
