EFRBS Features
Who can become a member?
The STM EFRBS is set up by a non- Gibraltar resident employer and is open to all employees and directors between the ages of 18 and 75 (no Gibraltar residents can be members).
There is no restriction on the type of business an employer undertakes.
Any such employer can contribute to the STM EFRBS for all or selected employees and such employees can become members of the STM EFRBS.
Upon retirement the beneficiary of the fund can receive the accumulated wealth in a variety of ways, for example:
- 100% of the fund can be paid as a lump sum (this may be taxable in the UK on the member depending on their personal tax situation);
- The funds can be withdrawn as income or an annuity could be purchased - i.e. the member can decide depending on their personal circumstances.
Death Benefits
The value of the fund will be paid out upon the death of a member.
Members may complete a Letter of Wishes to guide the Administrators as to how benefits should be distributed in the event of their death.
Contributions
Employer Contributions
Although there are no statutory limitations on the level of employer contributions, it is recommended that contribution levels are based on the eventual retirement needs of the employees.
Preclusion on Employee Contributions
Employee contributions are not permitted.
Maximum contributions
The pension capping regulations for UK regulated pensions do not apply to employer funded retirement benefits schemes and thus there are no maximum levels of contributions.
Term
No minimum term - payments must cease by age of 75.
Benefits should not be taken before 55 but must be taken by 75. There is no requirement to take an annuity.
Investment of Funds
There are no investment restrictions for the STM EFRBS.
Accordingly, the member can propose to the Administrators investments that might not normally be permitted within a regulated pension scheme. Such investments could include residential property (both UK and overseas), unquoted company shares and other business assets.
The taxation position of any Income and Capital Gains received from such investments should be considered on a case by case basis.
EFRBS Options available to Employer and Employee
An EFRBS Example
Employee with current salary of £180,000 and £200,000 available as a bonus payment (based on UK tax and NIC rates for the 2011-12 tax year):
- Pay bonus payment of £200,000 – subject to reduction re Company’s National Insurance Contributions (NIC) & Employee Income Tax & NIC
- Pay £200,000 pension contribution – subject to personal tax charge of 30% (assuming special annual allowance charge applies)
- Pay £200,000 EFRBS contribution – Corporation Tax relief available when qualifying benefits taken.
| Employer’s Position | Option 1 | Option 2 | Option 3 |
| Bonus | £175,747 | - | - |
| Pension/EFRBS contribution | - | £200,000 | £200,000 |
| Employer’s NIC (13.8%) | £24,253 | - | - |
| TOTAL | £200,000 | £200,000 | £200,000 |
| Less Potential Corporation Tax Relief (28%) | £56,000 | £56,000 | £56,000 |
| Employer's net cost | £144,000 | £144,000 | £144,000 |
| Employee’s Position | Option 1 | Option 2 | Option 3 |
| Tax Free Cash | - | £50,000# | - |
| Taxable Income | £175,747 | £150,000 | £200,000# |
| Employee’s NIC (2%) | £3,515 | - | - |
| Employee’s annual allowance charge | - | £60,000 | - |
| Employee’s Income Tax – immediate | £87,874* | - | - |
| Employee’s Income Tax – throughout retirement | - | £75,000* | £100,000*+ |
| Employee's net income | £84,358 | £65,000 | £100,000 |
# at retirement & assuming no growth
* Assuming 50% Income Tax rate
+ A 10% foreign discount may apply.
Final tax rate will depend on country of residence.
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
