PLANS to relax pensions legislation in the Isle of Man are unlikely to compromise Guernsey’s position as an offshore self-administered-schemes leader. The Manx government is considering relaxing laws to encourage more UK residents to take advantage of its small self-administered schemes as a means of avoiding purchasing an annuity in the UK.

But Guernsey is a step ahead.

As a leading centre for offshore self-administered schemes for non-residents, it has had retirement annuity trusts for several years. These vehicles already avoid the need to purchase an annuity.

At this stage, there are no proposals to review taxation of self-administered schemes in Guernsey or any calls for that to happen.

Ian Morris, a partner at BWCI, the Channel Islands’ biggest actuarial and consultant group, said: ‘The IoM proposals do not, as far as we are aware, impact on offshore arrangements and Guernsey’s competitive position is likely to be unchanged.’

Manx pensions expert Iain Messenger said liberalising the laws was crucial to the government’s policy of attracting high earners to the island.

But Mr Morris said: ‘When competing to attract wealthy individuals to become residents, pensions may only play a small part.’

Issues such as limits on income tax were likely to have a substantially greater impact, he said.

‘We would not anticipate that the IoM pension-taxation proposals would significantly impact on such decisions.’

A Manx consultation document has been in the public domain since October but the results are not expected until the middle of the year.

It looks at all aspects of the pension laws, from annuity purchase through to retirement ages.

As BWCI advises a number of pension schemes in the IoM, it submitted a detailed response.

Mr Morris said that while the consultation document may have come as a surprise to some, the IoM had in fact been considering changes for some time.

In 2001, it published draft legislation setting out a package but those proposals were put on hold pending the outcome of the UK’s pensions-simplification proposals that were announced shortly afterwards.

The issue was revisited after the UK changes came into effect last April.

The Manx proposals include statutory concessions in pensions schemes in a bid to win over wealthy potential residents.

These include:

* The taking of a tax-free lump sum of up to 25% of a pension fund will be permitted.

* Commutation of a trivial pension or pensions into a taxable lump sum will be permitted up to an overall fund or aggregate fund valuation of £15,000.

n A person will be permitted to hold a personal pension plan alongside membership of an occupational pension scheme, subject to an overall contribution limit of 15% of net relevant earnings.