Hong Kong Master Pension Trust

07 May

Hong Kong SAR Regional EmblemPENSION NOT A TRUST The Master Pension Trust is an "onshore" Hong Kong registered "occupational Retirement Scheme" (ORSO) administered as a Trust under the Mandatory Provident Fund schemes Authority since 27th March 2006.

COSTS: With trusts becoming more expensive, the Master Pension Trust gives a unique tax and pension planning opportunity at fair cost.

TAX EFFICIENCY AND FLEXIBILITY Due to the HK ORSO tax regime and double taxation agreements, no matter what your residence or nationality the Master Pension Trust can be one for the most cost effective and efficient ways of mitigating your tax planning issues.

QROPS The Master Pension Trust will accept UK domiciled pension transfers and thus take full advantage of the HMRC Qualifying Recognised Overseas Pension Scheme rules.

  • The Master Pension Trust can hold cash, property, land, mutual funds, stocks, stock options, bullion, private shares, hedge funds and bonds.
  • It can mitigate "MOST" taxes depending on your domicile, on both a current basis and death basis.
  • It can accept most transferred Pensions with no limits. It protects you and your assets against claims from Creditors.
  • No Income tax, Capital Gains tax, on the underlying funds
  • No compulsion to purchase an annuity
  • Income for life on 70% of pension funds transfered from a UK Pension.
  • Lump sum payment available on retirement age.
  • No Widows benefit on pension scheme
  • Freedom of investment and currency choice
  • No tax on the scheme or its member
  • Reporting requirements costs are significantly less in Hong Kong than elsewhere and that helps to enhance absolute returns on investments.
  • Client confidentiality.
  • Choice for investment assets.
  • No maximum investment restrictions.
  • Can mitigate UK Stamp Duty Land Tax, Capital Gain or Income tax on the transfer of property.
  • No UK IHT, death or estate tax.
  • No profits tax on property traded within the Master Pension Trust.

HONG KONG Master Pension Trust main features

Master Pension Trust can take transfers and contributions from anywhere. That is because of the Occupational Retirement Schemes Ordinance definition of a scheme. In other words, we are not confined to Hong Kong. A Master Pension Trust can receive employer contributions from anywhere for any type of pension fund design – defined contribution, lump sum, final salary, defined benefit, pension or annuity. It can purchase any form of insurance or financial instrument to answer benefit payments.

Any United Kingdom registered pension fund of any description, whether in drawdown or not, may be transferred to Master Pension Trust.

All forms of restriction on transfer of pension funds into and out of member states are made illegal under European Union Law. The United Kingdom regulations on transfers to QROPS follow EU law. HMRC cannot change regulations against EU law.

A transfer payment may be made either to the scheme administrator including persons responsible for administration of the QROPS, not just the trustees of Master Pension Trust; or, where

the receiving scheme for the member is to be an insured scheme, the the scheme insurers, then to Master Pension Trust (the usual route).

A Transfer Value is calculated according to The Pensions Regulators guideline and must be explained by the person presenting it to the member.

Following the transfer, Master Pension Trust will be required to provide benefits on a like for like basis as preceding the transfer. So the transfer of a scheme pension in payment, for example, should be continued in that form, and the conditions as set out in HMRC’s RPSM14106030 should be followed. If any of those conditions are not met the member of the receiving scheme will be liable to an unauthorised payments charge (see HMRC’s RPSM13102020).That will be the case, in particular, if a lump sum is paid, the scheme pension is increased or the income withdrawal is speeded up. Transferred pension fund money received by a Master Pension Trust cannot be topped up.

Additional voluntary contributions of any description, including real estate, can be received by Master Pension Trust only if the member is in employment and sponsored by his employer who must sign the Master Pension Trust trust deed.

Master Pension Trust members and their dependants can elect to defer benefit payments past first payment due date or on the member’s death. There is no reversion of the fund to the member’s deceased estate except by default where the member has no dependants or relatives.

Together with Modern Portfolio Theory, at, for example, age 60 with a life expectancy of 25 years, the portfolio should be weighted 70% to liquidity and 30% to less liquid capital growth. The 70% tax law rule is clear – life means life and not life style. The Master Pension Trust is designed to allow 100% drawdown of capital and income during a member’s lifetime with the option of leaving a capital residue for the member’s spouse and dependants.

2 Responses to “Hong Kong Master Pension Trust”

  1. Eelkje Wouda October 23, 2015 at 4:33 pm #

    You mention that “Master Pension Trust can take transfers and contributions from anywhere.” Does that mean that an MPT will accept a cash transfer from a pension fund located, e.g. in Bermuda, irrespective of whether the individual is a resident of the UK or other country outside China?

    • Aaron A Day October 24, 2015 at 3:38 pm #

      An adviser will be answer to you directly, thanks.

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