This will enable the expansion of its range of cross-border investment and pension services available from its offices in Malta, France, Spain, Portugal, Italy and Luxembourg.

The group, which also operates in Switzerland, specialises in financial planning for English-speaking expatriates across Europe.

Spectrum IFA already holds French MiFID authorisation and gaining this second European investment licence for Malta, will strengthen its EU advice capability, including for QROPS clients invested via insurance wrappers and custodian platforms.

Craig Welsh, manager of the Spectrum IFA Group in Malta, commented: “This Malta MiFID licence significantly broadens our advice and service offering for the group’s many existing QROPS clients across Europe. Within an ever-tightening regulatory framework, it also allows us to offer a cost-efficient solution for anyone seeking an advisory firm with combined financial-planning and investment-advice capability.’’

In draft legislation issued by the Malta Financial Services Authority (MFSA), ‘capped’ drawdown products will be introduced as the way in which a policy holder and/or beneficiary may take retirement benefits.

This has been issued in relation to life insurance companies authorised under the Insurance Business Act to carry on long-term business of insurance and retirement provision business in Malta, however indications suggest that the MFSA are considering implementing this for personal retirement schemes and Qrops providers.

B.4.6.3 of the Pension Rules for Personal Retirement Schemes issued in terms of the Retirement Act 2011 specify the following options for members wishing to draw an income from the remaining assets not paid in the form of a Pension Commencement Lump Sum (PCLS):

• be used towards programmed withdrawals. Programmed withdrawals shall be based on publicly available annuity/drawdown rates. The retirement scheme administrator shall ensure that the said annuity/drawdown rates are based on sound and prudent actuarial principles; or
• be used to purchase a life annuity; or
• be a combination of programmed withdrawals and life annuity.

In the absence of any specific publicly available drawdown rates and poor annuity rates, many trustees have relied upon UK GAD (Government Actuary Department) tables, including the ability to take 150% of GAD.

It would appear that the Maltese Regulator will require trustees in future to use the Malta 10-year Government Bond Yield rather than UK 15-year gilts and the Malta National Statistics Office mortality rates for 2001-2020 rather than those offered by HMRC.

The effect of these changes when finally introduced may see members income vary from what they have come to expect.

On 3 May 2023, the UK 15-year gilt stood at 3.97%, while the Malta 10-year bond yield stood at 3.48%. If you round down the rate to nearest 0.25% as is required, there is currently a 0.5% difference between the two rates. In addition, mortality tables vary but only negligibly.

The result of the change is that if you are currently aged 60 and using UK GAD, you would get £58/1000.

Using the new Malta rates, you would get £55/1000. On a pension pot of £500,000 ($625,000, €575,000), that would equate to a £1,500 per annum difference in the amount of income a pensioner would be able to draw.

However, this is only a small snapshot in time. Future drawdown rates will purely be determined by the Maltese economy and fluctuations in its bond yields.

This should be looked upon as another positive step forward for Malta in further developing its domestic pensions legislation. A transition period would be ideal, but this proposal will bring more certainty to the industry going forward.

This article was written for International Adviser by Bethell Codrington, director of TMF International Pensions.

The fund is managed by Fidelity International. BOV Asset Management has been the official representative of Fidelity in Malta since last November.

It is targeted at investors with a conservative bias as it gradually shifts them from low-risk fixed-income bonds to a balanced exposure, helping them to “exploit the potential of bonds and equities in a single solution”, the firms said in a statement.

Isabella Labak, sales manager and investment director at Fidelity International, said: “This fund is a highly innovative multi-asset investment solution that meets the investor needs, particularly in the present volatile and unpredictable market.

“This fund gradually guides the investor from a conservative to a balanced exposure, exploiting the potential of the bond and equity markets in a single solution.”

This was part of its 2023 Dirty Dozen campaign to crackdown on tax avoidance.

The IRS said that schemes can take many shapes, ranging from “abusive deals involving syndicated conservation easements and micro-captive insurance arrangements”, and they can also involve an international component, such as “hiding cash and digital assets offshore or using Maltese foreign individual retirement accounts or foreign captive insurance”.

Danny Werfel, IRS commissioner said: “These tax avoidance strategies often target high-income individuals seeking to reduce or eliminate their tax obligation.

“Sometimes taxpayers are conned into believing they can participate in these schemes. People should always look for advice from an independent, trusted tax professional, not a promoter focused on aggressively marketing and pushing questionable transactions.”

Malta

The annual Dirty Dozen campaign – a list of 12 scams and schemes – featured Malta-based individual retirement arrangements “misusing treaty”, the IRS said.

The US taxman said that the arrangements involve US citizens or residents attempting to avoid US tax by “contributing to foreign individual retirement arrangements in Malta, or potentially other host countries”.

The IRS added: “Participants in these transactions typically lack any local connection to the host country, and unlike US law for individual retirement arrangements, the host country’s laws allow for contributions in a form other than cash and do not limit the amount of contributions by reference to employment or self-employment activities.

“By improperly asserting the foreign arrangement as a ‘pension fund’ for US tax treaty purposes, the US taxpayer misconstrues the relevant treaty provisions and improperly claims an exemption from US income tax on gains and earnings in, and distributions from, the foreign individual retirement arrangement.”

Offshore accounts and digital assets

During the Dirty Dozen list, the IRS said that “international tax compliance remains a high priority” for the US taxman.

The US taxman said it is scrutinising taxpayers attempting to hide assets in offshore accounts and accounts holding digital assets, such as cryptocurrency.

The IRS said: The IRS reminds US persons that they are taxable on their worldwide income, unless they can establish there is a statutory or treaty exemption.

“The IRS continues to identify individuals who attempt to conceal income in offshore banks, brokerage accounts, digital asset accounts and nominee entities. The IRS scrutinises structured transactions, private annuities, employee leasing schemes, foreign trusts, the use of nominee ownership and other arrangements used to conceal taxable income, beneficial owners and assets.

“To complement its enforcement investigations, the IRS requires individuals holding foreign assets and third parties to report to the IRS on foreign assets, foreign accounts, foreign entities and digital assets. Reporting requirements carry penalties for failure to file.

“Asset protection professionals and unscrupulous promoters continue to lure US persons into placing their assets in offshore accounts and structures, saying they are out of reach of the IRS. Similarly, unscrupulous promoters recommend digital assets as being untraceable and undiscoverable by the IRS. These assertions are not true. The IRS can identify and track anonymous transactions of foreign financial accounts as well as digital assets.

“Many of these schemes are promoted and advertised online, but all these schemes have one thing in common – they promise tax savings that are too good to be true and will likely cause legal harm to taxpayers.”

The regulator has appointed Kenneth Farrugia as chief executive, with effect from 12 April 2023.

Farrugia was previously director general at the Internal Audit and Investigations Department (IAID) and as director of the Financial Intelligence Analysis Unit (FIAU).

He takes over from Michelle Buontempo, who held the position of acting chief executive for the past months.

Nomura

The banking group has appointed Rudolf Hitsch as head of north Asia for its international wealth management business.

In this newly created role, Hitsch will be based in Hong Kong and responsible for international wealth management’s client relationship management teams covering north Asia.

Hitsch was head of north Asia at Citi Private Bank.

Marlborough

The DFM firm has named Danny Knight as commercial director and Nathan Sweeney as chief investment officer of multi-asset.

Knight will have an initial focus on further strengthening Marlborough’s multi-asset investment proposition for financial advisers in the UK and internationally.

He joins from Quilter Investors, where he was a director of multi-asset and latterly head of investment proposition.

Sweeney’s appointment follows the promotion of Sheldon MacDonald to chief investment officer in January.

He joined Marlborough as deputy chief investment officer of multi-asset in 2021.

Capital Group

The asset manager has hired Arne Toelsner as head of client group for Germany, Switzerland, and Austria, effective immediately.

He was most recently as head of distribution for Germany, Switzerland, and Austria at Allianz Global Investors.

O-IM

The investment manager has named Tom Hind as a business development director.

Hind joins O-IM from Stellar Asset Management.

Reyl Intesa Sanpaolo

The banking group has appointed Richard Albrecht as head of wealth management.

Prior to joining Reyl Intesa Sanpaolo, he was head of French-speaking Switzerland as a member of the WM European committee at Deutsche Bank.

Evelyn Partners

The wealth management and professional services group has bolstered its Edinburgh office with the appointment of Duncan Arthur as financial planning director.

He joins from Blackadders Wealth Management in Dundee where he was director of financial planning.

Impax Asset Management

The specialist asset manager has appointed Matt Carter as director of UK intermediary distribution.

He joins Impax from Sarasin & Partners, where he was responsible for the distribution of thematic funds and outsourced investment solutions to financial intermediaries.

Calton Wealth Management

The wealth manager has named Laura Bruce as a non-executive director and Trevor Mitchell as an IFA.

Bruce brings a wealth of experience in financial services, including with the wealth management and private client teams at Barclays and Bank of Scotland.

Mitchell joins CWM from GRC Financial.

Dimensional Fund Advisors

The global investment firm has strengthened its team in northern Europe.

Kevin Hudson-Phillips, a 12-year veteran of Dimensional’s London-based global client group, has transferred to the firm’s Amsterdam office to work with investors in the Nordic and Benelux regions.

He is a regional director and vice president.

Atomos

The wealth manager has appointed Jon Taylor as chair, taking over from Alison Endemano.

Taylor previously sat on the wealth manager’s board as a non-executive director. Endemano had been chair since Oaktree Capital Management invested in Atomos in May 2022.

He has held several senior management roles within financial services including being chief executive of both Ascentric and Co-operative Insurance.

Guinness Global Investors

Tom Pearson has joined the investment firm as sales director for the southwest of England.

Before joining Guinness, Pearson was regional sales director at Crux Asset Management for five years.

STM Group

The cross-border financial services provider has announced Graham Kettleborough has tendered his resignation as a non-executive director of the company and as chair of the group’s UK subsidiary companies.

The resignation will take effect from 28 April 2023.