Interview with Nigel Gregg, Client Services Director at MAC Financial
By: Liz Corlett
31 October 2008
How does pensions legislation on the Island affect the nature and reputation of pensions business?
Following significant changes to pension legislation which came into effect in April 2008, the Isle of Man is now in line with and possibly exceeding the UK in terms of what it can provide.
In basic terms, the Isle of Man has ‘cherry picked’ the better bits of UK legislation and it has enhanced its reputation as a result.
The media perception of Isle of Man has changed: in recent times, the Island has been successfully promoted as secure, safe and well regulated. It is now seen as conservative, in contrast to other jurisdictions which are perceived as more ‘on the edge’.
How would you describe the Isle of Man’s position in the global pensions market?
The Island is compliant but dynamic, with a regulatory framework which is flexible yet robust in design, and so fully able to compete with jurisdictions around the world. We have an international offering here on the Isle of Man.
What would you say is the ratio of personal to corporate pensions business on the Island?
MAC is the dominant pensions provider on the Isle of Man and three-quarters of our business comes from the corporate pensions market, with over 5,000 employees covered by those schemes.
What do you consider to be the most influential factors in attracting pensions business to the Isle of Man?
One of the most influential factors is that we are able to provide solutions for expatriates around the world. For anyone needing to be tax-resident here, it is now legally possible to transfer your pension from the UK to the Island. Also, upon retirement, we release 30% of a pension fund as a tax-free lump sum as opposed to 25% in the UK.
What do you see as areas of growth in the pensions market in the next 5-10 years?
The competition for good quality employees means that pension options can be a deal-breaker during the recruitment process and a deciding factor when moving from one company to another. A survey in 2007 by KPMG showed that the average employer contribution stands at 7-8% of the basic salary; trustees can tend to contribute up to 30%. This is one area which we expect to remain very interesting in the future.
Also, SIPPS (Self Investment Personal Pension Schemes) have generated a great deal of interest since their emergence in 2007, and we expect much future growth in this area.
And what do you believe to be the potential challenges to this growth?
The main challenges to growth lie in legislation, education and awareness. Every year, 3,000 – 4,000 people leave the UK for life in a new country and are not aware of how changes to pension legislation can affect them.
We’ve got to make awareness the focus of our marketing; encourage people to see that taking pensions advice is empowering.
Volatility in the global markets is not the challenge to us that it might be to other sectors. The credit crunch means that people are less willing to invest in property, for instance, wishing instead to put more money away for the future.
The age of retirement will undoubtedly have to be reviewed in future: there needs to be a greater degree of flexibility to reflect people’s changing lives and what they want from them. People are rightly becoming increasingly that, as the State may not be able to provide for them, that they will have to manage their own solution.