Your Pension - Your Future 

The Isle of Man has two different types of tax-registered schemes:

• Schemes approved under the Income Tax Act 1989 (otherwise known as “1989 Schemes”); and
• “Pension Freedom Schemes” which allow greater freedoms and options for taking benefits.

This table, which was correct as at June 2025, sets out the differences between the tax regime for UK registered pension schemes and both types of scheme in the Isle of Man.

If you are thinking about transferring your benefits from ZCashBuilder to an Isle of Man pension arrangement, you can find out a bit more here. This is just an initial guide and is not intended to be financial advice or as a substitute for any financial advice you need on your benefit options.

One of the available options is to transfer your ZCashBuilder benefits to the Zurich International Personal Pension Scheme, a personal pension scheme operated by Zurich in the Isle of Man. This scheme is used for all new Zurich employees in the Isle of Man since 2019 and is available to any Isle of Man resident wishing to open a personal pension plan. The ZPen Trustee is not recommending or promoting this scheme but is merely presenting it as an option for your consideration.

You can find out more information about the Zurich International Personal Pension Scheme under Group Personal Pensions here. 

1. What happens when I come to take my ZCashBuilder benefits?

The earliest you can take your benefits under the UK rules is age 55 (unless you retire early due to serious ill health or have a protected pension age), but this is changing to 57 in April 2028. Under the UK rules:

• You can take 25% of your fund value as a tax-free lump sum, up to a maximum of £268,275 across all pension schemes.
• You can take the rest as a taxable lump sum and this would be subject to UK income tax.
• If you wanted to purchase an annuity (a pension for life) or to drawdown your ZCashBuilder funds to provide an income, you would need to find an arrangement that would allow you to do this whilst living in the Isle of Man. If you transferred to an Isle of Man arrangement at that time you would still be subject to the UK tax rules for a number of years.

If you are resident in the Isle of Man, you will be subject to UK tax on these benefits (including income tax).

2. How do I know whether transferring to an Isle of Man arrangement is the best option for me?

Deciding whether to stay in a UK pension scheme or transfer to an Isle of Man pension arrangement is a personal decision and may depend on where you plan to be living when you take your benefits.

Where conditions/requirements for taking benefits differ between the UK and the Isle of Man, the stricter condition/requirement will apply to members of the Zurich Financial Services UK Pension Scheme who are resident on the Isle of Man. Where UK conditions/requirements are stricter, this means you may be more restricted in how/when/in what amounts you can take your benefits. So a transfer to an Isle of Man pension arrangement may give you more flexibility (although there are certain conditions that apply on and after your transfer as well).

If you are thinking about transferring, you also need to consider if you intend to remain an Isle of Man resident for 5 complete tax years from the date your transfer takes place. This is because HMRC will make an Overseas Transfer Charge of 25% of your plan value if you are resident in the Isle of Man at the time of the transfer but leave the Isle of Man within 5 complete tax years from the transfer date.

3. If I transfer to an arrangement in the Isle of Man, will UK tax rules stop applying to me?

If you want to take your benefits under the Isle of Man tax rules you would need to transfer to a pension scheme that is solely registered in the Isle of Man. UK tax rules would then stop applying to your benefits:

• If you have always been resident in the Isle of Man - once you take your benefits and provided you transferred your UK pension benefits more than 5 years before taking them. 

      OR

• If you are resident on the Isle of Man but have previously been resident in the UK – once you take your benefits and provided you transferred your UK pension benefits more than 10 years before taking them.

You can find a flow chart here which shows which tax regime is likely to apply to your current ZCashBuilder benefits when you retire, depending on where you live and the time between any transfer to an Isle of Man 1989 scheme and when you start taking your benefits.

The UK tax rules on Overseas Transfer Charges would also apply to your transfer if you cease to be resident in the Isle of Man within five years of your transfer.

This means that you need to think about your future plans/where you might live in future very carefully before deciding whether to transfer is right for you.

4. How do I transfer to an Isle of Man pension arrangement?

You will first need to identify and select a pension arrangement in the Isle of Man which is classed by HMRC as a “Qualifying Recognised Overseas Pension Scheme” (a QROPS) and can accept the transfer of UK pension benefits.

To help you with this:

• A scheme should be able to tell you if it is a QROPs. Many schemes approved under the Isle of Man Income Tax Act 1989 can accept UK pension benefits whereas schemes approved under the Isle of Man Income Tax Act 1970, Section 61H “Pension Freedom Schemes” can’t, as these can only receive transfers from other Isle of Man approved pension schemes.

• Zurich International Pensions Administration Limited offers the Zurich International Personal Pension Scheme (ZIPP), part of which is approved under the Income Tax Act 1989. This scheme is used for all new Zurich employees in the Isle of Man since 2019 and is available to any Isle of Man resident wishing to open a personal pension plan. There is no charge for opening a new pension plan or transferring your UK benefits to the ZIPP.

Once you have selected an Isle of Man scheme, and confirmed that it is a QROPS, you should tell them you want to transfer in your ZCashBuilder benefits and provide them with the information they need. They should then contact the ZCashBuilder team to start the transfer process.

You should think about whether you need to take financial advice; you don’t have to but you may want to. You can find an Isle of Man financial adviser on https://www.iomfsa.im/media/2421/isle-of-man-financial-advisers.pdf and https://www.iomfsa.im/register-search/