A number of countries that have ‘civil law’ legal systems do not recognise trusts and may therefore treat a trust-based pension scheme simply as an investment platform for tax purposes. If a pension scheme member is resident in a country with a civil law legal system, then a contract-based pension scheme can offer a solution.
A trust-based pension scheme is established under a trust deed and a trustee company (Sovereign) is appointed to ensure compliance with the trust deed and rules. The pension is therefore governed by the trust deed and rules.
A contract-based pension scheme is set up via an individual contract between the member and the pension scheme provider. The scheme provider (Sovereign) is the scheme administrator and there are no trustees.