Expat Pension Transfer DWP Consultation

Expat Pension Transfer DWP Consultation.

The Department for Work and Pensions (DWP) has issued a consultation paper on the potential advantages and disadvantages of the hundreds of thousands of expats that have defined benefit, salary related pensions schemes in the UK.

The paper asks whether expats are disadvantaged in the requirement for transfer values with ‘safeguarded rights’ i.e. underlying guarantees in excess of £30,000 to be forced to seek expert pension transfer advice in the UK, the same as UK residents do.  The disadvantage is that expats may have difficulty in finding an adviser in the UK that has the necessary experience to understand pension and tax provision not just in the UK but also in the country that the expat is resident.

They suggest also that expats may end up paying double advice costs, advice in the UK and advice in their country of residence.

In addition, the DWP suggests adequate redress, compensation and protection may not be available if the advice is negligent.

Comment - Advice at both ends:

The DWP have totally missed the point here.

1. Overseas advisers are unlikely to have the necessary pension qualifications and knowledge of UK pension law and taxation to be able to adequately advise on a UK defined benefit transfer.
2. Overseas advisers are unlikely to be authorised in both the UK and overseas.
3. Equally, UK advisers are unlikely to have the necessary pension qualifications and knowledge of overseas pension law and taxation to be able to adequately advise on a UK defined benefit transfer to that territory or to an alternative jurisdiction QROPS.
4. UK advisers are unlikely to be authorised in overseas unless they have ‘passported’ advisory services within the European Union.

Our experience has shown that so many so-called expat financial advisers operating in the British expat market but based overseas do not have the same high level qualifications to be able to offer complex, high risk pension transfer advice nor is there adequate regulation or investor compensation protection.  We have worked with a number of clients would have ‘lost it all’ without our intervention, we wonder how many have lost out.

We do work with expats in dealing with pension transfers.  We make it a requirement that our expat client has regulated advice from us in the UK but equally we work with their overseas adviser in their country of residence to ensure that professional, unbiased advice is received at both ends.  Yes, this may increase costs but it also increases the likelihood that the client is protected and has received the right advice at both ends.

The DWP clearly does not understand the high risk nature of cross border advice nor does it understand that not all advisers overseas operate with the same level of qualifications or integrity that many do in the UK.  We have seen poor outcomes all too often.