When you consider the best options for your final salary pension advice, would you:
- Transfer your final salary pension without taking regulated advice?
- Transfer your final salary pension by allowing someone you have never spoken to, produce a report and sign it off?
- Transfer your pension by taking advice from a novice salesman?
- All of the above?
- Take advice on your final salary pension options from a regulated, qualified individual working for an authorised UK FCA firm?
ANSWER: Would it astound you if I told you that many expats are actually doing option (4), although they are being told the company they are working with provides option (5)?
In essence, most expats are being “sold” a final salary pension transfer by a salesperson who cannot provide the advice, has no responsibility for outcomes, and is probably acting inappropriately. In fact, in order to “process” the transfer, the salesman has to go to an “unscrupulous someone” that the client has never spoken to who signs for the transfer. The unscrupulous someone does work for an unscrupulous firm with UK connections to get a pension transfer signed off and signs off 50 a week without vetting (everyone is a “goer”). The unscrupulous firms shut down, start-up and shut down again as the regulator chases them.
The end result is often that the consequences are dire, with people effectively in option (1) category but with a nice meaningless report from the salesperson who later disappears when the balloon goes up. Usually the investment is a structured product (non-retail), an unregulated fund or three investing in “care homes, accommodation, rental houses, trees, precious metals, hotels, you get the idea”.
I saw an interesting article by Nick Bamford about final salary pension advice.
Most telling is this comment-
‘….the involvement of unauthorised advisers in the pension transfer process is a big red flag.
These unauthorised advisers need to involve an authorised adviser (an IFA) to legitimise the transfer, but in many cases the investor has never had direct contact or even met the IFA who signed off the advice.
If you ever find yourself in a similar position, please stop and think about what you are putting at risk.’
Final Salary Pension Advice- Speak to the adviser
It is incomprehensible to many UK regulated advisers that a client could be advised on a pension transfer (often having a Cash Equivalent Value of the family home) , without actually having any direct contact with the adviser that is recommending the transfer.
While there are, of course, many non-UK advisers that are properly regulated and qualified to provide investment advice to their clients, nearly all cannot give final salary pension advice.
In such cases, the non-UK adviser should work with the client and the UK adviser firm, the latter communicating with all parties throughout the whole process. The UK adviser may need help with local rules that are beyond his/her expertise. Such synergy (1 + 1=3) should leave no bases uncovered and produce a better client outcome.
Always have direct contact with the UK adviser
As stated in the published article, if a non-UK adviser gets a UK adviser to provide the advice for a transfer and you are not advised- or offered to be advised- by the UK adviser then walk away, you may be putting your pension at risk.
Make sure the UK adviser is fully aware of all investments that you will be taking out after the recommendation to transfer and make sure all the costs, fees and commissions are explained to you in writing (pounds and pence) and that the UK IFA has factored in these costs- both initial and ongoing – into the advice recommendations.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was published on 14th September 2017
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