UK expats (or any nationality no longer living in the UK) with a UK pension may ask why advice about UK pensions should be taken from a UK regulated adviser, especially if they have no plans to live in the UK. Surely, a local adviser in the jurisdiction where the pension holder lives is likely to be the best adviser. Well, that is only half of the argument.
Benefits of a UK Regulated Adviser
To move a pension with Safeguarded benefits out of the UK requires that a UK regulated adviser with the correct licences and permissions, advises and signs off the advice before an expat can move the pension.
Thus, a UK adviser must offer the full range of pension transfer advice; must have the FCA permissions , as well as the correct professional indemnity insurance. Only UK regulated adviser’s with the following qualifications are even allowed to advise on final salary pensions (or any pension with safeguarded benefits) valued at over £30,000.
In other words, where a UK pension has safeguarded benefits, an expat has no choice but to use a UK pension transfer specialist. The qualifications required are
- G60/ AF3 ( Chartered Insurance Institute )
- Pensions Paper ( IFP )
- APMI ( Pensions Management Institute )
Most practicing UK regulated adviser that are allowed to provide the full range of advice will be AF3 or G60 qualified.
Please note: The starting point for any transfer to an overseas pension (or a UK to UK transfer) must be a detailed understanding of all types of UK pensions, which most non UK advisers will simply not have.
Apart from the necessity of having to involve a UK regulated adviser, doing so is of further benefit to a UK pension holder. UK advisers will have a thorough understanding of all types of UK pensions. With pensions legislation changing so much and so often, you may find that the advice you receive from a UK adviser will save you a lot of money, as they may be aware of technical aspects of your pension, or pension legislation that will be beneficial to you.
Your Local Adviser
Many UK advisers may not be familiar with the pensions legislation where you are resident of course. In the highly regulated jurisdictions such as Australia, the USA and South Africa, you can be fairly sure that they won’t be. This could be argued for places such as Hong Kong and much of the EU as well.
Moreover, a UK regulated adviser may actually be restricted by local regulation, when not licenced in the clients’ jurisdiction, and this concept is often promoted by non-regulated advisers overseas as a reason not to use UK regulated advisers (Quote: “they do not understand”). It would therefore appear there could be a large advice gap here , but actually, this is easily resolved to ensure that you receive a robust and compliant advice process.
UK regulated adviser and local adviser working together
The answer to the advice gap is clear. By a UK adviser working in conjunction with a regulated adviser in the country you live, we create a synergy that, in our experience, results in a robust client outcomes. Please note the emphasis on “regulated adviser in the country you live”. Three examples of this are:
UK advisers are not able to advise on local Australian QROPS / Superannuation Schemes. With the correct advice from each jurisdiction, an Australian resident that retires in Australia would get substantial tax savings that would not otherwise be available by transferring a UK pension out of the UK. The input of advice from the Australian and UK based advisers are absolutely crucial and will result in far higher pension value and net income in retirement for the Australia resident client.
South Africa –
The issue of the taxation of non South African based pensions (in this case UK pensions or QROPS) is complex and likely to change. South Africa is bringing in a new RDR regime that will bring more transparency to the advice process. As in the example of Australia, an appropriately qualified and regulated adviser in South Africa, combined with advice from a suitably qualified and licensed UK adviser, will add significant value to quality of advice for someone who is resident in South Africa, and result in advice that is not commonly recommended in our experience.
The issue of the taxation of non US based pensions (in this case UK pensions or QROPS) is complex and subject to IRS scrutiny. It is essential that an appropriately qualified and regulated adviser in the USA is combined with advice from a suitably qualified and licensed UK regulated adviser; it will add significant value to quality of advice for someone who is resident in the USA, and result in advice that is not commonly recommended in our experience.
Other jurisdictions –
The issues made above apply to Hong Kong, Singapore, Malaysia and much of the EU, especially France and Spain. Our experience is that all of these areas could benefit from firms and advisers from different countries working together to benefit the client. Therefore, in all of these jurisdictions we have set-up partnerships with like based firms, or indeed we own a firm ourselves directly regulated in these jurisdictions.
Synergy for the benefit of the client
In his 1965 book, Corporate Strategy, H. Igor Ansoff, the mathematician and business manager who is sometimes referred to as “the father of strategic management”, defined synergy as “2+2=5”.
That is, he explained, that the whole is greater than the mere sum of its parts.
The same principles apply to the components of the “pensions expert”. Put another way, the assimilation of specialists in various jurisdictions can provide a better solution than that that would have been achieved by working independently with a UK or non-UK adviser alone.
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 23rd January 2017
- South Africa Financial Advisers
- QROPS in South Africa
- South Africa Financial Services Board
- Abridged Advice
- Final Salary Pension Advice- Expats
Share this story