Transferring to an International SIPP

Transferring to an International SIPP is the subject of a 2^nd December 2020  FCA alert .

The FCA state-

Overseas advisory firms often invest consumers’ pension funds through an offshore investment bond within an international SIPP. We are concerned that consumers who invest in this way may be exposed to high and/or unnecessary charges. We are also concerned that the tax benefits of investing through an offshore investment bond are largely redundant to someone investing in a UK personal pension scheme.

If you are approached by an overseas advisor you should consider if these arrangements are in your best interests. Make sure that you understand all charges that may be incurred by the overall arrangements, as well as any exit penalty charges that may apply.

If you are a member of a Defined Benefit Scheme (DB) and are considering transferring out into an international SIPP, you should contact the The Pensions Advisory Service, for impartial guidance before taking any further action. We believe transferring out of a DB pension scheme is unlikely to be in the best interests of most consumers.

Transferring to an International SIPP

It is worth pointing out that there are some SIPPs, sold as an International SIPP, that do not facilitate the sale of an offshore bond and have charges consistent with other lower cost UK regulated pensions.

However, many offshore advisers transfer UK pensions into an International SIPP for the sole purpose of recommending an expensive insurance bond that result in higher annual charges and high exit penalties.  We have been warning investors about this for several years and it is good to see that the FCA is finally waking up to this issue- albeit several years too late.

Summary

If an offshore adviser recommends an offshore bond, within a SIPP, you have to ask yourself who will benefit most from this transaction and why a UK regulated pension is being sold with an investment wrapper that is not regulated for sale in the UK.

Only deal with transparent and regulate advisers and demand the same standards of advice as that that would be expected in the UK. After all, this is a UK pension.

Article Date 7th December 2020

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.

“About

Chris Lean

Chris is a Chartered Financial Planner who writes blogs and articles to simplify and explain some of the financial issues that affect UK expats. Subjects include; hot topics, regulation and the ever-changing world of finance.

Related Stories:

• Ex-DeVere duo fined by US regulator over transfers of British Pensions to QROPS
• Offshore Bonds and SIPPs
• Offshore Bonds in Pensions
• Spain- Insurance bonds in pensions, is there a tax advantage?
• QROPS Fees, Transparent Charges and Commissions