UK pension changes challenge expat advisers

Almost 60% of advisers who handle UK pension transfers for their clients say they “have faced challenges under the new requirements”, according to a survey by Old Mutual International.

Around two-fifths of those surveyed told the Old Mutual International researchers that they would support a review of the UK’s new pension rules.

The survey was carried out in the fourth quarter of last year, and included input from some 289 overseas advisers located in Europe, Asia, the Middle East and Africa, as well as in the UK, according to Old Mutual Wealth, the parent organisation of Old Mutual International (OMI).

The controversial new pension regulations came into force last April, and were aimed at giving UK pension holders greater freedom to do what they wished with their pension savings, including the right to take the money out of schemes in which it had been built up.

Among the requirements that accompanied the new pension freedoms was a stipulation that individuals interested in transferring a final salary pension scheme with a “transfer value of more than £30,000” must obtain “appropriate independent advice” from a UK Financial Conduct Authority-authorised entity, which would assume responsibility for the pension advice given.

According to Old Mutual, “this has led to a number of overseas advisers linking up with advisers in the UK for their pension transfer business”, although clients typically are not happy about the prospect of having to pay “an additional fee to a UK adviser”.

International advisers – those who are located outside of the UK, and advise clients who are living abroad – also raised concerns over liability in connection with these transfers, and “who would be to blame if things went wrong”, the Old Mutual survey found.

Some 69% of international advisers have, though, “successfully linked up with UK advisers”, according to Old Mutual – of which around 40% already had a connection to the firm they linked up with, such as being a part of the same financial group, and 60% didn’t.

Some 14% of international advisers “have not found [an FCA authorised] UK adviser firm to link with yet” but say they intend to keep looking, the survey found, while 9% of advisers “have decided to stop writing this type of business [altogether]”.

Old Mutual said the UK Department for Work & Pensions was aware that the requirement to take advice from an FCA-authorised adviser could be creating “practical difficulties to people who are now living overseas” and is currently considering whether further action may be required, following the outcome of the so-called Financial Advice Markets Review, which was carried out in the second half of last year to consider whether anything needed to be done to improve the access of UK taxpayers to affordable financial advice.

‘Alarming’ number cite ‘challenges’

Old Mutual Wealth technical manager Jon Greer said the research was “an interesting insight into how advisers are feeling”, and that, while a “surprisingly high number of overseas advisers have already successfully linked up with UK adviser firms”, the number of advisers who say they have been facing challenges “is alarming”.

“It is imperative that clients are not detrimentally impacted, so we would welcome a review by the Department for Work & Pensions,” he added.

Old Mutual Wealth is part of Old Mutual plc, a FTSE 100-listed insurer with roots in South Africa, more than 16 million customers globally, and around £319.4bn in assets under management.

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