• Home
  • News
    • People moves
    • Africa
    • Asia
    • Australia
    • Canada
    • Caribbean
    • Domicile
    • Europe
    • Latin America
    • North America
    • Middle East
    • US
    • US
    • UK
  • Products
    • Funds
    • Pensions
    • Platforms
    • Insurance
    • Investments
    • Private Banking
    • Citizenship
    • Taxation
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Directory
  • Video
  • Advertise with us
  • Directory
  • Events
  • European Fund Selector
  • Newsletters
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
  • Advertise with us
  • Directory
  • Events
    • Upcoming events
      event logo
      International Investment Nordic Summit 2021

      International Investment Nordic Summit 

      • Date: 09 Mar 2021
      • ONLINE, ONLINE
      View all events
  • European Fund Selector
International Investment
International Investment

Sponsored by

Sharing Alpha
  • Home
  • News
  • Products
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Video
  • Pensions

UK gov't decides against 'watering down' advice requirement for 'safeguarded' benefits

UK gov't decides against 'watering down' advice requirement for 'safeguarded' benefits
  • Helen Burggraf
  • 27 March 2018
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  

The UK government has today confirmed it will maintain a requirement that savers who are considering an overseas pension transfer that would see them giving up “safeguarded” benefits worth £30,000 or more must first obtain regulated advice from a UK-based adviser.

The government had been considering proposals to water down the requirement, amid concerns that savers wanting to take advantage of so-called pension freedoms, which now make it possible for them to move their retirement pots abroad, face what some say are unnecessary barriers.

Related articles

  • PLSA demands tougher action on UK and overseas pension scams
  • Strabens Hall exec: UK-regulated adviser role in pension transfers 'best for client'
  • Industry concern over UK Gov consultation on int’l pension transfers
  • UK and int’l advisers must join together on transfer biz: Montfort Int’l

However, in a 15-page Department for Work  & Pensions document posted on its website, it said that, “having considered the responses” it had received to its call for evidence last year, it thinks “that the advice requirement as [currently] applied to overseas transfers is largely working, and does not require an easement”.

Although the data shows that there were some 9,700 transfers of UK pensions into qualifying registered overseas pension schemes in the tax year 2016 to 2017, it wasn’t possible to determine how many of these would have been affected by the advice requirement, in addition to which, “following the introduction of [a new] 25% tax charge in March 2017, there was a reduction in the number of transfers” being made into such overseas schemes, the government notes, in its response.

Thus “the evidence received did not indicate that the requirement to take financial advice is routinely preventing overseas residents from transferring their safeguarded pensions out of the UK”.

What’s more, “the Financial Ombudsman Service reported only four complaints in relation to the advice requirement in the 18 months from when it was introduced to when they responded to our call for evidence,” the government statement continues.

“We’ve seen fewer than 20 complaints over the last three years about transfers overseas or difficulty in accessing UK pension benefits from overseas.

“Of these, four relate to the advice requirement imposed since the introduction of the pension freedoms… Approximately 20% of these complaints overall have been upheld.”

The government assessment does acknowledge, however, the apparent existence of a shortage of pension transfer specialists available to provide the mandatory advice, with the result that UK pension scheme members currently “sometimes struggle to find a financial adviser, or face delays while waiting for an adviser to complete the advice process on their proposed transfers”. But it notes that the market is already moving to accommodate the demand.

“Providers of pension transfer qualifications introduced new qualifications in anticipation of the FCA’s rule changes, and have reported high demand for them,” it points out. “The Chartered Insurance Institute reported that more than 500 personal finance professionals signed up to its new pension transfers qualification within the first week.

“We expect this to lead to an increase in the number of pension transfer specialists in due course.”

It concludes by inviting those who still believe an easement on the pre-transfer advice requirement to demonstrate “how an easement that allowed members to satisfy the requirement by taking advice from a financial adviser in their country of residence might work”.

“Importantly, we are not satisfied that an easement that allows the advice requirement to be met by an adviser not authorised and supervised by the FCA would offer sufficient protection to members.

“Transfers can carry the risk of scams, and this is potentially magnified for overseas transfers where the
destination of the funds being transferred can be more opaque.”

‘Could have been a recipe for disaster’

Tom Selby, a senior analyst at AJ Bell, was among those who felt the government had made the right decision in retaining the advice requirement.

“Easing the advice requirement for transfers of guaranteed pensions to overseas schemes could have been a recipe for disaster,” he said.

“We know a significant number of pension scams involve moving money to vehicles in foreign jurisdictions, which often lack the protections available in the UK.

“Fraudsters would inevitably have seized on any scaling back of the advice requirement to target people with defined benefit pensions and valuable guaranteed annuity rates.

“While HMRC’s stance will make it more costly and time-consuming for people to transfer larger guaranteed pensions into overseas schemes, this seems a small price to pay to ensure members are protected.

“Indeed, with the ongoing attention being placed by the FCA on defined benefit transfer advice, it would have been odd for HMRC to water down the advice requirement for people transferring to a QROPS.”

Fifty-two respondents 

Some 52 companies contributed comments in response to the government’s “call for evidence” on the advice requirement for overseas pension transfers, including many well-known advisory firms, the Isle of Man Financial Services Authority, the Gibraltar Association of Pension Fund Administrators, the Australian Securities & Investments Commission, the Superannuation Arrangements of the University of London and The Pensions Advisory Service.

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
  • Topics
  • Pensions
  • Rest of World
  • UK
  • HMRC
  • pension transfers
  • QROPS

More on Pensions

FCA data reveals £20bn of DB pensions advised to transfer in 2018-20

  • Pensions
  • 18 January 2021
Digital switch must accelerate to meet demand: iPensions Group

  • Fintech
  • 15 January 2021
Pensions and investments could be tapped for £800m in UK's dormant assets

  • Pensions
  • 11 January 2021
FCA identifies 30,000 instances of unregulated activity in 2020

  • Pensions
  • 06 January 2021
Tavistock to use Canada Life's Retirement Account as core pension solution

  • Pensions
  • 08 December 2020
Back to Top

Most read

SharingAlpha's 2020 top rated funds by category revealed
SharingAlpha's 2020 top rated funds by category revealed
Duff & Phelps opens Gibraltar office
Duff & Phelps opens Gibraltar office
DeVere launches equity fund with Columbia Threadneedle Investments
DeVere launches equity fund with Columbia Threadneedle Investments
HNWIs in SE Asia cite lack of financial knowledge as greatest concern: report
HNWIs in SE Asia cite lack of financial knowledge as greatest concern: report
DeVere Group to offer free ESG advice to clients
DeVere Group to offer free ESG advice to clients
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017
Loading