We spoke to Brian Furzer of Spectrum IFA about the pension advice you cannot do without. If you are in Nouvelle-Aquitaine and need expert guidance you need look no further.
Brexit! Where will it lead to? Unsurprisingly, I can offer no crystal ball revelations. But because there is still such uncertainty surrounding the eventual Brexit outcome, I continue to receive approaches from clients who want to take their savings or pensions out of the UK. Pensions particularly.
Should I take my pension out of the UK?
This could well be sensible, but pensions are a technically complex subject where reliable advice is essential. From understanding state pension entitlement, to reviewing all existing personal and/or employer schemes, it may be possible to increase the value, flexibility and security of your retirement finances, but each case needs to be considered individually and carefully.
Repeatedly I have seen other financial advisers proposing to unlock clients’ pension cash by arranging transfers to a Qualifying Recognised Overseas Pension Scheme (QROPS). There may be merit in a QROPS transfer, but I have also regularly seen advice which has been inappropriate and offered without any proper procedure other than establishing pension values. Regrettably some clients have proceeded with these transfers, but others came to me and I was able to offer guidance which encouraged a change of direction for the benefit of their current or future circumstances and finances.
What are the main reasons for alarm?
- The clients have received either wholly or partially inappropriate advice to transfer their funds.
- The firms concerned have no regulation in France and, therefore, are not accountable for any loss on the part of the client either now or in the future for French residents.
- The high level of fees that these firms are charging over and above the commission which they will be receiving from the investment provider.
- The funds that they recommend have generated commissions on top of commissions earned from the provider.
- Many of these funds have eventually been closed with total, or near total, loss to investors.
It seems that the advice trail begins with the client contacting the firm on the basis that they believe that they will receive professional and appropriate advice. The pension details are then established and without exception (in the cases I have come across) they are advised to transfer the pensions to a QROPS. This has happened on every case I have been consulted on, despite the fact that in a number of instances final salary schemes were involved.
A final salary scheme (also known as a defined benefit scheme) is a pension that is part of a previous employment and carries with it guarantees which need to be carefully examined and compared against the alternatives. This evaluation needs to be completed by a UK FCA authorised adviser. As a rule, for all pensions, be wary of any recommendation to transfer without receiving a formal report explaining, in terms you understand, why a transfer could be in your best interests.
In two cases where I was consulted the final salary schemes were public sector and under practically no circumstances would I recommend a transfer out due to the solid guarantees in place. The advice was given by the original advisers to transfer and, fortunately, the clients all had rethinks and left their pensions where they were.
What will it cost to move my savings?
The costs associated with a pension transfer should always be fully explained and understood. Without proper planning and advice there can be a dramatic reduction in the value of the overall pension pot, with obvious consequences for clients’ financial security in retirement.
Unfortunately, many firms offering pension transfer advice are high profile in terms of advertising. Search Google for advice on pension transfers and you may find, on other websites you visit, numerous invitations to ‘click here for independent advice on releasing your pension’. Anyone interested is redirected and it goes from there.
Even for the financially experienced it is worth seeking professional advice. It goes without saying that you should only deal with an independent, appropriately authorised adviser, ideally someone living and working locally.
The Spectrum IFA Group is not tied to any financial institutions and we do not charge for our reports or recommendations. You can find details of our Client Charter on our website. Our registration details can be found here.
For further information and advice or to arrange a free consultation please contact me directly either by telephone or email.