Shopping for a Qualifying Recognised Overseas Pension Schemes (QROPS) online is complicated enough without the reams of well-meaning but often wrong advice.
Forums, expats and armchair experts all give their views on the rights and wrongs of QROPS online.
Some of their advice is good, but much is out-of-date and does not comply with current HM Revenue & Customs (HMRC) rules for offshore pensions.
What’s worse, many of the so-called professional advisers also get the basics let alone the nitty-gritty details wrong.
One recent press release claims HMRC is responsible for protecting QROPS consumers from products and services that do not meet the required standards.
Even ‘experts’ get advice wrong
That will come as a shock to regulators in the financial centres where QROPS providers are based, as they police pension providers and advisers in their countries, not HMRC.
HMRC is responsible for checking the scheme meets UK qualifying tax rules, but not the delivery of advice or provision of services offshore to consumers.
Typically, this takes place through an intermediary, like an independent financial adviser who should be regulated for giving advice in the financial centre where the QROPS is based.
Many advisers also claim HMRC ‘approves’ financial products. Again, this is in correct. HMRC does not endorse or approve any product – and the QROPS List on the HMRC web site explains this in detail and advises QROPS investors to carry out their own due diligence before handing over any money to an offshore company.
Expats and international workers with UK pension rights who are shopping for a QROPS need to bear this undercurrent of well-meaning but wrong advice in mind.
How to check out a QROPS advisor
Potential QROPS investors should consider a few points before taking on an adviser:
- Always check out their regulated status. Some unscrupulous advisers use false or expired licences, so always ask for the registration number and regulatory authority and confirm the details personally online or by phone
- Ask for a breakdown of charges and fees in advance
- Testimonials are rarely worthwhile because bad advisers are not going to let new customers talk about their past failures, but check the adviser or their company’s name online to see what sort of reputation they have got
- Make sure any adviser is not tied to a specific company or jurisdiction and can give whole-of-the-market advice or you could risk missing out on a better deal elsewhere. The QROPS market has more than 3,300 pension products across 42 countries.
If in doubt, look elsewhere for advice, as other than a house, a pension transfer is probably the biggest financial transaction most people make in the lives.