Getting specialist UK pension transfer advice while living abroad
Expats seeking advice from a UK pension transfer specialist are finding it increasingly difficult to find an adviser willing to take on their case.
Once a UK adviser has been found and contacted, the difficult task of explaining your complex circumstances and needs begins. Intricacies such as taxation, inflation, currency planning and international regulation mean that many UK advisers simply won’t accept a non-UK resident. Indeed, due to the huge demand for Pension Transfer Specialists, most don’t need the business either.
However, while a rare breed, there are a handful of UK pension advisers who do specialise in cross-border planning for expats.
Why do I need a UK specialist?
No matter where you live, those holding a UK defined benefit pension with a value in excess of £30,000 will require the advice of a UK qualified Pension Transfer Specialist with the appropriate regulatory permissions.
The pension transfer advice requirement is a UK rule put in place by the Financial Conduct Authority (FCA) some years ago, and does not look likely to change. The FCA see this advice requirement as necessary in order to protect the holders of such ‘gold plated’ pensions.
The regulator has been focussed and highly critical of PTS firms during their market-wide review and continues to focus their attention on the quality of advice in the DB pension market, visiting hundreds of firms and requesting data and copy reports from many more. This has left many pension transfer firms simply choosing to exit the specialist market. With increasing regulatory pressure, rising costs of insurance, blame culture and the constant threat of aggressive claims management companies, many firms have simply chosen to outsource this element of a client’s planning, instead focussing on their core activities.
Expats looking to review their pension planning now face a complex maze of advisers, questions, analysis and sometimes contradicting advice and information. UK pensions and retirement planning can be complex, but why is getting good, sound, regulated advice seemingly so difficult for those living abroad?
Getting UK Regulated Advice as an Expat
There are thousands of highly regulated and highly qualified advisers across the world who specialise in advice for British expatriates.
International advisory services can range from life and health protection to complex cashflow analysis, portfolio management, taxation and currency planning. Regulated international advisers are highly knowledgeable in their field and experienced in cross-border financial planning. However, when it comes to UK defined benefit pensions, non-UK firms must link to a regulated UK firm with the specific pension transfer qualifications and permissions, who are comfortable with non-UK resident customers.
Why do I need a UK specialist?
You may already have a financial adviser who you’re happy and comfortable with. However, that adviser must link to a UK Pension Transfer Specialist in order to help with your more complex retirement planning.
The UK regulator, the Financial Conduct Authority (FCA) requires those with ‘safeguarded’ pension assets to seek professional regulated advice from a pension specialist. This rule applies to all defined benefit transfer values in excess of £30,000. UK Pension Transfer Specialists are rare, obtaining the right advice in order to consider your UK pension transfer options, and indeed transact a pension transfer, can be difficult.
The role of a Pension Transfer Specialist
A UK Pension Transfer Specialist is highly qualified and experienced to provide expert advice upon defined benefit pensions. That includes final salary schemes, career average schemes and some other pensions holding important guarantees or protections for the member.
The role of the specialist is to carefully consider your current circumstances, future objectives, the pension wealth in place as well as the alternative options available.
A UK based cross-border pension specialist typically offers just the pension transfer advice, while a ‘local’ regulated adviser will offer investment advice and ongoing advisory services for the same client. This allows the UK specialist to focus upon specific pension advice, while the ‘local’ (international) adviser looks after the client over the long-term, offering wider advisory services and support. This is termed by the FCA as the ‘2-adviser model’.
What is the 2-adviser model?
The two-adviser model is a recent term used by cross-border advisers and recognised by the regulator in recent guidance and communication.
For those living abroad, the two-adviser model allows a link to be made between a locally regulated investment and advisory firm who have a relationship and ongoing service agreement with a client to ‘introduce’ that client to a UK specialist firm who become involved specifically for expert advice as required by the FCA.
When done well, this offers the client a double-layer of advisory service and protection. Their local firm provides holistic regulated advice accounting for local nuances such as inflation, currency and taxation planning, while the UK specialist firm offers project-based advisory services specific to a defined benefit pension.
It is normal for a good financial adviser to properly assess a client’s options, consider their wealth holistically, and bring in specialist advisers where needed. That could be an accountant, will-writer, tax expert or in this case, a UK pension transfer specialist.
How to get the right advice
Whether you’re seeking international and cross-border planning, a UK holistic adviser or pension transfer specialist, we can help. We introduce clients in the UK to UK pension specialists, while those abroad are only introduced to regulated international firms who hold professional links with a UK pension transfer with international specialism.
Get in touch to be linked to the right adviser for your needs and circumstances.