The Financial Conduct Authority has confirmed its rules on pension transfer advice. There is no exception for non-UK residents, so the rules also apply to expatriates and those moving into Qualifying Recognised Qualifying Overseas Pension Scheme (QROPS).
The Financial Conduct Authority (FCA) is anxious that retirees are well advised on their pension transfers. You should take professional, regulated advice on your pension savings, which play a key role in determining your lifestyle and financial security through retirement.
The introduction of the new pension freedom, which only applies to defined contribution schemes, means many people with defined benefit schemes are eyeing a pension transfer to take advantage of the new flexibilities.
The FCA’s June 2015 policy statement, “Proposed changes to our pension transfer rules; feedback on CP15/7 and final rules” sets out the rules around the transfer of safeguarded benefits, primarily held within defined benefit schemes, to flexible arrangements like occupational pensions, SIPPs and QROPS.
It confirmed that transfers from defined benefit schemes over £30,000 require a review by an adviser with a suitable pension transfer qualification and who is regulated by the FCA.
British expatriates have further levels of complexity to deal with. The FCA’s document says explains there are additional considerations where the individual is resident overseas:
“….this means that a non-UK resident seeking to transfer pension benefits overseas will need to seek advice from an FCA-authorised adviser on the implications of proceeding with the transfer. As FCA-authorised advisers are unlikely to know the local tax regime or pension rules, non-UK residents seeking to transfer pension benefits will be likely to need to seek advice from both an FCA-authorised adviser and a local (resident) adviser.”
Previously, an expatriate wishing to transfer a defined benefit scheme to a QROPS may have simply employed the services of an offshore advisory firm. Now, the same transfer requires the involvement of a suitably qualified UK pension transfer specialist.
The same applies for transfers from a defined benefit to defined contribution schemes.
UK pension advisory firms are not able to advise you on taxation in Spain. Expatriates looking to transfer their pension may need to employ the expertise of different advisers: a UK firm to get the authorised advice required; a local advisory firm for pension advice, and a local tax adviser to understand all the tax implications.
Receiving advice from different sources and having to work out the overall position is far from ideal. You need holistic advice to cover your pensions, the investments within the funds, your investment options should you take the cash, the tax implications in both Spain and the UK, and estate planning considerations.
If possible you want to avoid using two or three advisers. You can overcome that anxiety by using a firm regulated by the FCA and also based locally in Spain. They will understand all the local implications as well as the UK pension rules and options.
This is possible, since article 56 of the Treaty on the Functioning of the European Union allows the freedom of movement of services within the Union. It gives regulated entities within one EU country permission to legitimately conduct business in another, through the EU’s Insurance Mediation Directive. This is how Blevins Franks Financial Management Limited is regulated. It is regulated by the FCA and has a specialist UK pension team, including a number of pension transfer specialists with the requisite qualifications and permissions. We have offices in Mallorca, and experts in Spanish and UK taxation.
It is very important to be aware of the full implications of your pension decisions. This includes any risks to your long-term financial security, and all the tax and estate planning consequences. You need to adequately assess all your pension options before you can determine the best one for you. Just looking at one or two in isolation is risky.
And the best advice is to carry the FCA’s rule on taking regulated advice forward to all your pension decisions. Pensions is a highly complex area; getting it wrong could have serious consequences.
Blevins Franks Financial Management Limited (BFFM) is authorised and regulated by the Financial Conduct Authority in the UK, reference number 179731. Where advice is provided outside the UK, via the Insurance Mediation Directive from Malta, the regulatory system differs in some respects from that of the UK. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts and companies. Blevins Franks Tax Limited provides taxation advice; its advisers are fully qualified tax specialists. This promotion has been approved and issued by BFFM.
More about Blevins Franks tax advisors
For more information and personalised advice, contact Peter Worthington, Senior Partner at Blevins Franks, on +34 971 719 181 or email@example.com.
To keep in touch with the latest developments in the offshore world, check out the latest news on Blevins Franks Tax & Wealth Management Specialists.
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