It would be interesting to know how many column miles have been devoted to QROPS over the last few years. As a concept it has captured the imagination of advisers. Unfortunately, this often includes those who know so little about UK pension law that any so called advice they give may be considered dangerous.
Many of the latter though recognise that the entire area of pension transfer advice (whether to a QROPS or not) is a specialist field and should be accompanied by substantive technical knowledge of how the UK pension system works and knowledge of how the pensions system works in the various jurisdictions where QROPS are to be found. Advisers in this category are open minded enough to introduce their QROPS enquiries to us and we thank them for trusting us to assist with their clients.
Claims of offering access to all QROPS are just plain silly
There are thousands of them and most are in jurisdictions which only open their door to local residents. So for example although a resident of Spain may transfer their UK pension fund to a QROPS in Guernsey, New Zealand, Isle of Man or Malta, they cannot transfer to a QROPS in Jersey or Australia. In fact only a tiny proportion of all QROPS are “open” to the public at large. The real choice is from less than perhaps 100 schemes not from the entirety of the contents of the QROPS list maintained by HMRC.
Transparency of costs and references
If you are receiving advice on QROPS always ask for and accept nothing less than transparency as to costs. Be suspicious of anything being free of charge because it will not be – instead there will be a huge and undisclosed commission lurking somewhere. The advice you receive needs to be paid for as does the QROPS provider, but you have a moral right to know to the penny what those costs are.
Think about asking for a reference from another client who has used the adviser’s services on a transfer to a QROPS. If this is not forthcoming then vote with your feet. Ask the adviser to confirm the level of their pension qualifications – a generalist financial services qualification will not suffice.
Importance of proper pension advice
We see many instances where people have transferred to a QROPS without receiving advice in writing. By that I do not mean some generic QROPS summary which makes no reference to you and your existing pension rights, but a comprehensive letter of recommendation. This should set out in clear language what your UK pension rights currently comprise, any guarantees that apply together with the current transfer value and any cost of transferring. It should then set out the comparative benefits you can expect to receive on a transfer to a QROPS and how those benefit opportunities compare with those associated with your UK pension rights. This should be capable of being explained to you in language you understand.
Ask the specialists – Premier Pension Solutions
If you do not understand in detail what the adviser is telling you this is more than likely because he does not understand it himself. And if you ask any question of the adviser which he cannot answer but has to go away and ask a specialist – then show them the door and come to the specialists – Premier Pension Solutions.
© Premier Pension Solutions – May 2011