Consumer protections on pension transfers would be eased for offshore residents under measures being considered by the UK government.
Currently, those wishing to access pension pots with “safeguarded” benefits such as a guaranteed annuity rate, or final salary pension, valued at more than £30,000 must obtain advice from an independent financial adviser authorised by the Financial Conduct Authority.
But the government this week said that this advice requirement “may create difficulties” for members who are resident overseas.
“There have been a number of common concerns raised about the appropriateness of requiring members who are resident overseas to seek advice from an FCA authorised adviser,” the Department for Work and Pensions said.
“Those living overseas who wish to transfer their pension may have different or additional circumstances and motivations for transferring pension benefits to an overseas scheme than a member with [defined benefit] benefits seeking to transfer to a UK [defined contribution] scheme to take their pension flexibly.”
The government is now seeking views on whether an alternative safeguard could be developed that would give overseas-based pension holders, a “comparable degree of protection” to that provided by advice from an FCA-authorised adviser.
But UK experts said that easing the rules too much could put savers at greater risk of fraud.
“In considering how to make it easier for people living overseas to get advice on a potential pension transfer, the consultation needs to ensure it does not water down the advice requirement so much that overseas transfers can be made without any advice at all,” said Mike Morrison, a pensions expert at AJ Bell, a pension provider.
“This could open the door to unscrupulous pensions salesmen and at the same time reduce the Treasury’s tax take as it becomes easier for people to shift their savings to different tax jurisdictions.”
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