Would be expats warned about pension transfer sharks

If you’re planning to retire overseas and have a personal or work-related pension, you’ll need to be very careful about any advice on pension transfer you may receive.

Since pension freedoms were brought in, independent financial advisers have lined their deep pockets with over £715 million, just by persuading savers to transfer their pensions overseas. The rules changes in 2015 saw some 220,000 people transferring their savings from a defined benefit pension scheme, netting their advisers an average of £3,250 per transfer. Nice work if you can get it, but how can a financial novice tell whether the right advice has been given?

Sadly, it’s well known that unscrupulous IFAs have been milking this particular cash cow for all it’s worth, targeting retirees with little or no knowledge about what’s on offer, especially if the rules governing their particular scheme are changing. Aggressive sales techniques include cold calling, hassling their targets on social media and even standing outside the factory gates when shifts change in order to start up conversations with older workers.

To be fair, many will be doing the right thing by transferring their pension pot, but it’s not a ‘one size fits all’ solution as it involves taking a lump sum rather than going for a guaranteed annual income. This is the reason why impartial, unbiased professional advice must be taken. The UK financial regulator has concerns about the issue, which came to a head with the news workers at the Tata UK steel works were being targeted by sharks. The company is restructuring its $15 billion pension scheme, giving unprincipled advisors the chance of a lifetime to snare huge profits.

Greedy IFAs arranged one-to-one meetings, set up chips and curry nights for workers and concocted numerous other schemes to take advantage of pension savers. IFAs were flying in from Newcastle and London to grab victims, using false promises of returns of 10 per cent per year to get workers to sign up. One saver was billed £20,000 for withdrawing a £500,000 pot and another transferred his cash and lost the lot.

For older workers looking to retire overseas and use their pension pot to create the perfect lifestyle overseas, the moral of this sad tale is simple – choose your independent financial advisor as carefully as you chose your life partner all those years ago. Check, check and check again everything you’ve been told, and don’t sign anything unless you’re 200 per cent sure it’s what you want. The internet is your friend as regards the questions you’ll need to ask your IFA, but you also need to remember it’s not just the good guys who have financial advice websites.