The topic of overseas pension transfers has undoubtedly caught the attention of many this year. Montfort's Geraint Davies further comments, and notably so, with the Department for Work and Pensions (DWP), announcing in March that the mandatory advice requirement on overseas pension transfers would remain unchanged for the foreseeable future. 

As part of an ongoing government inquiry looking at the difficulties experienced by cross-border residents when transferring their pension pots to and from the UK, the government had considered the feasibility of easing existing regulations.

The current ruling requirements, introduced in 2015, applicable to both UK and non-UK pension schemes with safeguarded pension benefits, obliges members to have financial advice from a UK regulated independent financial adviser, with the required permissions, prior to the transfer of pensions valued over £30,000. Over 52 responses were received by the DWP from a range of adviser firms, based in the UK and internationally, as well as those with an overseas representation. In all, results from the DWP’s consultation revealed over half of the respondents supported maintaining the current requirements with an acknowledgement of the additional challenges that may be faced by overseas pension scheme members.

The DWP’s statement, released on 27 March, confirmed the current advice requirement “is working as intended for overseas transfers by offering an effective level of protection for members.” As a supporter of the verdict, I believe the conclusion makes sense and ensures a more informed and ethical approach when recommending overseas transfers. But how does the DWP announcement sit with the current state of the industry and what future recommendations should it make?
As founder and managing director of Montfort – the first UK-based IFA firm to specialise in global financial planning, cross-border solutions and emigration – it is fair to say that I have seen it all. Montfort was established in 1995 when very few cross-border solutions existed, be it from the UK or globally.
Fast forward 20 years, there is still a significant lack of awareness within the IFA community about the level of complexity such cross-border cases require, with very few professionals holding the required technical expertise to advise in this area. Even when experts are qualified, circumstances can become hazardous and entering unchartered waters is commonplace, in other instances professionals may flatly refuse to advise due to their own risk concerns, and the opportunity for unscrupulous advisers, often based abroad and away from the FCA’s watchful eye, increases.
Advising on overseas pension transfers from the UK must therefore incorporate a holistic approach to consider all aspects of a client’s financial, visa and tax situation and any future migration plans, including a potential return to the UK and departing country tax and other consequences. Ignorance about this can cost a client hugely in their future decumulation years and a legal claim for wrong advice may surely follow. It is plain to see that this is not about fait accompli pension transfer implementation. There are also other non-pension assets involved which are rarely considered. Quality advice must remain focused on tailored solutions for an individual’s requirements and situation that may or may not lead to a pension transfer, rather than the damaging practice by some advisers to immediately recommend transfers or be incentivised to sell products.


Geraint Davies' comments form part of a wider statement as featured in FTAdviser. Read the article in full here.
To further discuss your overseas pension transfer requirements with Montfort, contact the team by calling +44 (0)1483 202072 or email;
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