Since April 2015, pension scheme members who have safeguarded (usually final salary) pension benefits worth more than £30,000 have had to take advice from a FCA-authorised adviser before they can transfer their benefits to another scheme.
This advice requirement has caused some headaches where a member is resident overseas, or moving overseas and wants to transfer to a Qualifying Recognised Overseas Pension Scheme (QROPS).
The main problem has been that, whilst FCA-authorised advisers can complete the necessary transfer analysis, they are not usually in a position to
advise on local tax rules and/or the suitability of an overseas pension scheme.
This means that members resident or moving overseas (who might previously just have taken local advice) may need to pay both for advice from a local adviser and for advice from an FCA authorised adviser. This exposes the member to additional cost and risk and has been a cause of concern for trustees.
On 30 September 2016, the DWP issued a call for evidence on how the advice requirement is working for members who are resident or moving overseas, and whether the requirement should be changed to work better for them.
Options in the call for evidence
The call for evidence asks the industry for information on the number of people affected. It also asks for responses on the options of:
- leaving the advice requirement as it is;
- removing it for overseas transfers; or
- replacing it with a requirement to seek advice from a local adviser.
The call is open until 23 December 2016. We await any developments with interest. In the meantime, trustees and administrators should continue to apply the advice requirement as it stands.