If you are thinking about moving your retirement savings to a Qualifying Recognised Overseas Pension Scheme (QROPS) and are classed as a final salary pension transferee or an insistent client, you may not get the financial advice you expect.
Many IFAs duck recommending a QROPS transfer for these clients because they come under the ‘too difficult’ heading.
Some IFAs say they are swamped with inquiries from clients who want to move their workplace final salary schemes to other pensions such as SIPPs or QROPS because they believe employers have broken their promises to fund their retirement at the expected level.
Insistent clients are those who have had advice not to move their pension but still want to do so.
So if you want to move a final salary pension to a QROPS what can you do?
Why IFAs don’t want to transfer final salary pensions
The first hurdle is advice from pensions regulator the Financial Conduct Authority. The FCA maintains moving from a final salary fund to another pension rarely offers a good outcome to the saver.
The main reason is final salary pensions come with extra benefits that another scheme cannot match or would be too expensive to buy.
Retirement savers generally have a reason for asking for a transfer out of a workplace scheme.
These can range from settling crippling debt, looking for a safe haven away from a workplace scheme that is in deficit or wanting to access pension cash early as they are 55 years old, want to exercise flexible access but cannot touch the current fund to they reach 60 or 65.
If the reason is genuine, the IFA rejecting a transfer recommendation is probably mismatching advice with client expectations.
Switching for a good reason
The retirement saver has to show they want to switch for a good reason, then that is often enough to swing the argument in most cases.
The workplace pension crisis triggered by British Home Stores and Tata Steel is unlikely to settle any time soon as more big businesses face pressure to shore up their pensions.
Around 5 million workers are in poor performing funds and risk seeing cuts of 10% in their retirement income if the scheme goes into the government Pension Protection Fund.
Expats can take control of their pensions and look for flexible access with a QROPS.
Making a transfer is about finding an experienced and qualified IFA who understands final salary pensions – but avoid scam pension liberation schemes like the plague.