3 Key Areas

Qualifications

• Is the adviser even qualified to discuss a UK pension fund? Advice around pensions in the UK is a specialist field, with the UK regulators (Financial Conduct Authority) requiring high level education minimums. Only around 10-12% of advisers in the UK have attained these qualifications.
• The minimum requirements to be called a Pension Transfer Specialist is the Level 4 Diploma and G60 (or AF3). Ensure your Australian based adviser has both these qualifications before engaging. We further recommend you receive advice from a person qualified to a much higher level, such as a UK Certified Financial Planner or Chartered Financial Planner.
• If your adviser claims to be a “QROPS expert” or specialist, in our opinion, they must by definition be a UK pension fund expert. After all, the QROPS rules are HMRC requirements and only apply to UK pensions. Therefore, do they hold the qualifications mentioned above? If not, what qualifies them as expert, or specialist?
• Qualifying Recognised Overseas Pension Scheme (QROPS) are an HMRC set of rules and regulations designed to permit an overseas pension transfer. Remarkably, no regulatory body oversees the “advice” market around QROPS. There are no specific UK or Australian examinations to demonstrate proficiency in QROPS, an important advice area. It would therefore be advisable to only receive advice from an Australian regulated adviser, with the prerequisite UK Pension qualifications and experience.

Regulation (Protections)

• Does your adviser have an Australian Financial Services Licence (AFSL)? If they do not, what legislative protection are you being provided with if the advice fails? Are you willing to forego the Australian Financial Complaints Authority (AFCA) protections for your pension assets? Why?
• Ensure your advice team is resident and based full-time in Australia and that they are Australian regulated financial advisers. Under no circumstances accept an approach or advice from an adviser not regulated in Australia. These are critically important reasons:
  • The Australian regulator, ASIC, demands that all advice fees are disclosed to you, and commissions for product recommendations are banned. Offshore, so-called advisory companies, often recommend Bond products (not to be confused with bond funds) which pay them an undisclosed commission of up to 8% of your funds. You will be penalised by the Bond provider if you withdraw from these Bond products in the first 10 years of opening it. This is highly likely to be just when it is the most appropriate time to transfer to Australian superannuation.
  • In addition, they are not qualified in Australian superannuation, personal taxation and the Double Taxation Agreement that exists between the UK and Australia, and frequently misquote these rules.
  • Finally, they will not be able to transfer your funds to Australia as they are not licensed here, so you will need to source a new Australian based adviser, who will naturally wish to charge you a fee to transfer your funds here. There is absolutely no need for you to expose your funds to these real risks, so don’t.
• Please check: The ASIC adviser register
• Ensure your adviser belongs to a professional body, such as the Financial Planning Association of Australia (FPA) or the Association of Financial Advisers (AFA). Maintaining the Code of Ethics associated with these organisations is important to ensure you receive the best possible service.

Advice

• Insist that you are provided with a Recommendation of whether or not a UK-Australia pension transfer is in your best financial interests. Without a specific recommendation are you actually receiving advice or paying for an expensive administration service? Do not accept any excuse for a lack of recommendation.
• The QROPS rules are essentially a series of requirements that ensure your new non-UK fund complies with HMRC rules on UK pensions for ten years. Failure to comply may result in a fine on the fund of up to 55% of its value.
• HMRC recently dropped the “Q” for Qualifying as it did not want clients to automatically assume they comply with the rules. Dropping the “Q” didn’t catch on, but the point remains the same. Do not assume just because you are in a QROPS fund that you are maintaining fund compliance.
• There are both accessibility and investment restrictions for QROPS funds, be careful before entering into both. If in doubt, seek advice.

• Are you intending to retire in the country in which the scheme is established?
• Is your adviser regulated in the country you are resident in? (For you, this means do not deal with advisers based in Dubai, Hong Kong, or anywhere else that is not Australia)
• Did the adviser make the first contact with you (i.e. a cold call)?
• Have you been promised a specific/guaranteed rate of return on your pension investment?
• Are you being put under pressure to carry out a transfer quickly?
• Are you aware of costs and fees involved, and those involved in the ongoing investment?
• Has the adviser disclosed their fees and commissions, and exit penalties in the ongoing investment?
• Please can you provide a brief explanation of your reasons for wishing to transfer your benefits?
• What do you want to achieve through the transfer that you can’t in your current scheme?