Advice to Expatriates

by Alexander Beard, on Jan 31, 2019 11:54:56 AM


As a Financial Advice firm, providing advice to Expatriates and UK clients we have seen an increase in demand for our services. Deciding whether to transfer a pension out of a Defined Benefits scheme to a defined contribution (DC) scheme in the UK or a ROPS (Recognized Overseas Pension Scheme) will be the biggest financial decision that many clients make in their lifetime.

It is therefore vitally important that we assist the client by providing independent objective advice and recommendations after an in-depth analysis, after gathering all the information and facts required.

The Financial Conduct Authority advise that clients should not transfer out of their DB scheme unless it is clearly in their best interests which often contrasts with client expectations that they simply can tell the scheme or their adviser they want to transfer and start to drawdown their money or take the whole cash equivalent transfer value (CETV) as cash.

When clients are provided with a limited time enhanced transfer offer, they often feel the time is right to transfer, as part of our calculations and analysis we consider, on behalf of the client, whether the CETV offer is poor, fair, reasonable or good compared to the benefits they are being asked to relinquish.

As Financial Advisers we can only provide a report and advice recommendation after collecting all the scheme information and personal client information, including details of their partner, children, health, attitude to risk and capacity for loss, attitude to risk and retirement, other investments and pensions, in addition to their wishes and objectives.

We then carry out a detailed, in depth analysis including checking the guaranteed benefits pre and post retirement and on death and comparing the most suitable alternative pension they could potentially transfer to.

An important part of the Financial adviser’s role is to ensure that the client makes an informed decision and understands the risks that transfer to them as an individual including investment return risk, inflation risk, longevity risk. We are often thanked for explaining why the scheme is making them a CETV offer, and even experienced investors tell us they had “forgotten” the valuable inflationary increases their DB scheme often affords them.

CETVs provided by a DB pension scheme are normally only guaranteed for three months, and we therefore must consider the expiry date of the CETV provided and explain whether we have enough time to undertake a report with the current information. Some schemes will provide an updated CETV free of charge, and others require the client to pay a fee or wait till 12 months have passed since their last CETV.

ABG is insured for the provision of Financial Advice to Expats and works in partnership across the globe with our advisers in different geographical offices when appropriate e.g. US and Australia.

Topics:Alexander BeardExpatriatePensionsUK