If you live in Spain, or are planning a move here you may be aware that many expatriates before you have transferred out of their UK pension plans into qualifying recognised overseas pension schemes (QROPS) or an international SIPP (self invested personal pension). Whilst this may be a perfectly ligitimate course of action in many circumstances it is important to point out that this area of our industry is still rife with scammers just waiting to strip you of your valuable pension assets, to their gain. Here we list 5 common warning signals which should trigger alarm bells and help prevent you making the mistakes of others gone before you. As always it is important to seek out the advice of a qualified professional within a regulated, respected firm.
1. Cold Calling
Banned under UK rules (accept in some specific circumstances) and now under increasing scrutiny by the EU. If you receive an unsolicited call from someone who is not an authorised adviser from a regulated firm, you should put the phone down immediately.
2. Cash in all your pension
You are encouraged to cash in 100% of your UK pension in order to invest elsewhere. Scammers love cash. Apart from the potential tax liability in the UK and/or Spain, once your pension has been converted to cash and sitting in your bank account they will really try to convince you of how great their "investments" are.
3. The promise of high returns
In an attempt to lure you further, scammers often speak of guaranteed high returns on investment. Often quoting very unrealistic figures (without the statutory warning of 'Past performance is no guarantee of future results...') and commonly into exotic, "off-shore", "alternative" or "life-style" investments.
4.'Pension Review' type websites/companies
Many of the websites promoting themselves on the internet under banners such as "free pension reviews" or "pensions for expats" etc. are not regulated firms and you are not dealing with a qualified adviser. At worst these could be scammers trying to get their hands on your pension pot or at least they are just sales lead generating sites who pass on your infromation to the highest bidder. To be safe, always look for legal information (often at the foot of the webpage) explaining the regulatory status of the website/firm in question. If there is nothing there - beware!
5. Pension access before 55
Under UK rules you cannot access your pension before age 55 unless you are seriously ill or in rare conditions where you have a "protected pension age" built into your pension which started before April 6th 2006. The over 55 rule also applies to International SIPPs and QROPS wherever you live. If anyone tells you different be very careful - an unauthorised payment charge of 55% could be levied on your pension by HMRC in the UK if you took benefits before the permitted age.
Patrick Macdonald ASCI
International Financial Adviser
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