HM Revenue & Customs (HMRC) has confirmed it will maintain the requirement for savers giving up “safeguarded” benefits worth £30,000 or more transferring to an overseas pension scheme to take regulated advice from a UK-based adviser.
In 2016, the government issued a call to evidence on the advice requirement on overseas pension transfers, which ran from 30 September to 23 December.
It received 52 responses, more than half of which supported retaining the current advice requirement, though some acknowledged the additional challenges faced by overseas members.
On Tuesday, the government revealed the advice requirement will stay in place. “Having considered the responses to the call for evidence [the] government considers that the advice requirement as applied to overseas transfer is largely working and does not require an easement,” it said.
‘Recipe for disaster’
AJ Bell senior analyst Tom Selby said easing the advice requirement could have been a “recipe for disaster”.
“We know a significant number of pension scams involve moving money to vehicles in foreign jurisdictions which often lack the protections available in the UK. Fraudsters would inevitably have seized on any scaling back of the advice requirement to target people with defined benefit pensions and valuable guaranteed annuity rates,” he said.
“While HMRC’s stance will make it more costly and time-consuming for people to transfer larger guaranteed pensions into overseas schemes, this seems a small price to pay to ensure members are protected.”
He added: “Indeed, with the ongoing attention being placed by the FCA on defined benefit transfer advice, it would have been odd for HMRC to water down the advice requirement for people transferring to a Qualifying Recognised Overseas Pension Scheme.”