Expats hitting a brick wall over cashing in pension pots

Published:  15 Aug at 6 PM
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Pension savers living overseas are being denied access to their pension pots due to a Financial Conduct Agency stipulation that egulated financial advice must be taken before monies are released.

The pensions revolution has become a chaotic nightmare for expat pensioners wanting to access their savings in British employers’ pension schemes as the FCA is now insisting on evidence of having consulted a UK registered IFA. Given that most holders of smaller pension pots know exactly what they are planning to do with their money, the time wasted and high cost of unwanted independent financial advice is causing anger across the UK expat world.

The rule applies to sums with a transfer value of over £30,000, with IFAs charging an average of £1,000 for a single interview as required by the FCA. Worse news and even higher costs await those on final salary/defined benefit schemes, as everyday IFAs are reluctant to do anything but recommend a specialist pension advisor at an even higher rate.

An infuriating fact is that there’s no FCA pressure to take any advice you may be given, as the Pension Trustees are only interested in proof of your having spoken with an IFA who’s signed off on your pension transfer form with possibly one of the most expensive signatures around. Whilst the system may work for some retirees living in the UK, for expats it’s a whole different story as the vast majority of British-registered IFAs will not deal with pension savers living overseas.

Even for expats prepared to visit the home country and avail themselves of the required IFA interview, there’s still no guarantee of being able to get their hands on their own money. The system itself is in chaos, with IFAs either opting out due to fear of being sued at a a later date or turning away expats with smaller pension pots. Sky-high withdrawal costs and insurance companies knocking huge sums off pension values add to the confusion.

According to pensions minister Ros Altmann, retirees should be able to have full access to their savings, no matter which pension provider they have used. Notwithstanding her assurances, companies including Friends Life and Phoenix Life are actually refusing to allow savers the full use of they money as promised in Osborne’s budget as well as insisting on offering annuities to those who simply want their savings returned.

Others are restricting the amount which can be taken and are charging hundreds of pounds for every withdrawal, with lengthy delays now coming as standard. Complaints websites are snowed under with desperate requests for help and advice from retirees who need their savings in order to plan the remainder of their lives.
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