Warnings about QROPS pension scammers still hitting the headlines

Published:  26 Apr at 6 PM
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Due perhaps to the soaring popularity over the last decade of the Qualifying Recognised Overseas Pension Scheme (QROPS) and its benefits for those on private pensions, the numbers of pension scammers taking advantage of financial novices have also shown a massive increase.

QROPS are based outside the UK and must meet stringent conditions imposed by Her Majesty’s Customs and Excise. Should the conditions be breached, the hapless pension saver will be liable for a tax bill of 55 per cent of the full amount. However, for pensioners who’ve emigrated there are major benefits to be had, not the least of which is the mitigation of risks from currency fluctuations.

In addition, ongoing and mostly confusing changes in pension rules by the UK government have caused difficulties in achieving long-term pension goals, thus attracting many retirees to the benefits of taking charge of their own savings by moving them overseas. Sadly, and especially prevalent in expat retiree hubs abroad, the attraction of QROPS has spawned a large number of pension scammers eager to get their hands on retirees’ life savings.

These crooks are unregistered, unregulated and smooth talking in the extreme, duping thousands of expats into transferring their pension pots into unsuitable investments, unregulated schemes and even Ponzi schemes. Efforts by consumer organisations and the HRMC itself to warn unsuspecting victims have fallen on deaf ears in the many UK expat communities scattered across the world, with tragic tales of losing a lifetime’s pension savings still hitting the media on a regular basis.

One of the worst scenarios, sadly familiar to many scammed individuals, is the promise that a QROPS can be taken under the age of 55 years, and another ‘guarantees’ ridiculously high interest from the recommended investment. Cold calling by so-called financial advisers should ring an alarm bell the size of Big Ben’s, but all too often doesn’t, thus allowing the scam to play out.

Advice as to how to spot a scammer once he’s hit on you starts with the fact that strangers in this trade almost never have your best interests at heart. Even if you've met the person socially, any conversation based on investment can indicate the start of a scam, as many unhappy expats are now aware.

Expats should remember to check the business credentials, registrations, visas, work addresses and more of any IFA who’s approached them, taking into account that, in some countries, working as an IFA is prohibited for expats. Requesting a fact-find of your total financial situation and objectives, not just your pension needs, might well see off a scammer, and the real deal will carry out a complete transfer analysis of your present pension, comparing it with the recommended scheme – an obligatory step if the transfer is from a defined benefit pension or has other protected rights.

Source: The Connection, France
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