A Qualifying Recognised Overseas Pension Scheme (QROPS) review is a vital step for expats wanting to map their future finances.
The review is a tool to help expats grow and protect their wealth.
The trouble is plenty of sharks are out there offering the service without the experience or qualifications to back up their promises.
Recently, UK pension firm Aegon warned that 80% of transfer requests from UK pensions to a QROPS were suspected scams – so here are some tips about how to protect your pension cash from fraudsters out to leave you with nothing.
How a good QROPS adviser works
A specialist international IFA will work with you to choose the right QROPS to suit your needs from the hundreds available worldwide based on where you live, your personal financial goals and your feelings about risk.
The IFA will have a licence to give QROPS advice in the country where you live.
You can check this out with the local pension regulator by asking for the IFA’s name and registration number.
Properly authorised advisers also have professional indemnity cover and because they are regulated, work inside the local financial services compensation scheme and are answerable to the regulator if clients have complaints.
Spotting a QROPS scammer
One important difference between a bona fide adviser and a scammer is the way you are contacted.
You generally initiate a financial review by calling the IFA – scammers work by cold calling.
The cold-call offer of a free review is the scammer’s way getting a foot in your door by attracting your attention.
If you are contacted by a cold-caller:
- Never respond to an unexpected telephone, email, letter or text.
- Do not give out any personal information
- Do not hand over any cash
- Ask another IFA for a second opinion about the deal they are offering
- Do not sign any contracts or other documents
How a QROPS scam hits your savings
QROPS scammers are after your cash and will charge exorbitant fees to arrange pension transfers or shift your money into an unsuitable offshore investment where you are unlikely to see a return.
Worse than that, if the transfer goes to a bogus QROPS, HM Revenue & Customs (HMRC) will levy a tax penalty starting at 55% of the pension transfer value.