Transferring a pension scheme abroad can be beneficial to individuals who are looking to move to that country upon retirement. Schemes authorised by HMRC have potential associated tax benefits for those individuals relocating abroad, which makes them an appealing option.
Hugh James has however, recently dealt with a number of cases where individuals were incorrectly advised to transfer their pensions to overseas schemes located in places such as Malta and Gibraltar.
“I never intended to move abroad”
Mr M approached us having transferred around £147,000 from his existing occupational pensions to a Qualified Regulated Overseas Pension Scheme (‘QROPS’) located in Gibraltar, operated by STM Group Plc.
Mr M was advised by WJA Financial Services Limited, a UK based financial advisor that this scheme, and the underlying investment in Axiom Real Estate, would provide him with significant growth which he could enjoy in retirement.
Mr M’s financial advisors however failed to notify him that the Axiom investment was high risk, highly speculative and suitable only for experienced or sophisticated investors. In addition to this, Mr M was unaware that his funds were to be managed by a company located in Gibraltar.
The suitability report prepared by WJA for Mr M was littered with factual inaccuracies including assertions that he had a “vast amount of investing experience”. More contentiously however, was the statement that Mr M intended to become resident in Gibraltar on retirement, something that he strongly denies was ever a consideration. It was however, this false information that allowed WJA to set up the QROPS scheme on Mr M’s behalf.
Since transferring his pension, Axiom Real Estate has wound up resulting in Mr M losing his investment. We were able to recover a proportion of Mr M’s losses through the Financial Service Compensation Scheme. We have also successfully recovered compensation through the Financial Ombudsman Service for other clients in similar circumstances.
