The government is letting pension scammers off the hook by targeting legitimate firms, according to Pension Life.
The campaign group says the tax on transfers to qualifying recognised overseas pension schemes (Qrops) lets pension savers down and fails to address the issue of pension scammers overseas.
The tax, announced in the Spring Budget earlier this month by the Chancellor Philip Hammond, is a 25% charge on transfers to Qrops (PFI, 9 March).
The charge applies to transfers made on or after 9 March, but does not apply if, from the point of transfer, both the individual and the offshore pension scheme are in the same country, both are within the European Economic Area (EEA), or the Qrops is provided by the individual's employer.
Angela Brooks, chair of Pension Life, said the charge is a misguided attempt to bolster the government's coffers.
She said: "It disadvantages many genuine pension savers who are using bona fide, regulated advisers and who want to benefit from the advantages that transferring their UK pensions out of Britain can offer and it doesn't drop any of the current scammers using Qrops as the vehicle for their scams."
Some of the problems associated with the offshore pension industry include firms operating without regulation and trustees accepting business without due diligence.
"While there are many regulated, well-run and responsible firms operating in the international space, unfortunately there are others that use questionable practices and products - as well as outright scams," said Brooks.
"British citizens living overseas need protection from regulators against those offshore firms which purport to provide advice covered by the FCA, but which actually operate under offshore regulation unbeknown to the client - who only finds out once things go wrong."
Brooks added that the government should be preparing to work with regulators, ombudsmen and financial crime units in all the popular Qrops destinations, to clean up the offshore industry in the interests of British expats.
First published 23.03.2017
Lindsay.sharman@wilmingtonplc.com
