Arriving to work or retire abroad, you’ll probably have been cautioned against the less desirable parts of the country you’re entering. Where the pickpockets are most likely to steal your wallet. Restaurants that overcharge tourists. But you probably weren’t warned about the real thieves, who could cost you everything.
Expats are attractive to unscrupulous salesmen purporting to be financial advisers usually for one of two reasons; they are working abroad in a high earning, low tax environment; or they have arrived to retire in a foreign country with all of their life savings in tow.
Combined with a lack of familiarity of the rules and their rights outside of their home jurisdictions, these attributes can make expats extremely vulnerable to pension mis-selling.
Lawyers, never known to miss a trick, are increasingly convinced expats have been, and continue to be, mis-sold overpriced and poorly performing pensions on a large scale. Pension litigation – where investors fight for compensation in group claims against retirement firms, fund managers and financial advisers – is forecast to see huge growth.(1)
This is because pension mis-selling follows an all too familiar pattern, though hard to see when it’s happening to you. Overseas salespeople flog the same faulty pensions, stuffed with the same far-too expensive investments like life bonds and structured notes to expats everywhere in a pretty much identical way.
Working expats are targeted with long term savings contracts requiring monthly or annual contributions. The longer the better – while you’re saving the salesman who sold you the scheme gets their commission, which in a 20 year contract could be 50% of the first year’s premiums, straight into their pocket. (2)
If you’ve retired abroad, the mis-selling tends to work like this: (2)
- a fee to transfer your UK pension of about 15% of its value
- an expensive offshore bond “wrapper”, costing you another 2% a year
- underlying investments, weird and not so wonderful funds like fine wine and land bank schemes, but more often so-called ‘life bonds’ sold by insurance companies that cost you another 2% a year
- other hidden commissions for the ‘free’ advice you received for all this
In this cookie cutter process, your needs as an individual are totally left out of the equation.
No one wants to spend their expat career or retirement embroiled in an ugly court battle – with no guarantee of winning. Thoroughly check any financial adviser before you start, and get explicit costs. If you think you have been mis-sold a bad pension, get a pension review from a quality independent financial adviser as soon as possible.
Contact Brite Advisors today for qualified, transparent advice.