Thousands of expats who have switched their retirement savings in to Malta-based Qualifying Recognised Offshore Pension Schemes need to check that their financial advisers can still act for them.
The Malta Financial Services Authority (MFSA) has green-lighted new rules that changes the way QROPS providers handle transfers and deal with financial advisers.
Starting from July 1 (2019), any QROPS IFA must:
- Have a licence that allows them to give pension and investment advice
- Be authorised by the pension regulator in the country where the client is based
This change could have a massive impact on QROPS retirement savers in the European Economic Area (EEA).
Sweeping rule changes
Under the current rules, a retirement saver can take advice from an IFA to transfer pension funds from the UK to Malta, providing they live in the EEA.
But their IFA does not have to be regulated in the country where they live.
James Green, the Western Europe divisional manager for the deVere Group, an independent financial advisory organisation, explained the move should enhance client protection.
“It is highly likely that many advisory companies will be unable to meet some or all of the stringent new regulations and, therefore, will not be able to service new or existing clients in this area.
“As such, I urge all retirees to check as a matter of urgency that their financial adviser is able to fulfil their obligations in accordance with the sweeping rule changes.
“These changes will have a major impact on how advice and service is given to those with Malta-based QROPS.”
30,000 retirement savers affected
The change is likely to affect 30,000 QROPS pensions based on the Mediterranean island.
Malta providers host 36 QROPS and is popular with British expats as the pensions come with a UK-style pension freedoms option that allows drawdown from the age of 55 years old.
The legislation will hit transfers from UK pensions to Malta QROPS and transfers between current and new QROPS.
The new rules for QROPS advisers follow Maltese Parliament approval of a raft of regulations aimed at improving the regulator’s supervisory capability triggered by a report from the International Monetary Federation.
The executive restructure will make the MFSA a ‘more robust and forward-looking financial supervisor’, according to a spokesman.