Complaints about Qualifying Recognised Overseas Pension Scheme (QROPS) should really blame the messenger and not the provider.
QROPS pensions are tightly governed by rules laid down by HM Revenue and Customs (HMRC) in the UK which are implemented by overseas regulators and pension providers.
QROPS have to comply rigidly to rules about reporting money movements, the age and tax residence status of investors and a raft of other administrative issues.
The problems retirement savers have with the offshore pensions do not involve the way their QROPS works, but rather the professionalism of IFAs recommending transfers to one of the schemes or the quality of the underlying investments.
Most QROPS advisers are qualified and regulated to give pension and investment advice in the financial jurisdiction where they work.
If they are not, do not touch them with a barge pole.
Playing to the rules
Professional international IFAs will have the qualification, experience and back up to properly advise expats of the best QROPS to suit their needs and the suitability of investments to meet their risk profile.
The problems arise from dodgy advisers posing as IFAs giving dubious investment recommendations.
The most troublesome investments are likely to involve taking a stake in hotel resorts, esoteric investments such as fine wine or diamonds or barmy schemes like buying car parking spaces.
Although money can be made from these by the right investor with considered advice, the high returns and low risk to capital are unlikely to materialise.
Professional IFAs will earn their money according to the rules of the regulator in the place where they are giving advice. This can be fees paid by clients or commissions from product providers which should be disclosed as part of the QROPS transfer package.
Beware of risky investments
The chancers pushing risky investments will likely earn their money a commission or a cut of the pension fund.
QROPS providers rarely recommend investments or the suitability of their pensions to individuals.
Providers do not have the same responsibility as UK pension firms to carry out investment due diligence when they make a transfer to a SIPP or QROPS.
Expats should bear in mind that the QROPS tax wrapper is not to blame if investments fail to perform. If the investments are risky and lose money, the adviser is more likely at fault and if he or she is not regulated, QROPS investors have no way of complaining or seeking compensation other than trying to recoup their cash with expensive legal action.