Financial Planning Matters… a monthly insight with Jonathan Beardmore, an IFA at Pearson Solicitors and Financial Advisers.
LAST WEEK I received a very odd phone call from an existing client of mine for whom I hold investments.
He asked me what do I know about Maltese pensions and is Pearsons authorised by the Czech national bank? The answer to the first question was absolutely nothing and the answer to the second question was absolutely not!
After he got to grips with exactly how wonderfully uninformed I was on Czech banking and Maltese pensions we sat down to discuss exactly what prompted him to ask such questions.
My client – Bob for convenience – had been approached by a UK-based sales person who used the cover of Pension Freedoms to try to persuade him it was his legal duty to review his pension.
Being about as scrupulous as a cat walking across a mantelpiece containing fine china, the adviser suggested the following to Bob: take all of his tax-free cash and place it into a trust. Apparently this would be the best way to pass the money to his family should something happen to him, despite Bob having no IHT liabilities whatsoever.
Remarkably there was actually worse to come – he was then expected to transfer his pension on to the Isle of Malta and invest into USA investment funds, all of which would tie his money in for up to ten years, meaning by the time Bob could actually get his money back, he would be well into his 70s.
This was all packaged neatly for him, done over the phone and then by post.
Although corners were cut and there was clearly no budget for either morals or ethics, the same could not be said of the company’s documentation which gave the impression of a stable, reputable company.
The bottom line is Bob was very lucky not to get conned out of a substantial amount of his pension savings. The current UK pension regime is one of the most generous in existence and will be more than sufficient for most.
Bob narrowly avoided losing a substantial amount of money so I’d recommend to anyone who has experienced the same thing to be very aware of cold callers, pensions based over fees or contracts where you tie in your money for an extended period of time.
Should any of these things happen, I’d recommend contacting your local financial adviser (preferably us) and/or contacting the FCA immediately.