GAR Trap

progresstobe

Thanks again, I'll have to look for an IFA who is double regulated.  Do you know anyone who could do it for me?

progresstobe

DO you know of any ongoing legal proceedings to resolve the situation

progresstobe

I was thinking that maybe the money sections of some of the newspapers such as the Sunday Times might be interested enough to help

Decision_Time

progresstobe said:

I was thinking that maybe the money sections of some of the newspapers such as the Sunday Times might be interested enough to help

I'm sure the Guardian or Sunday Observer would love to take this on given the Brexity connotations.

dunstonh

progresstobe said:

I was thinking that maybe the money sections of some of the newspapers such as the Sunday Times might be interested enough to help

This is not a consumer issue.  It's a legal issue. As mentioned, an anti-Brexit paper may pick up on it as a human interest story to knock Brexit but the reality is that unless the EU have a change of heart (and media coverage here is that the UK has given up on getting equivalence) you are stuck between taking the GAR (which is not classed as a new product), returning to the UK and doing it in person with an adviser (face to face in the UK does not require passporting permissions) or finding an ex pats firm (and the only one I know has an awful reputation and still works in a salesforce method outside of the UK).

Robert_McGeddon

Move back to the UK for a few months?

dunstonh

Robert_McGeddon said:

Move back to the UK for a few months?

May not need that.   (from regulator on passporting permissions:)

The passporting permissions covered remote advice methods and the ability to give advice face to face outside of the UK.   Whilst the person is in the UK and face to face advice is being given, then passporting rules did not apply in most cases.   So, on that basis, it's possible that a holiday to the UK should suffice where you can go face to face in that period as it shouldn't breach regulation.  


(that was for ongoing advice scenarios - hence reference to regular.   The scenario in this thread would be one-off.  However, ALL advice and servicing must be completed in the UK.  If the person returns to the EU, then they will not be able to provide new advice or get new forms or transactions completed.  In other words, all paperwork must be in place without any expectation of any more before a return to the EU.

However, the compliance company that gave their interpretation (and its a major one used by many IFAs said the following:


So, the reality of the situation is that an adviser, on guidance from a compliance company, is going to refuse offering their services.  Even where the rules may allow it.

There is actually a third issue that hasn't been covered at all on this thread so far.    The UK pension provider that you plan to transfer to.  Their T&C will probably block EU residents from doing top ups and transfers in.    So, progresstobe, you need to check with your pension provider that they will transact with you on this basis.      

elouise01582

I would double check with AVIVA as with some of their GAR policies you can include a 10 year guarantee but you have to ask them to quote you for that.

jamesd

progresstobe said:

I can't see that the legislation controlling the FCA rules can block someone outside the UK from having what is rightly theirs.  So I don't believe that Aviva can withhold this money because I'm outside the UK, or is there part of the legislation which denies expats from taking their pension options.. 

Aviva are required by UK law to see that you have received UK regulated advice before allowing transfer of a pension with a GAR if the value exceeds £30,000. They don't have discretion.

progresstobe said:

Sorry, you asked how much is the GAR -it is 12+% and guaranteed for 5 years. If I die in the 6th year Aviva get to keep between 35% & 40%.  That's a potential guaranteed loss.  How that can be considered good advice is beyond me.  If I was 60 or 65 or my wife was the same age as me, then there could be an argument for taking the GAR which of course would be much lower, but not in my situation. 

If there's some medical reason for you to expect to die in six years then ask them for an enhanced rate that takes your health into consideration or for a rate that has a spousal pension payment.

It seems to me that your best route is likely to be taking the GAR in some form and then buying term life insurance so that your wife receives capital matching the current capital value on your death. The GAR will presumably be ample to cover the cost of such a policy. It's not what you truly want but it's legal and doable without spending a few thousand Pounds on advice. Aviva are allowed to pay you a 25% (UK tax free) lump sum before buying the annuity and if taking 25% gets the value below 30k there's more discussion to be had because no advice is required to take the 25% and the pot is then below the advice threshold.

By term life insurance I mean a policy that for eight years pays out the pension pot value and has no value after that. If available a decreasing value product would be a good fit since the shortfall between capital value and income paid drops over time.

If the value is close to 30k another approach is to try to invest such that the pot loses value and becomes worth less than 30k. An ordinary market downturn might achieve this result in some cases.

The GAR might have an expiration date and Aviva may not be obliged to set up an annuity at that point. If so, waiting for the GAR to expire might be viable, removing the GAR and advice requirement.

elouise01582

From what I have seen on Aviva pension policies which include GARs they will try to get you to do something before age 75 - so around 3 years away for you.  Of course if you die before age 75 then your Estate should receive return of fund but you might want to double check as a few out there are still only return of contributions.  Also the plan value is likely to fall into the Estate as RACs don't work the same as personal pensions so if you choose to defer you might want to consider placing the policy in trust.  I just have a suspicion that if you leave things until close to age 75 your pension provider may forcibly annuitise and you may also no longer be entitled to take the 25% pension commencement lump sum.  Whilst on that point although this is NOT my field I have heard that if you are a Spanish resident you don't get the PCLS tax-free. I did refer someone to an IFA a couple of years ago who was a UK resident in her 70s who had forgotten about her RAC with GAR and the IFA was able to recommend she transferred out as she did NOT want to be invested in with-profits (she had worked in the City for many years) and she wanted to leave all the plan proceeds to her family.  It wasn't necessary for this advice to come from a pension transfer specialist but she did still need advice in order to transfer away.  If you defer you may have to hope that Aviva change their stance on what happens at age 75 before you attain that age.