Top tips when transferring your UK pension

1. USE AN AUSTRALIAN-BASED AND LICENSED ADVISER

There are many overseas companies marketing UK Pension transfer assistance to UK ex-pats in Australia. Many of these are not licensed in Australia, so as an Australian resident if you use a provider that does not hold an Australian Financial Services Licence (AFSL) then you risk dealing with an organisation that is not governed by Financial Services Law and you may not have access to Australian dispute resolution services if anything were to go wrong.

By using a fully licensed and Australian based advisory service like ours, you can have confidence that you have full consumer protection rights from advice provided as required by Australian regulation for your protection.

You cannot get any better protection than using a qualified, experienced adviser licensed in the same country in which you live.

Did you know? Any financial services company that promotes financial services to Australian residents must by law and regulation hold (or be an Authorised Representative of) an AFSL. This applies to those that advertise online as they are promoting financial services to Australian residents. If anyone you propose to deal with can’t give you the number of their AFSL, you should not proceed any further.

You can check any adviser’s current authorisation status on the Financial Adviser Register which is maintained by the Australian Securities and Investments Commission (ASIC) at the following link:

Financial advisers register - Moneysmart.gov.au

You can also search for details of the Adviser’s AFSL in ASIC’s professional registers search area:

Browse Professional Registers (asic.gov.au)

We are hold our own AFSL as DB5 Advisers Pty Ltd, AFSL 543198, and our advisers, and the DB Advisers practice, are all authorised under this AFSL.

Anthony’s Authorised Representative number is 266758

Rhett’s Authorised Representative number is 1238708

DB Advisers’ Corporate Authorised Representative number is 1300978

For more information on us and our AFSL, including the services we can provide, please follow this link to our Financial Services Guide >>

 

2. UNDERSTAND YOUR INVESTMENTS AND DEFINITELY UNDERSTAND THE FEES INVOLVED

Make sure you can clearly see and understand all fees involved. Some products that are promoted by overseas companies include “Unlisted Bonds” and “Structured Notes”. Both of these structures commonly contain hidden commissions.

Such “Unlisted Bonds” that are often used can have hidden commissions of 7% or more. “Structured Notes” commonly have hidden commissions of around 4%. These are just the hidden upfront costs in some cases. Other fees are also commonly applied.

Some advisers licensed in Australia will also use Separately Managed Accounts (SMA’s) or Managed Discretionary Accounts (MDA’s). These commonly have layers of additional management costs as high as an additional 1% per annum and are commonly owned by the adviser’s licensee. If the use of these types of products is promoted to you, then take the time to fully understand all of the layers of fees involved and who receives those fees. We see a lot of these structures that hold index-based investments which are traditionally very cost effective until they are loaded with layers of additional fees.

Did you know? In Australia all fees and commissions that a licensed adviser, their licensee (AFSL) or an aligned associate receives must be clearly disclosed to the client (you). These rules of disclosure do not apply in other parts of the world. You are always at risk of paying high levels of hidden commissions when you are not dealing with an Australian based and licensed (via AFSL) adviser. You may be told by some that you don’t pay these fees and that someone else pays them. Reality is it all does come out of your money. You also have similar risks when dealing with an Australian based adviser where they have incentive to promote the in-house product suite.

DB Advisers, and its Licensee DB5 Advisers, do not own or white label any types of products where an additional licensee fee is charged. We simply use the best of breed we can find to meet our client needs.

 

3. MAKE SURE YOU UNDERSTAND WHAT AN EXCESS CONTRIBUTION STRATEGY IS

We are seeing this promoted more and more but the tax consequences are rarely mentioned.

The strategy basically involves you bringing more funds to Australia than your contribution cap allows and then declaring an excess contribution to the Australian Taxation Office (ATO). This may sound simple, but there are consequences.

With an excess contribution strategy THERE IS ALWAYS AN AUSTRALIAN TAX LIABILITY generated which is PAYABLE BY YOU. In some cases, this can be as much as the highest marginal tax rate payable in Australia (47%) even if you have no other income that is taxed at that level.

If this strategy is promoted to you, then you should always insist on having the taxation outcomes highlighted to you very clearly by an accountant specialising in this area.

Did you know? A lot of advisers promoting transfer services do not provide any guidance on tax outcomes at all. We always do before any withdrawal or transfer actions are taken. We have created a special tax information sheet which you can request here :- Contact Page >>

 

4. NEVER ENGAGE WITH A COLD CONTACT………………….EVER

The Australian Securities & Investment Commission (ASIC) has strict regulatory rules around unsolicited contact known as The Hawking Prohibition which contains a range of prohibited forms of contact, these prohibited forms of contact include:

Unsolicited phone calls (cold calls) – ASIC RG 38.34(a)

Any other real-time interaction in the nature of a discussion or conversation (contact via Linkedin, Facebook, WhatsApp etc) –ASIC RG 38.34(c).

Some offshore interests have obtained local licensing in Australia by using an existing on-ground Australian adviser. The hawking prohibition cannot be circumvented by engaging a third party to make offers on a person’s behalf – ASIC RG 38.37

 

5. MAKE SURE YOU ONLY USE AN APPROPRIATELY LICENSED, QUALIFIED AND EXPERIENCED ADVISER

You can do this simply by contacting us here at DB Advisers. We are 100% Australian owned, highly experienced and provide a genuinely professional advisory service with all appropriate licensing and registrations in place.

We’ll happily answer any queries you have in a straightforward and simple way with your best interests in mind.