Plans to scrap mandatory advice for expats wanting to transfer their retirement pots overseas could open the door to scammers, it has been warned.
It comes as the Department for Work and Pensions (DWP) published a consultation document last week, asking for industry opinion on the proposed change.
Since the introduction of the pension freedoms last April, savers with pots worth more than £30,000 have been required to seek regulated advice when considering moving their scheme, including to overseas schemes.
However, those opting to move savings abroad often have to take separate advice on local laws, with many UK-based financial advisers unwilling or unable to provide the advice.
But now, the consultation, published 30 September, questions whether the requirement is working for members, and whether it should stay in place, but with changes.
The government believes the proposed rule change would make it easier and cheaper for overseas savers to transfer their funds. It argued "members resident overseas... may be financially disadvantaged by having to seek two separate sets of advice".
However, the move could lead to more savers falling foul of seemingly legitimate overseas pension schemes run by fraudsters, some of which may appear on HM Revenue and Customs' (HMRC) list of recognised schemes.
Dalriada Trustees' trustee representative Mike Crowe said: "The removal of regulated advice could increase the potential for scams. The direction of travel for scams is they are moving away from pension liberation to be more focused on overseas schemes. At the time when this is happening, is it right to remove protections?
"By closing one door to a scam, is the DWP opening up another by allowing overseas advisers to be involved? Is there enough resource to ensure those advisers have the right qualifications? The last thing we want to do is open up a new avenue for dodgy salesmen in the Costas to get expats' savings"
There had already been concerns that uncertainty over the impact of the Brexit vote would lead to more people moving their savings into suspicious overseas schemes.
Crowe added the change would simply move the onus, making it more important for expat savers to understand local regulatory regimes. He also questioned whether foreign advisers have the required understanding of UK pensions law to provide adequate advice, noting the opposite is a problem with UK advisers.
He said: "It's turning the problem around 180 degrees. If it has been seen UK advisers don't have an awful lot of knowledge of overseas laws, why are we saying overseas advisers should know about UK laws?
"A lot of the burden will fall on providers and trustees to add to their due diligence and make sure everyone is suitably qualified. It's adding another layer of complexity and, ultimately, if it's not going right, there are going to be more referrals to the ombudsman."
Around 700,000 people live abroad with private sector contracted-out salary related defined benefit pensions which are not yet being paid, according to the DWP.
The consultation is open for responses until 23 December.
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