I have been an adviser for many years, both in the UK and Portugal and during my time I have seen a fair few clients who have been poorly advised, scammed, or worse, didn’t fully realise until they came to take their pension benefits. Likewise, I have seen clients try to do this themselves with the help of Google or Facebook, with the same undesirable results.


Unfortunately, it is more common than you might think, so this week I will offer some advice when approaching pension planning and taking advice.

1. Take qualified advice

Advice obviously carries a cost and for many this is off-putting, but there is something in the saying, ‘free advice is not always worth the price’.

Look for regulated firms and suitably qualified advisers, the minimum UK requirement is ‘Level 4’. There is no such Portuguese equivalent, and many advisers advertise qualifications that are below this level. Conversely, many UK advisers don’t understand the rules and nuances in Portugal which means you could be misadvised, miss an opportunity, or receive an unexpected tax bill.

If you are a British expat, make sure the firm has suitably qualified specialists who not only understand UK pensions and the options, but also fully understand the cross-border issues for living in Portugal.

2. Beware of scams

Be aware of cold calling, pressure sales, guaranteed or unusually high returns, or certain ‘bespoke or inhouse’ funds being pushed/recommended. Likewise, if your adviser is quoting fees clearly lower than other firms, take care that there are no hidden fees or back-end commissions being paid. I have seen so-called reputable firms take commissions of up to 10% without the client knowing until it was too late, or in some cases clients never find out.

Once your pension is transferred there is very little you can do to rectify the situation, so shop around and do your due diligence.

3. Create a plan

Pensions are only one part of your finances so you should look at them in the context of any other income sources and assets you have e.g. rental income, property, investments etc.

No one size fits all, so your adviser should not only look at your pension but your other assets, risk profile, estate planning, residency plans etc. to ensure your plan is right for your future. Cashflow modelling is also a useful tool to simulate the likely longevity of your finances vs. your lifestyle and plans. You never know, you may be able to spend more than you had planned!

4. Understand your options

Qualifying Recognised Overseas Pension Scheme (QROPS) is something that is recommended widely as it is an opportunity for an adviser to charge. Although it might not be bad advice per se, it might not be the best.

Whilst there are many benefits to QROPS such as greater, and less UK-focused, investment options, currency flexibility and some estate and inheritance tax planning benefits, they can be expensive to run and might not be necessary.

Generally, the options are: keep your pensions as they are; restructure existing pensions; transfer to another UK scheme or QROPS; or draw down the monies in a lump sum or a series of lump sums and reinvest in an alternative, non-pension arrangement. Discuss each with your adviser and ensure you understand why one route has been chosen and the others discounted.

5. Review your planning

Your retirement could be for 30 years or more so you must review your position regularly. The investment and planning landscape is forever changing due to markets, new products and legal changes, as well as family circumstances such as health or new family members.

Speak to several advisers and compare their advice, even if you already have an adviser to ensure you are best placed.


For further information please visit www.spectrum-ifa.com. Mark Quinn is a Chartered Financial Planner with the Chartered Insurance Institute and Tax Adviser, qualifying with the Association of Tax Technicians. Contact Mark, at: mark.quinn@spectrum-ifa.com