GCC expats seeking cover from UK pensions implosion

Wednesday 16 March 2016
Hamzah Shalchi, who manages GWM’s Dubai operations

Dubai – MENA Herald: Increasing numbers of UAE expats are changing their UK pension plans following reports of serious shortfalls in Britain’s occupational pension schemes, according to the Dubai-based financial planning company Guardian Wealth Management.
The UK’s Pension Protection Fund recently warned that many final salary schemes – those that promise pensions linked to savers’ wages while they were working – do not have sufficient funds to pay out retirement incomes in full.
Guardian Wealth Management (GWM) says many Gulf-based expats who hold UK pensions are approaching the company to transfer their occupational pensions to ones that offer greater financial security and pay-out flexibility.
“It’s heart-breaking to hear about people paying into a final salary pension over their entire working life - expecting it to leave them financially secure during retirement - but eventually receiving a fraction of what they were owed,” said Hamzah Shalchi, who manages GWM’s Dubai operations.
“Final salary pensions also lack flexibility in that you get a specific amount each year until you die. But what if your lifestyle goal is to do more with your money in the ten years after you retire and less when you’re much older?
“More and more people are coming to us seeking advice on alternative pensions that are better protected and give greater control over the amount they receive.”
A combination of factors has led to many UK occupational pensions falling into deficit and failing to honour their payment pledges. A poor economic climate means funds are making less money, while financially insecure companies are dipping into the pensions pot. To compound the problem, people are living longer and taking earlier retirement.
The Pension Protection Fund recently highlighted a total shortfall of £300 billion in Britain’s final salary pension schemes.
GWM’s pensions experts are advising many of their clients to transfer their occupational pensions to Self Invested Personal Pensions (SIPPs)’, which are based in the UK and regulated by Britain’s Financial Conduct Authority (FCA). GWM is one of very few Gulf-based financial planning companies to secure authorisation from the FCA to make such transfers.
SIPPs benefit from all the rules and legislation of UK pensions and are protected by stringent regulation. They also carry the benefits of recent UK pension changes such as the ability to have total access to funds from the age of 55, as well as the ability to ‘phase’ retirement by taking the 25 per cent tax free allowance either all at once or across tax years.
“GWM’s objective is to base our financial advice on a client’s lifestyle requirements,” said Mr Shalchi. “After working out their needs and expectations throughout retirement, we advise them on the most suitable pension plan. And, crucially, we have FCA authority to act on their behalf.”

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