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Was my overseas Sipp a safe investment?

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20/12/2018

Was your self-invested personal pension (Sipp) was placed into a scheme outside the UK? If it was, you may be wondering where you stand in the centre of the mis-selling scandal. Here’s what you need to know about your overseas Sipp.

Overseas Sipp investments

An opportunity for both financial gain and a way to personally enjoy the investment is what drives many people to opt for an overseas Sipp. One overseas scheme type is property, such as hotel rooms or timeshares in luxury resorts. These appear to be a safe bet, with clear returns on investment promised.

Others have more of a ‘green’ angle, with forestry schemes in places like Cambodia and Costa Rica proving popular amongst UK investors in recent years. However, sometimes these seemingly sound investments can go very wrong. In fact, schemes such as these have been at the centre of the Sipp mis-selling scandal.

We take a look at the steps you can take to make sure your overseas Sipp is right for you.

What makes an investment safe?

Whether or not an investment is safe depends on the suitability of the individual making it.

To be deemed safe and suitable, an individual should not invest more than they can afford to lose. Overseas Sipps usually have a high risk attached, making them suitable only for high net worth individuals who are able to take on that additional financial risk.

Did you receive advice that your overseas Sipp offered low risk for high returns? You may have fallen victim to mis-selling. We find that this is the case for many of our clients. They believed their pension pots were safe until it was too late. If you believe this may be your situation, we urge you to seek advice immediately.

Was your overseas Sipp regulated?

In short, if your Sipp is overseas, it is not regulated by UK law.

This means that if the scheme goes bust, your investment is not protected and you cannot be compensated by the Financial Services Compensation Scheme.

You are entitled to transfer out of your Sipp at any time. If your Sipp provider will not allow it, you may be forced to explore other avenues to keep your pension pot safe.

Always keep in mind that all investments carry risk. However, overseas Sipps also lack several of the checks and balances we find in investments closer to home.

If you are going to invest in an overseas Sipp you need to understand how limited your options are if things don’t go to plan.

Always make sure your investment has the right risk-reward balance. If you can’t afford to take losses on an overseas Sipp, your best option if probably to look elsewhere.

We represent over 10,000 people who have been mis-sold or mis-led on Sipp investments. If you think you’ve been mis-sold an overseas Sipp we can help you. Just get in touch and a member of our team can offer support and advice.