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  • FIRST POST
    • simongt
    • By simongt 15th Jun 17, 6:05 PM
    • 3Posts
    • 0Thanks
    simongt
    Another question on defined benefit transfer - where to find an honest IFA
    • #1
    • 15th Jun 17, 6:05 PM
    Another question on defined benefit transfer - where to find an honest IFA 15th Jun 17 at 6:05 PM
    Hi,

    I guess i'm quite lucky. I've saved hard and at 49 have a SIPP of 550k, recently i realised that in my youth i ticked a'pension please' box with a previous employer and actually had a final salary scheme which they have offered me 260k to take off their hands. It works for me as i want the flexibility in the future whilst the potential growth with a couple of market corrrections/crashes far outweights the downside. I enjoy my investing game, and spend a lot of time reviewing the technical nature of the markets/companies as well as the economic issues.

    Well, given i fully intend to work well into my 60's as a hardcore IT strategist my intent is to role the 260 into my SIPP, and push for hard growth with a portfolio i've been designing and considering for several months.

    But, finding an IFA who is prepared to do a simple transfer review without trying to get a long term claim to manage not just the transfer, but my whole pot (no thank you, i am quite capable) is proving damn near impossible.

    Is anyone aware of a fair and reasonable company, with an ounce of common sense not to try and make a grab for along term piece of of my hard work.

    Sorry to rant, but i'm sooo disappointed in the 4 IFA's ive spoken to so far ..... i'm sure this wasn't what HMRC intended when they made the 30k rule.

    Many thanks for taking the time to share any advice you may have
Page 1
    • dunstonh
    • By dunstonh 15th Jun 17, 6:34 PM
    • 88,292 Posts
    • 53,522 Thanks
    dunstonh
    • #2
    • 15th Jun 17, 6:34 PM
    • #2
    • 15th Jun 17, 6:34 PM
    Sorry to rant, but i'm sooo disappointed in the 4 IFA's ive spoken to so far ..... i'm sure this wasn't what HMRC intended when they made the 30k rule.
    The need for advice on defined benefit schemes goes back long before the triviality rule.

    Only 1 in 10 IFAs hold the permissions to do transfers. So, having only contacted 4 means you have a lot more phoning around to do.

    Also, most consumers want an IFA on an ongoing basis. Many IFAs are only interested in that type of client. So, their business model, software etc will be built with that in mind. When someone like you comes along who doesnt want any of that, the adviser firm has to decide whether doing a one-off transaction in the highest risk area going is actually worth it or not. There are those that will do it (you just have to read this forum to see posters saying they have used advisers willing to do that).
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • sandsy
    • By sandsy 15th Jun 17, 8:11 PM
    • 1,129 Posts
    • 655 Thanks
    sandsy
    • #3
    • 15th Jun 17, 8:11 PM
    • #3
    • 15th Jun 17, 8:11 PM
    The fact that you refer to it as a 'simple transfer review' indicates you have no idea how complex pension transfer advice is. Simply walking in and demanding that they recommend a transfer so you can put it in your untested investment strategy is unlikely to help you find an adviser who is prepared to work with you as you're a liability in waiting.
    • bigadaj
    • By bigadaj 15th Jun 17, 10:07 PM
    • 9,347 Posts
    • 5,975 Thanks
    bigadaj
    • #4
    • 15th Jun 17, 10:07 PM
    • #4
    • 15th Jun 17, 10:07 PM
    Hi,

    I guess i'm quite lucky. I've saved hard and at 49 have a SIPP of 550k, recently i realised that in my youth i ticked a'pension please' box with a previous employer and actually had a final salary scheme which they have offered me 260k to take off their hands. It works for me as i want the flexibility in the future whilst the potential growth with a couple of market corrrections/crashes far outweights the downside. I enjoy my investing game, and spend a lot of time reviewing the technical nature of the markets/companies as well as the economic issues.

    Well, given i fully intend to work well into my 60's as a hardcore IT strategist my intent is to role the 260 into my SIPP, and push for hard growth with a portfolio i've been designing and considering for several months.

    But, finding an IFA who is prepared to do a simple transfer review without trying to get a long term claim to manage not just the transfer, but my whole pot (no thank you, i am quite capable) is proving damn near impossible.

    Is anyone aware of a fair and reasonable company, with an ounce of common sense not to try and make a grab for along term piece of of my hard work.

    Sorry to rant, but i'm sooo disappointed in the 4 IFA's ive spoken to so far ..... i'm sure this wasn't what HMRC intended when they made the 30k rule.

    Many thanks for taking the time to share any advice you may have
    Originally posted by simongt
    What is the db scheme currently scheduled to pay out as an annual payment?

    If you did transfer out successfully aren't you going to hit the lifetime allowance in the very near future?
    • AnotherJoe
    • By AnotherJoe 16th Jun 17, 8:43 AM
    • 6,831 Posts
    • 7,249 Thanks
    AnotherJoe
    • #5
    • 16th Jun 17, 8:43 AM
    • #5
    • 16th Jun 17, 8:43 AM
    Please take the following as a different POV and not an attack.

    recently i realised that in my youth i ticked a'pension please' box with a previous employer and actually had a final salary scheme which they have offered me 260k to take off their hands. It works for me as i want the flexibility in the future whilst the potential growth with a couple of market corrrections/crashes far outweights the downside.
    Originally posted by simongt
    I would say the underpinning of a guaranteed pension income gives you more scope for flexibility with your current pension pot than if all your eggs are in that one basket. And so you should consider keeping it. Without knowing what benefit the £260k CETV provides that's about all anyone here can say.

    Well, given i fully intend to work well into my 60's as a hardcore IT strategist my intent is to role the 260 into my SIPP, and push for hard growth with a portfolio i've been designing and considering for several months.
    Originally posted by simongt
    You don't need to push hard for growth if you intend to work well into your 60's. Both because it's needless risk, and because you will be bumping up against the LTA. You can be more conservative. You appear to have got into keeping score with the number rather than realising what a pension is for, it's for use during retirement. If you will retire close to SPA and having used up many years you might have been spending it, working instead, what's it for ?

    Sorry to rant, but i'm sooo disappointed in the 4 IFA's ive spoken to so far ..... i'm sure this wasn't what HMRC intended when they made the 30k rule.
    Originally posted by simongt
    That's because what's coming down the track is a raft of claims for compensation about how people should never have been advised to transfer (or even have been advised not to transfer since that still gave them the ability to transfer) and so they will have been on a one way bet. Thus the IFAs need deep insurance and that's expensive.

    Unfortunately in the Nanny State we live in people are rarely allowed to take responsibility for their own actions, if only because if the minority of gullible who indeed cannot but will be preyed upon by the fraudsters. it's a hard balance to strike.
    • simongt
    • By simongt 16th Jun 17, 9:12 AM
    • 3 Posts
    • 0 Thanks
    simongt
    • #6
    • 16th Jun 17, 9:12 AM
    • #6
    • 16th Jun 17, 9:12 AM
    The DB scheme is scheduled to pay 10k in todays money and 15.5k in 2032 , but in my view the 25 multiplier is quite good given i'm planning another 15 years before i retire ..... for me the additional moving part is that we checked out of the housing market 8 years ago due to negative equity, and with more children coming along in addition to work mobility are still not in the property game.

    The capital growth i can gain in the next 15 years, regardless of LTA, will give me the flexibility to buy a home with cash, and when hitting the LTA in 2 years my employer will continue with my pension contributions but as a post PAYE cash sum which will go into ISA's for the next 15 years.... which i will manage in parallel to my investment portfolio

    The combination of long term ISA growth in investment funds, flexi draw down on a large pension pot and other instruments should provide a better return.

    250k today, in a medium risk well managed investment fund can top 1m in 10-12 years, even with a couple of corrections along the way. even if this is subject to 50% + tax the potential income if left invested could be quite a lot better than the 15k they promised.

    I would also add that the fund was closed to new members in 1999 and currently looks risky. I wouldnt want to place my hopes in the PPF cushion as i have good provisions elsewhere and any sane government in the future would likely asses whether i need the 90%

    I also have the challenge of cryptocurrency, where £100 i invested for fun 2 Christmases ago , and reinvested in other cryptocurrencies along the way is now nudging 6 figures. Even if this bubble bursts (and it will) i will still have an interesting tax dilemma. I intend to keep re-balancing this portfolio through online startups and secure blockchain tech, but repatriating the cash sometime in the future under capital gains will be an interesting conversation with HMRC.

    Thanks everyone for all your response. i'm calling around IFA's today looking for my 1 in 10.
    • AnotherJoe
    • By AnotherJoe 16th Jun 17, 9:36 AM
    • 6,831 Posts
    • 7,249 Thanks
    AnotherJoe
    • #7
    • 16th Jun 17, 9:36 AM
    • #7
    • 16th Jun 17, 9:36 AM
    250k today, in a medium risk well managed investment fund can top 1m in 10-12 years, even with a couple of corrections along the way. even if this is subject to 50% + tax the potential income if left invested could be quite a lot better than the 15k they promised.
    Originally posted by simongt
    I think your maths is way off. A reasonable expaction long term might be 10%. That isn't going to quadruple an investment in 10 years. You would need high risk investments and also be lucky with the sequence of corrections, because an early correction would be a serious set back.

    Good luck because I think you'll need it.
    • Bravepants
    • By Bravepants 16th Jun 17, 9:48 AM
    • 214 Posts
    • 235 Thanks
    Bravepants
    • #8
    • 16th Jun 17, 9:48 AM
    • #8
    • 16th Jun 17, 9:48 AM
    I have only scanned your posts, but I would keep the DB where it is! There is nothing like the reassurance of a known income in the later stages of life when you may start to need it. You have done well with your SIPP, use that for your early years of retirement, or even to retire early knowing that you have the DB scheme available later on.
    This is often referred to as a staged retirement plan.


    The DB part of your pension provision should give you a warm and fuzzy feeling, not sleepless nights or stress about what to do with it and how to do it.


    I have a part DB scheme which will come into effect from age 60, this gives me a warm a fuzzy feeling as I plan to retire early at 55 with the sum total of my S&S ISA and a DC based AVC helping me over that time and providing extra when my DB comes into effect. I am also currently on a career average scheme which will come into effect on my NRA, which is 67 at the moment, with my state pension...another warm and fuzzy feeling.


    As my old great gran used to say "Don't try to be clever and f**k with your future!" Hehe!
    • aldershot
    • By aldershot 16th Jun 17, 10:21 AM
    • 138 Posts
    • 123 Thanks
    aldershot
    • #9
    • 16th Jun 17, 10:21 AM
    • #9
    • 16th Jun 17, 10:21 AM
    250k today, in a medium risk well managed investment fund can top 1m in 10-12 years, even with a couple of corrections along the way. even if this is subject to 50% + tax the potential income if left invested could be quite a lot better than the 15k they promised.
    It would be hard to see how an IFA would recommend a transfer, given your expectation of future returns and risk. You are so far off from reality. For 250K to reach 1m in 12 years requires a compound growth of >13%pa. The IFA legislation is there to protect people like you to be honest.

    Use your fine DB fund as a backbone to your retirement financial needs.
    • AlanP
    • By AlanP 16th Jun 17, 12:17 PM
    • 806 Posts
    • 554 Thanks
    AlanP
    How much do you anticipate needing in retirement?

    That should be your target ideally, then you can look at what sources of income you have to meet it.

    £15.5k plus SP will give you a "no real risk, inflation linked" income of over £24k so that's £2k a month irrespective of what your DC pot does.


    Sounds good to me, why take unnecessary risks?
    • simongt
    • By simongt 16th Jun 17, 12:54 PM
    • 3 Posts
    • 0 Thanks
    simongt
    I understand how complex the transfer can be, but i also understand the actuarial elements of the underlying benefits.

    What i find difficult to stomach is handing over 1% a year to an IFA from my SIPP, by which in its definition i am assuming the investment risk in. Its a lot of money in perpetuity and I struggle to find the value in someone sending me an invoice every year for work which was carried out a number of years previously.

    I do agree though they have a business to run, and the regulatory elements come with an overhead which needs cover. I also agree an IFA provides a necessary service to those who don't have the time or experience to either manage their investments or make balanced and informed decisions.

    Hopefully ringing around another dozen or so providers will help, but it would be nice if we just had a waiver form :-)
    • rpc
    • By rpc 16th Jun 17, 1:06 PM
    • 2,282 Posts
    • 3,472 Thanks
    rpc
    What i find difficult to stomach is handing over 1% a year to an IFA
    So find an IFA that will do this as a single transaction and not as part of ongoing servicing.

    It cuts down your options a lot - dunstonh pointed out in the first reply that you are not looking to give the sort of business most IFAs are after.

    Also remember that the IFA will carry liability for their advice far after you actually make the transfer. If you reach retirement in 15 years and your SIPP has crashed at the wrong time, your IFA is still on the hook if their advice isn't up to scratch.

    Personally, my DB pension is the foundation of my retirement plans and it pushes up my risk tolerance in other investments. If it all goes well, I will have a lot of flexibility. If it goes wrong (or just a slump at the wrong time) then I still have a DB pension from 65 as a backstop.

    Hitting the LTA at age 51 doesn't sound like particularly great tax planning...
    • Aretnap
    • By Aretnap 16th Jun 17, 1:20 PM
    • 2,655 Posts
    • 2,099 Thanks
    Aretnap
    If you do the transfer and your investment strategy goes to plan then you hit the lifetime allowance and end up paying a punitive tax rate.

    If you do the transfer and your investment strategy doesn't go to plan then you miss out on the secure retirement that the DB pension offered you.

    So I'm slightly struggling to see why any IFA would recommend that you transfer - it looks like an obvious mis-sale to my (unprofessional) eyes. That's before they even consider the merits of your investment strategy - and I have to agree that 4-fold growth over 10 years (about 14% annual) would probably strike them as a little, ahem, optimistic.
    • CFrog
    • By CFrog 16th Jun 17, 4:23 PM
    • 44 Posts
    • 30 Thanks
    CFrog
    You've been given lots of good advice but to add my 'tuppence' ...

    I'm 58 and going through a DB transfer myself. I do however, already have a SIPP and another DB pension that I'm not touching. As Bravepants / others suggest, I too would probably leave your DB pension where it is as a bit of a 'comfort blanket' / fallback should things go sideways.

    A few other random thoughts / observations:

    - Do you really plan to work well into your 60's; if it's your choice, I think you're in a minority
    - Without knowing the detail, unless you are planning to have an extravagant retirement, I would have thought that growth in your existing SIPP, your DB pension and any additional ISA savings made between now and 2032 should provide for a comfortable retirement. Do you have a target figure; do you know your 'number'?
    - It took me a while to find an IFA who would consider looking at the transfer; not all firms will touch this business. You will just have to ring round or perhaps approach one of the larger firms (like Tideway?) who do this sort of work.
    - The IFA will have to perform a TVAS calculation to assess the relative merits of transferring your DB pension but this would (in your case) have to be backed up with a solid rationale for transferring to demonstrate you've thought it through and your numbers 'stack up'.
    - You need to consider your partner's (financial) circumstances in your thinking.
    - As part of the 'case' I put to the IFA, I was able to set out my current / projected outgoings over the next few years; do you know what your outgoings are now and likely to be in the future?
    - Even if the IFA does not recommend transferring, you may still be able to be an 'insistent customer' and go ahead with the transfer. However, not all companies will accept DB transfers in these circumstances. HL don't for example, but AJ Bell do.
    - As noted, your financial projections are unrealistic.
    - Maybe it's a bit 'naughty' / disingenuous but if you're still keen to move the DB pension, you could consider getting the IFA to effect the transfer and accept the charges for a year or two and then move the funds out to fund(s) / platform of your choosing.
    - As you're not currently 'in the property game', suggest you are mobile with work and it looks like you've 'more children coming along' you could always consider deferring things for a while. It may be beneficial thinking about the affect of putting some 'roots down' somewhere and / or seeing how things develop post Brexit and / or the missus going back to work.
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