Moving pensions into SIPP - problem with guaranteed rights one

[Deleted User]

Got about 5 or 6 separate pensions that I;m moving into a SIPP now.

However, the company have come up with a problem with one because they insist I must get financial advice before moving it. Apparently, its an occupational pension with a guaranteed income.

Can someone explain this? It is generally a bad idea to move this pension into a SIPP (I guess I;d lose guarantees) and should I just leave it alone?

Dont really want all the hassle of getting financial advice - theres only £15K in there anyway.

dunstonh

Can someone explain this? It is generally a bad idea to move this pension into a SIPP (I guess I;d lose guarantees) and should I just leave it alone?

The FSA take the position that the transfer of defined benefit schemes are mis-sales unless proven otherwise. Not too long back they applied this to direct applications as well where no advice was sought or given. Now as its not possible for a firm not giving advice to prove that it is right or wrong to do it, they have no choice (if they wish to avoid fines or other sanctions) to tell you to seek advice from an IFA.

[Deleted User]

dunstonh wrote: »

The FSA take the position that the transfer of defined benefit schemes are mis-sales unless proven otherwise. Not too long back they applied this to direct applications as well where no advice was sought or given. Now as its not possible for a firm not giving advice to prove that it is right or wrong to do it, they have no choice (if they wish to avoid fines or other sanctions) to tell you to seek advice from an IFA.

Thanks. That explains it then. They wont do a transfer unless I get something in writing from an advisor.

rrf494g

but please bear in mind . . .

it probably is not a good move out of a defined benefit pension into a SIPP. As time goes by, the real value of defined benefit pensions keeps going up and up (life expectancy increases), but after transfer to a SIPP the value is frozen. There's a good reason for the "compulsory advice". Your circumstances may be different. In my case, I retired early and kept all my funds in a defined benefit scheme. The amount of money I would need to buy my existing pension now, after 8 years, has doubled.

good luck

dunstonh

The general rule of thumb figure is that only 1 in 100 cases are best advice on transferring out of defined benefit schemes. So, you can see why the rule exists. I

[Deleted User]

Interesting. Perhaps I might just leave it there then...

jamesd

Leaving it would be a good idea. It leaves some of the risk with the former employer. Think of it as a handy bit of extra diversification.

Old_Slaphead

dunstonh wrote: »

The general rule of thumb figure is that only 1 in 100 cases are best advice on transferring out of defined benefit schemes. So, you can see why the rule exists. I

Suppose you still want to go ahead even if the IFA advises otherwise. What would happen then?

dunstonh

Old_Slaphead wrote: »

Suppose you still want to go ahead even if the IFA advises otherwise. What would happen then?

Some firms will allow you to overrule the IFA which will allow the IFA to process it. The IFA will cover their back by documenting what a silly idea it is. Other IFAs will not transact it if overruled as the FOS is increasingly taking the stance that you shouldn't allow a transaction that you know to be wrong to be processed.

Old_Slaphead

I recently enquired about crystallising a 25% tax free payment from Aviva but they said that they couldn't sanction it without an IFA signoff.

I think I know a reasonable amount about how pensions work, the implications of what I'm doing etc etc and was quite prepared to sign an indemnity.

Why wouldn't pension co. allow me to go ahead (although at that stage it was only a tentitive enquiry - although they didn't know that)?

dunstonh

Why wouldn't pension co. allow me to go ahead (although at that stage it was only a tentitive enquiry - although they didn't know that)?

FSA regulation. If its mis-sold unless proven otherwise and that includes direct applications then they have no choice. However, the FSA ruling only applied defined benefit schemes. Not money purchase. Although some treat section 32 buy out bonds as occupational pensions. If it was a PPP or SHP (or SIPP) then it shouldnt need an IFA.