Transfer Teachers' Pension to SIPP

tjd08

Hi,

My partner was a teacher (4 years service) and we're having an exceptionally tough time trying to find a SIPP provider that allows the transfer-in of a Teacher's Pension.

I called the TPS a month or so ago and was told that transfers to a SIPP are absolutely fine, and that the SIPP provider needed to request the transfer, the TPS would give a final valuation for the current benefits, and the transfer could go ahead from there.

However, being a Hargreaves Lansdown client, I tried theme first. HL rejected the request, explaining their latest stance is that they don't allow TPS transfers, as a the government is changing legislation and they've adjust their policy ahead of that.

I've since tried phoning a few providers up who didn't really know, or said that they don't allow Final Salary Scheme transfers, which is what the TPS is, apparently (?).

Does anyone know a SIPP provider in the UK that allows the transfer of a Teachers' Pension, or has anyone been successful in doing so?

A huge thanks to anyone able to help in this.

Kind regards,
Tim

kidmugsy

Someone has to ask: why do it at all?

Your_Hero

Why do you want to transfer out? You don't even know what a Final salary scheme is and yet you want to get out of it? I suggest you read up on the TPS scheme some more.

Linton

kidmugsy wrote: »

Someone has to ask: why do it at all?

Indeed - the pension you lose is likely to be worth less than the cash you gain, which is why you are having difficulties. The SIPP companies dont want to risk you suing them for a mis-sale at some point in the future.

magpiecottage

tjd08 wrote: »

I called the TPS a month or so ago and was told that transfers to a SIPP are absolutely fine, and that the SIPP provider needed to request the transfer, the TPS would give a final valuation for the current benefits, and the transfer could go ahead from there.

Which is just what the scheme wants - to dump its open ended liability onto some mug of a financial adviser

However, being a Hargreaves Lansdown client, I tried theme first. HL rejected the request, explaining their latest stance is that they don't allow TPS transfers, as a the government is changing legislation and they've adjust their policy ahead of that.

So they are not the mug you are looking for.

I've since tried phoning a few providers up who didn't really know, or said that they don't allow Final Salary Scheme transfers, which is what the TPS is, apparently (?).

So they are not the mug you are looking for either.

Does anyone know a SIPP provider in the UK that allows the transfer of a Teachers' Pension, or has anyone been successful in doing so?

All the ones I know of have gone bust because of the cost of redressing missold transfers from final salary pension schemes.

tjd08

Thanks for the concern (I mean that in the nicest way!), but the TPS valuation / investment vehicle / returns is not clear, nor is the future of teachers pensions. 4 years of service is unlikely to amount to much, and our preference is to manage the 'cash' through a SIPP.

tjd08

@magpiecottage - interesting, would you care to elaborate more on the 'cost of redressing missold transfers' please? I'm not using an IFA - I simply want to transfer a nominal TPS scheme cash value into a SIPP!

Your_Hero

tjd08 wrote: »

Thanks for the concern (I mean that in the nicest way!), but the TPS valuation / investment vehicle / returns is not clear, nor is the future of teachers pensions. 4 years of service is unlikely to amount to much, and our preference is to manage the 'cash' through a SIPP.

The "returns" couldn't be more clear, that's why it's called a Defined Benefit, i.e. your benefits are already defined by the years of service and leaving salary which is then inflation linked. You have no investment risk with a DB scheme. By contrast, a SIPP would transfer all the risk to you and no guarantees.

Linton

The TPS is a Defined Benefit scheme so what it will pay out is very clear and guaranteed as far as anything in this world can be guaranteed. This guarantee is not dependent on any pot of money nor on investment returns. The transfer value is unclear and opaque because no-one knows how much it will cost to provide the guaranteed inflation-linked pension in n years time and pay it out for as long as you may live. In practice transfer values tend to be very low - much lower than it would cost you to provide the same benefits.

tjd08

@Your Hero - I've been unable to find the formula for this. If you have it, please let me know.

Personally, I'd prefer to take the risk. Does anyone know of a SIPP provider that I can at least talk to who allow this?

SomeUser

If you're sure you want to do it (and most people shouldn't!) then you'd have more luck transferring to an occupational trust based scheme but the cost of getting the pre-requisite advice will probably be larger than the benefits (if it really is a nominal amount).

My occupational scheme, for instance, will accept DB transfers provided there are no contracted out benefits.

Contract based schemes (SIPP, GPP, Stakeholder) generally aren't interested because of the administrative burden and risk. It's not in their interests to do so (especially where the value of the benefits are nominal - they're not going to make enough money out of it compared to the risk they're taking).