Being forced to seek IFA on pension transfer

AlexMagd

Hi all,

I'm in a difficult situation where I'm getting very little information from my new pension provider (plenty of snide, though) about my situation. I was hoping somewhere here could help me out.

Basically I have recently left a job and have a small amount of cash in my pension. Job #1 gave me the option of either cashing out a very small proportion, or transferring the full value to a new scheme.

My new job, Job #2 has a new auto-enrollment pension with a pension provider (let's call them Welsh Wives, eh?)

Now I've completed the transfer paperwork, but now I am getting letters from Welsh Wives which state I need to get this transfer signed off by an IFA. The cost of doing so would wipe out almost half of the transferable amount (although still more than I would get from a lump sum withdrawal)!

I've offered to sign a waiver or any statement they like indicating that transferring the money is my own choice. I'm not a complete idiot when it comes to financial matters, and I'm not sure why I need to pay an IFA £500 just to sign off my transfer - I'm not even asking them for any advice.

Is there any way around this? Welsh Wives are being extremely insistent that I need to get this advice, and I don't understand why they consider me not competent enough to make this decision on my own.

Thanks

dunstonh

I'm not sure why I need to pay an IFA £500 just to sign off my transfer - I'm not even asking them for any advice.

Can be a few reasons here.

1 - The scheme you are trying to transfer into is administered by an IFA or administration company and they have to handle all the admin. Not SW. (typically happens with occupational money purchase schemes and some group personal pensions).
2 - The scheme you are trying to transfer from is classed as an occupational pension and SW will not accept liability for the transfer and require an IFA to take on that liability. Many firms will not accept execution only with defined benefit transfers given the default position that they are mis-sold unless proven otherwise.
3 - The plan you are transferring into is not available direct to public and requires an intermediary (not likely to be this as SW normally accept direct instructions).

Welsh Wives are being extremely insistent that I need to get this advice, and I don't understand why they consider me not competent enough to make this decision on my own.

Most people attempting to make occupational pension transfers are not competent enough to make their own decision. Even if you did execution only, SW would still be liable for the transaction if you complained and would probably find the complaint upheld even if you signed waivers (FOS doesnt accept waivers as being a suitable defence if the person is not knowledgeable enough to know what they are doing)

Your_Hero

AlexMagd wrote: »

Hi all,

I'm in a difficult situation where I'm getting very little information from my new pension provider (plenty of snide, though) about my situation. I was hoping somewhere here could help me out.

Basically I have recently left a job and have a small amount of cash in my pension. Job #1 gave me the option of either cashing out a very small proportion, or transferring the full value to a new scheme.

My new job, Job #2 has a new auto-enrollment pension with a pension provider (let's call them Welsh Wives, eh?)

Now I've completed the transfer paperwork, but now I am getting letters from Welsh Wives which state I need to get this transfer signed off by an IFA. The cost of doing so would wipe out almost half of the transferable amount (although still more than I would get from a lump sum withdrawal)!

I've offered to sign a waiver or any statement they like indicating that transferring the money is my own choice. I'm not a complete idiot when it comes to financial matters, and I'm not sure why I need to pay an IFA £500 just to sign off my transfer - I'm not even asking them for any advice.

Is there any way around this? Welsh Wives are being extremely insistent that I need to get this advice, and I don't understand why they consider me not competent enough to make this decision on my own.

Thanks

This is very common when you are trying to transfer a DB pension scheme to your DC arrangement. There is no way round this if 'Welsh Wives' won't allow it even when you've offered to sign a waiver.

This is because in the FCA's eyes, even if a customer signs a document to confirm their understanding and on an 'execution-only' basis, it is almost ignored as they look at whether or not it was right for the customer in the first place. 99% of the time it is not and a claim for mis-selling will almost certainly lead to compensation at the expense of the provider.

SomeUser

The difference between this and a standard DB to DC transfer is that you have no choice but to accept a transfer or a refund of contributions, so there is no risk. There is no question about whether this is right because there is no choice (apart from receiving a refund of contributions).

I'd suggest making that crystal clear to them, but if their rules state "no DB transfers without advice" then those are the rules. This provider is also snowed at the moment which won't work in your favour. Nowt to lose by trying though.

atush

Why not transfer to another personal pension instead? One that is execution only?

xylophone

Basically I have recently left a job and have a small amount of cash in my pension. Job #1 gave me the option of either cashing out a very small proportion, or transferring the full value to a new scheme.

I am wondering whether the OP is leaving a job after less than two years.

http://www.pensionsadvisoryservice.org.uk/life-events/leaving-your-pension-scheme/taking-a-refund

"Taking a refund from a defined benefit or money purchase scheme

You may have the option of taking a refund of your own contributions to your workplace scheme if:

you are leaving with less than two years' service; and
you did not make your contributions through salary sacrifice.
Taking a refund from a personal pension or stakeholder pension

You have the option of taking a refund of your own contributions if:

you are leaving having been a member for under thirty days; and
you did not make your contributions through salary sacrifice.
In both cases, the amount refunded to you will take account of any tax relief you received when making your contributions. "

Under such circumstances, an IFA's advice seems superfluous ( he'd be losing by not transferring)?

If the above is the case, I wonder whether SW would be in a position to go ahead without the IFA sign off?

Otherwise the OP might explore eg http://www.cavendishonline.co.uk/pensions/

mgdavid

We're all groping in the dark as usual, need more info!
OP, how long did you work at Job #1?
What type of pension was it, DB or DC (final salary or stakeholder or whatever)?.

SomeUser

This has got to be less than 2 years service - otherwise the statutory requirements are that you are entitled to a deferred pension.

And based on the info, I think it's a fairly safe bet that it's a DB scheme. I offer £20. Anyone?

RichandJ

mgdavid wrote: »

We're all groping in the dark as usual, need more info!
OP, how long did you work at Job #1?
What type of pension was it, DB or DC (final salary or stakeholder or whatever)?.

Think we should all make a template reply along those lines mgd.

What was it ?

How long ?

Private/public sector ?

I'm sure others can add.

RichandJ

SomeUser wrote: »

This has got to be less than 2 years service - otherwise the statutory requirements are that you are entitled to a deferred pension.

And based on the info, I think it's a fairly safe bet that it's a DB scheme. I offer £20. Anyone?

If you're offering twenty quid to confirm its a DB between 3 months & 2 years I'll take it on.

dunstonh

Defined benefit does seem likely but the problem is that defined benefit transfers are defined benefit transfers. So, whilst it seems sensible to transfer it if it cannot be left where it is, the problem is that in the eyes of the regulator it is still a defined benefit transfer and it would treat it the same way as someone outside of the 2 yaer period.