Mum can't get her full pension pot even though she hasn't taken anything

woolly_wombat

atush wrote: »

They may have followed correct procedure but they may not esp if they have suddenly 'remembered' she is old enough to draw her pension. AS the tests were supposedly for ill health retiral.

Indeed, which is why I think a call to ACAS would be a good idea.

WW

buckster

Hi again and thank you all for your previous help. My mum now has a transfer value of £150k and has been shopping around for IFAs to move the money from the 1964 pension scheme (a defined benefit scheme) into a drawdown pension so she can take what she wants, when she wants. The first IFA gave her a free meeting and discussed her options, he was eager for her to take an annuity at 7.5% rate (due to heart attack and other health issues) which she does not want to take, she would rather have access to all of her money when she wants it.

She has been quoted 2% from the IFA to move the money into a drawdown pension and I asked the IFA which pension it would go into and he would not tell me. My mother told him she wanted it to go into a Hargreaves landsdown drawdown pension for ease of use but he then told my mother that HE is the adviser so she shouldn't tell him what should be done, which is a great way for him to cancel out his 2% commission.

I spoke to Hargreaves about transferring the money without an IFA involved and they said that she must be shown to have taken advice before they can transfer the money in and they would need a box ticking to say she has received advice but still wants the money to go from the 1964 pension to a drawdown. The reason for this is the type of pension she currently has. She has had advice from the first IFA but he seems too eager to annuitise the pension and is not forthcoming with fine details so she does not want to use him.

Is there a low cost way of getting this transfer signed off so it can be moved to a drawdown pension of her choice. A £3000 fee is a very expensive bank transfer rate and that is basically all it is. We understand that a letter has to come from hmrc allowing the move but it should still never be this rate just for signing a few pieces of paper.

Does anyone have any tips on how to do this at a good rate?

jem16

buckster wrote: »

Hi again and thank you all for your previous help. My mum now has a transfer value of £150k and has been shopping around for IFAs to move the money from the 1964 pension scheme (a defined benefit scheme) into a drawdown pension so she can take what she wants, when she wants.

What is she going to get if she doesn't transfer? Without knowing that £150k transfer value is meaningless.

The first IFA gave her a free meeting and discussed her options, he was eager for her to take an annuity at 7.5% rate (due to heart attack and other health issues) which she does not want to take, she would rather have access to all of her money when she wants it.

Is the annuity rate joint or single?

She won't be allowed withdraw what she wants when she wants until April.

She has been quoted 2% from the IFA to move the money into a drawdown pension and I asked the IFA which pension it would go into and he would not tell me.

If you're only at the quote stage, the IFA is not going to be able to tell you the answer to that yet. He would have to do research and find out. He cannot do that without gathering all the information from your mother first.

My mother told him she wanted it to go into a Hargreaves landsdown drawdown pension for ease of use but he then told my mother that HE is the adviser so she shouldn't tell him what should be done, which is a great way for him to cancel out his 2% commission.

The IFA is quite right though. An HL SIPP is very unlikely to be the best option.

I spoke to Hargreaves about transferring the money without an IFA involved and they said that she must be shown to have taken advice before they can transfer the money in and they would need a box ticking to say she has received advice but still wants the money to go from the 1964 pension to a drawdown. The reason for this is the type of pension she currently has.

A transfer from a Defined Benefit pension is a high risk transaction and likely to be classed as a missale unless proved otherwise. In most cases it is also going to be wrong which is why you need an IFA to give advice and prove it would be in your best interests.

She has had advice from the first IFA but he seems too eager to annuitise the pension and is not forthcoming with fine details so she does not want to use him.

She's not really had advice if all she had was a free meeting to discuss options.

Is there a low cost way of getting this transfer signed off so it can be moved to a drawdown pension of her choice. A £3000 fee is a very expensive bank transfer rate and that is basically all it is. We understand that a letter has to come from hmrc allowing the move but it should still never be this rate just for signing a few pieces of paper.

It's a lot more involved than just a bank transfer and signing a few bits of paper.

Your Mum needs proper financial advice on this rather than just deciding she wants to spend it how and when she likes. That may be the worst decision.

Linton

Why is she so keen to go for a drawdown pension? The advantage of course is that she can take what she wants when she wants it and when she dies there could be money left for her beneficiaries. However the downside is that the size of an impaired (ill health) annuity she gets would be higher than she could safely drawdown from her pension pot without the risk of running out of money should she not die early.

Incidentally I assume 7.5% (is this inflation linked?) is much higher than she would get from Barclays.

You first IFA is right in what he says if not in the way he said it. Hargreaves Lansdowne operate SIPPs where the investor chooses and manages the investments. There are other providers who will do the job cheaper some of which do not deal with individual private investors.

If she wants to go to H-L who will be deciding and managing the investments? Does she have the knowledge and experience?

The final clarification to make is that it is not just a box ticking exercise. If this drawdown plan ends in tears there is the risk that either the IFA or the platform provider could be sued for mis-selling to their great expense. Neither will want to put themselves in a position where that could happen.

dunstonh

A £3000 fee is a very expensive bank transfer rate and that is basically all it is.

Consumer protection exists to prevent people making silly mistakes. Such as those that think this is a bank transfer.

Your mum wants to do a transaction that the regulator generally treat as mis-sold unless proven otherwise and is wrong for 90 out of 100 people.

Why is she so confident that she is in that minority where it is better for her?

She has been quoted 2% from the IFA to move the money into a drawdown pension and I asked the IFA which pension it would go into and he would not tell me. My mother told him she wanted it to go into a Hargreaves landsdown drawdown pension for ease of use but he then told my mother that HE is the adviser so she shouldn't tell him what should be done, which is a great way for him to cancel out his 2% commission.

The adviser is correct. You go to an adviser for advice. Not to tell them what to do. Most advisers will not transact occupational pension transfers on a non-advised basis as their liability insurance wont allow it.

If your knowledge is an indication of your mother's knowledge (as I am sure you have discussed it as you comments suggest) then that places you and your mother as high risk clients who are making a bad mistake and will likely complain later on.

xylophone

Presumably Barclays offer a PCLS, a monthly pension and a survivor pension for the spouse? What are the figures?

Your mother feels that because her health and your father's health is poor (the one having had a heart attack and the other a stroke) she would be better off transferring into a SIPP?

It does not appear to be the case that HL always insist on an IFA sign off https://forums.moneysavingexpert.com/discussion/5053691 see post 15 but the transfer value was not high - A judgement call for HL as for any provider under current rules and it has to be said that the likelihood is that any other receiving scheme will take the view that IFA advice must be shown to have been taken.

Under the new rules, it would seem that a transfer of this size will definitely require an IFA sign off.


http://www.barnett-waddingham.co.uk/comment-insight/blog/2015/02/17/guidance-trustees-tpr-consults-db-dc-transfers/

buckster

The original pot (although it is classed as not a pot due to the type of pension it is) was £180k and Barclays said she can have 25% tax free out and then receive £5k a year, so around 4% roughly. She would need to live over 30 years of it growing at a bad rate (has had heart attack and other serious health issue) to get all the money out because the pot still grows when only £5k a year comes out. Annuities are great for IFAs and for insurance companies

I have a Sipp which is on target to enable me to retire in my fifties (just over ten years) and still be a high rate tax payer (as I am now) I make my own investment decisions and have made just over 32% growth this year in my pension. Agreed I have had a blinding year but to be honest, if you read the right books and don't get too emotional with your investments, it isn't rocket science to control your own investments. I intend to help my mother with her investment decisions and if she runs out of money, I will not see her want for anything. She loves her holidays and she wants to have as many as she can fit in before she is too old and tired to keep 'holidaying'

Advisers are 'advisers', not Financial 'tellers' and after speaking to two, they both still think it is a great idea to take an annuity when she would have to live until she is near 100 years old to benefit so it is not an option.

She has already decided to go to the drawdown route so that IS decided after speaking to advisers. My question is.....is there a low cost way of transferring the money to a drawdown other than paying 2%?

If the answer is no, she will just have to pay an IFA and be done with it. Annuities (even at 7.5% rate) may be attractive to some people but not for me or my mother.

greenglide

This is not an annuity - it is a Defined Benefit pension scheme. It offers to pay the pension along with promised increases for as long as she is alive and survivor benefits as well.

To surrender these benefits she has to go to an IFA who will wok out the options and make recommendations. She can then ignore these recommendations and go to HL (or someone else) and tell them she has had advice.

As long as she has had advice but not acted on it then she can proceed but, of course, no one can force any pension to take her business.

BobQ

If she left it where it is, will your father qualify for a pension if he survives her? How much will that be and what is his life expectancy?
Are either increased for inflation?

buckster

I understand that the Barclays annual payment may not be classed as an annuity but it basically is the same thing. They keep the big pot and give her a very small percentage each year. Call it what you will.