DB scheme transfer?

232607

dunstonh wrote: »

Were the amounts above or below £30,000 on the transfer value?

Above £30K.



That doesnt make any sense for a pension transfer as the issue is not about investments but liability and the regulator.

I'm guessing that SL are happy to take on the liability with consideration to the CETV's involved.

agarnett

woolly_wombat wrote: »

A very timely reminder IMHO to take care. The CETV I was quoted for a DB pension now administered by Towers Watson was very poor indeed.

WW

Very interesting. I had the temerity to question a CETV from a major corporate ex. employer's scheme - I discovered they were using Towers Watson to calculate the CETV. It appeared they were using some very out of date assumptions about life expectancy amongst other things.

My maths isn't too shabby. My kids are mathematicians. One might even become an actuary - I warned her to make sure she was her own man if she does! There have always been lies, damned lies and statistics. And it seems mercenary approvals of questionable statistical methods are at the root of almost all City shenanigans.

The potential for diverting newly released DB CETV money, subject of the current hype, even prior to the transfer process is obviously being coveted by more than just third party scammers.

Corporates with shortfall liabilities are perhaps giving themselves first dibs on the strength of that part of the Government's response to "Freedom and Choice in pensions" consultations which seems to give them carte blanche:

The government will issue new guidance to trustees on how to use their existing powers to delay transfers from schemes if the scheme is at risk, and to reduce transfer values to reflect scheme funding level.

... whatever that might mean. Damn the fools at FCA for promulgating such get outs to corporates!

As with other previous bank and insurance industry corrupt practice, I am becoming more concerned by the scope for first party scamming from our pensions ... it is a question of trust, and the abuse of trust.

When an individual presents as a trustee, in 2015 you have to wonder which is the hand that feeds them, and if their next words could just as well be "Honest to God, guv ... !"

I have even noticed in recent years a growing tendency for pension Trustees to report using the singular phrase "The Trustee" as if they may have distanced themselves from individual accountability long ago.

greenglide

But the CETV is always a "we promise to pay you the scheme amount of pension until you die or we can pay you £££££ if you can buy something else elsewhere".

So what is the scope for scamming? Oh yes - people want to be given ££££ so they can buy a Lamborghini, leave money to the kids, go on a world cruise etc because the governments change of the rules says I can.

These people want "my pot" of "my money" from "my contributions" from "my hard earned money" even if it was a non contributory scheme and, at the end of the day the schemes generally never offered this as an option when people were paying in anyway.

The world has gone mad!

redbuzzard

agarnett wrote: »

I have even noticed in recent years a growing tendency for pension Trustees to report using the singular phrase "The Trustee" as if they may have distanced themselves from individual accountability long ago.

A small point, but as you raise it - I am a trustee of a company pension scheme, except I'm not - the trustee is a company, and the people who sit around the table are directors of it.

For that reason, our reports refer to "the Trustee". Could that have been the case with the examples you have noticed?

hyubh

agarnett wrote: »

Corporates with shortfall liabilities are perhaps giving themselves first dibs on the strength of that part of the Government's response to "Freedom and Choice in pensions" consultations which seems to give them carte blanche:... whatever that might mean. Damn the fools at FCA for promulgating such get outs to corporates!

I honestly don't get the problem - supply and demand isn't it? Lots more people are going to want to transfer out come April, so let them and (if trustees are interested in such a thing) give scheme deficit reduction a boost at the same time. Shame it probably won't be happening with the LGPS - I could do with a council tax cut.

woolly_wombat

agarnett wrote: »

Very interesting. I had the temerity to question a CETV from a major corporate ex. employer's scheme - I discovered they were using Towers Watson to calculate the CETV. It appeared they were using some very out of date assumptions about life expectancy amongst other things.

This TW corporate and trustee briefing spells out how to make savings using Budget 2014 increases to commutation limits (from £2000-£10000):
http://www.towerswatson.com/en-GB/Insights/Newsletters/Europe/UK-Corporate-and-Trustee-Briefing/2014/06/Budget-2014-increases-to-trivial-commutation-limits?page=1

For the small lump sums of £10,000, this is simply a case of looking at the value of the benefits in your scheme. The number of members affected will depend upon the terms which are used to convert pensions into lump sums. The less generous the terms, the larger the number of eligible members will be and the larger the savings in the scheme.

However, the lower the lump sum compared with the pension the less likely members are to take this option. It may be possible to make the exchange compulsory, subject to the wording in the scheme rules and legal advice, but forcing a lump sum on members is likely to mean that more generous terms need to be offered.

The government is also amending the rules re advice on transfers from DB to DC, thus enabling more "savings" to be made:
http://www.corporate-adviser.com/news-and-analysis/latest-news/db-transfer-advice-rules-relaxed/2018132.article

The government is relaxing the rules around requiring advice for DB to DC transfers, with the £30,000 threshold to be applied on a per pension basis rather than on a total benefits basis.

It had originally only planned to allow DB transfers without authorised financial advice where an individual’s entire pension assets were below £30,000.

I shan't be transferring out on the shoddy deal I was offered.

WW

agarnett

redbuzzard wrote: »

A small point, but as you raise it - I am a trustee of a company pension scheme, except I'm not - the trustee is a company, and the people who sit around the table are directors of it.

For that reason, our reports refer to "the Trustee". Could that have been the case with the examples you have noticed?

I am sure it could easily have been the case.

So could you explain the difference between the duty of care owed to members of a pension scheme of a director of a trustee company performing the role compared to the duty of care owed by an individual trustee ? And why would such directors ever call themselves "a trustee" if they are using the company to distance themselves from positions of real trust and personal liabilities ?

greenglide

The directors don't call themselves a trustee.

That is why they refer to "the trustee" or "the trustees". I dont think I have ever come across a pension scheme that has a person / people as trustee, they are all corporate. Do you think that a single person should be personally responsible for a scheme which could have hundreds of millions or billions of funds?

agarnett

greenglide wrote: »

The directors don't call themselves a trustee.

That is why they refer to "the trustee" or "the trustees". I dont think I have ever come across a pension scheme that has a person / people as trustee, they are all corporate. Do you think that a single person should be personally responsible for a scheme which could have hundreds of millions or billions of funds?

Why even "trustees" - that's a plural last time I looked and it is not an alternate word for directors. Did you perhaps mean "trusties" which is an alternate word for trusted known crooks with nowhere else to go for the time-being, who don't give too much trouble so long as they get three good meals a day and a pat on the head? I exaggerate perhaps, and of course my question is aimed at no poster of recent aquaintance!

I think that conflicts of interest should be eliminated. Once upon a time Accountancy firms could not be limited companies. Now look at the mess - sign offs of anything the finance director likes can be arranged at a price by the big accountants without any of the accountancy firm directors fearing personal ruin if cooked books are rumbled - as they have been so many times now that we have lost count!

So is it not a complete misleading nonsense to even use the word "trust" or "trustee" when too many foxes are in charge of hen coops, and even member elected directors of 'the trustee' might be as individually potent as capons?

redbuzzard

agarnett wrote: »

I am sure it could easily have been the case.

So could you explain the difference between the duty of care owed to members of a pension scheme of a director of a trustee company performing the role compared to the duty of care owed by an individual trustee ?

None at all as far as I am concerned.

The Pensions Regulator (TPR) says:

Corporate trustee - where the trustee is a company, you will be a director of that company. However, you will have the same responsibilities as an individual trustee in relation to the scheme.

agarnett wrote: »

And why would such directors ever call themselves "a trustee" if they are using the company to distance themselves from positions of real trust and personal liabilities ?

I don't think that "distancing" premise is the purpose of using a corporate trustee. It's clearly much easier from an administration point of view for the trustee to be a company. If there are any benefits in terms of the risk of losing my house then I have never been aware of that, and so much the better, but it doesn't influence my thinking at all.

In any event, most trustees will have the equivalent of Directors & Officers insurance in place - there have been cases of TPR requiring trustees to replace funds that they have been judged to have incorrectly paid out, even with professional advice - and you can be sure that any sensible trustee set or board will take advice when there is any question of doubt.

As to referring to themselves as a trustee - I'm not sure what you mean, but in the case of the report, of course they are, together, the trustee (though I have also seen "your directors..." and the relevant mugshots of course appear on the short report sent to members every year).

In an everyday sense, people tend to refer to the individuals as trustees and it gets tedious to explain, so where it's not important in the context, I sometimes let it go.

Incidentally, it is quite possible to have an independent specialist service company as a director of the trustee - who will be represented by a specified individual, a pensions professional, and such people are very handy to have around when there are a few hundred million of assets to manage, thousands of members' interests to worry about, and TPR looking over your shoulders. The last thing professional trustees want to do is to foul up.

The pros of course get paid. As a Member Nominated Director, there is no dosh in it for me.

Now I've written that I'm beginning to wonder why I volunteered...it certainly wasn't for the tea and biscuits.