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Just over 30k DB "Trivial Commutation" threshold
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Flipping_Fed_Up
Posts: 5 Forumite

Hi, there must a number of others experiencing the same problem as me so, if there are, please help!
My Defined Benefit pot is just over 32k meaning I can't just take it (as I could if it was under 30k) but must involve an IFA.
I have three problems arising from this:
1) I worked in financial services for twenty years and don't need advice - I know exactly what I plan to do. I have other pensions kicking in soon which will provide a five figure pension and the "benefit" from this DB will only be around £80 a month : I'd rather have access to 32k right now
2) every IFA I've spoken to is scared of touching DB schemes (perceived as the "gold standard") for fear of getting sued/fined down the line a la endowment & PPI
3) even if they will consider it, they want up to £1200 just to get involved :eek:
I would have no problem paying for financial advice if I was clueless and sitting on a pot of hundreds of thousands but paying 1200 quid just for a signature because I'm very marginally over the threshold cannot be what the legislation was all about.
So has anyone experienced and tackled this "Defined Benefit Over 30k But Only Just" problem without lining the pockets of an IFA for nothing but a signature?
Any advice most welcome
My Defined Benefit pot is just over 32k meaning I can't just take it (as I could if it was under 30k) but must involve an IFA.
I have three problems arising from this:
1) I worked in financial services for twenty years and don't need advice - I know exactly what I plan to do. I have other pensions kicking in soon which will provide a five figure pension and the "benefit" from this DB will only be around £80 a month : I'd rather have access to 32k right now
2) every IFA I've spoken to is scared of touching DB schemes (perceived as the "gold standard") for fear of getting sued/fined down the line a la endowment & PPI
3) even if they will consider it, they want up to £1200 just to get involved :eek:
I would have no problem paying for financial advice if I was clueless and sitting on a pot of hundreds of thousands but paying 1200 quid just for a signature because I'm very marginally over the threshold cannot be what the legislation was all about.
So has anyone experienced and tackled this "Defined Benefit Over 30k But Only Just" problem without lining the pockets of an IFA for nothing but a signature?
Any advice most welcome
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Comments
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There is no getting round it, its the law since 6th April. Its there for your protection.
What annual return on your investment is required to match the DB benefits? If its under 5% then a few IFAs may sign it off.
Dont you have an DC pensions you can drawdown instead?0 -
you have a £32k pension which you wish was £30k and yet you don't want to pay an adviser £1,200....
if you want a job doing you have to expect to pay someone to do it, right?0 -
Bottom line is that 32k is more benefit to me now than waiting six and a half years for an extra £80 per month. This legislation is supposed to be about choice, not lining the pockets of IFAs for minimal work.0
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for this type of case there'd be a lot of work involved and, more importantly, a lot of risk.
what you can do is call the trustees and see if they'd allow you to sacrifice some of your pension to benefit from the triviality rules. i dont think it'll work but worth a shot.
please be wary of the tax implications too, you'll have a lot less than 32k by the end of the process0 -
Thanks for all the replies.
I appreciate the tax implications but have planned for that. The proceeds (if I am unable to release the funds) will only provide a tiny fraction of total planned retirement income so the normal concerns about losing out on guaranteed income don't really come into play.
If anyone has successfully got past this roadblock, I'd like to hear about it.
Thanks0 -
There isn't a legitimate way past it.
You can try waiting until interest rates/gilt yields go up and hope that the CETV drops as a consequence. The problem with that is that each year you wait, you are a year closer to taking the benefits which makes them more valuable and might offset the drop in the CETV.0 -
3) even if they will consider it, they want up to £1200 just to get involved
£1200 is cheap. Plus, you are £2k higher than expected so you are still a net £800 better off.but paying 1200 quid just for a signature because I'm very marginally over the threshold cannot be what the legislation was all about.
Its not just a signature though. Its a soft barrier of consumer protection.without lining the pockets of an IFA for nothing but a signature?
If you had worked in financial services you would know its not just a signature.If anyone has successfully got past this roadblock, I'd like to hear about it.
You cant.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Flipping_Fed_Up wrote: »Thanks for all the replies.
I appreciate the tax implications but have planned for that. The proceeds (if I am unable to release the funds) will only provide a tiny fraction of total planned retirement income so the normal concerns about losing out on guaranteed income don't really come into play.
If anyone has successfully got past this roadblock, I'd like to hear about it.
Thanks
Get divorced, surrender 10% via PSO and then act quickly! Sorry for being flippant, but your hands are tied.
I'm not a fan of lines in the sand legislation, I prefer a tapering approach. I don't think this legislation exists solely for 'protection', as promulgated and repeated until the cows come home (certainly not so to support such a starkly defined outcome); rather, legislative and administrative expediency.0 -
I thought DB wasn't a pot? If I contributed about £32k into my DB it would mean £825/month on retirement, how is yours only worth £80/month?Mortgage (Nov 15): £79,950 | Mortgage (May 19): £71,754 | Mortgage (Sep 22): £0
Cashback sites: £900 | £30k in 2016: £30,300 (101%)0 -
I thought DB wasn't a pot?
It's not.
The OP is quoting the CETV?0
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