Transfer a defined benefit pension to SIPP

everyday7

My mother had a defined benefit pension, it pays out £1.2k per year assuming she takes 25% tax free cash lump sum. Overall its worth £31.6k. She wants to 'cash it in'. She is 61 has no other pensions. My father has a good pension.
I've requested for the cash transfer value. I think that is the first step. But she then needs to talk to a IFA and get their approval. The IFA needs to be Pension Transfer Specialist. Once she gets his approval or not - she can go to a pension provider and set up a SIPP.

Is this correct, any steps missed? Any idea how much a IFA will charge her for advice?


Please please no advice about how DB are the greatest things since sliced bread. I know they are. I just need to know I am following the right steps so i can just sort this out.

AnotherJoe

everyday7 wrote: »

My mother had a defined benefit pension .....But she then needs to talk to a IFA and get their approval. .........
Is this correct, any steps missed? Any idea how much a IFA will charge her for advice?

Strictly speaking she doesn't need their approval, she just needs one to be prepared to say if its a good idea or not. I can save you the trouble, nearly all (probably all) will say its terrible idea. Only a few will be prepared to put this in writing because of a past case where someone said how bad an idea it was, got the recipient to sign to this, , transferred it and then was later successfully sued for not being firm enough about what a bad idea it was !!!

So, because of this anyone who will even agree to say its a terrible idea in writing will likely want a big wodge of money. I'm guessing 2%.

bigadaj

AnotherJoe wrote: »

Strictly speaking she doesn't need their approval, she just needs one to be prepared to say if its a good idea or not. I can save you the trouble, nearly all (probably all) will say its terrible idea. Only a few will be prepared to put this in writing because of a past case where someone said how bad an idea it was, got the recipient to sign to this, , transferred it and then was later successfully sued for not being firm enough about what a bad idea it was !!!

So, because of this anyone who will even agree to say its a terrible idea in writing will likely want a big wodge of money. I'm guessing 2%.

Would agree with the gist but there's no way any sane ifa would be doing this for £60-£700, if you can get anyone to do it for less than £2k then I'd be surprised.

everyday7

I know it needs to be a pension transfer specialist. Is there a list where I can the details of any such people in London? Also, provided my mum pays the £2k fee - the IFA will be compelled to write something. Right?

xylophone

http://www.fca.org.uk/firms/financial-services-products/investments/pension-transfers

http://www.thepfs.org/yourmoney/find-an-adviser/

dunstonh

know it needs to be a pension transfer specialist. Is there a list where I can the details of any such people in London?

Pension transfer specialist adds to cost
London adds to cost
Very High Risk transaction unlikely to be in her best interests add to costs (for liability reasons)

I would expect something in the thousands of pounds range.

AnotherJoe

everyday7 wrote: »

I know it needs to be a pension transfer specialist. Is there a list where I can the details of any such people in London? Also, provided my mum pays the £2k fee - the IFA will be compelled to write something. Right?

No.
If you can find someone to write it up, then she'd pay the fee. But no one may be willing to write it up, even to say "dont do do it".

And my bad yes I'm sure 2% on such a lump sum would be way too low and £2k is more like it.

everyday7

oh - why did the gov even offer this option to people if its going to be so hard / impossible to get.

Its going to take 1 - 1.5 hours of work, to work out if its going to be worthwhile how can they justify charging her thousands.

xylophone

http://www.finalsalarytransfer.com/

The guides above may be worth a read.

AnotherJoe

everyday7 wrote: »

oh - why did the gov even offer this option to people if its going to be so hard / impossible to get.

Its going to take 1 - 1.5 hours of work, to work out if its going to be worthwhile how can they justify charging her thousands.

This is already explained in several of the previous replies. Please read them.

The sum is not for the work.

Its for the liability when your mother goes back to the IFA in 10 years time and says "you obviously didn't explain clearly enough what a terrible deal it was because if you had I wouldn't have done it, so I demand compensation"

p.s. I can tell you right now its not worthwhile (unless your mother is terminally ill?) and there are almost certainly better ways of getting the money she wants / needs.

saver861

everyday7 wrote: »

oh - why did the gov even offer this option to people if its going to be so hard / impossible to get.

Its going to take 1 - 1.5 hours of work, to work out if its going to be worthwhile how can they justify charging her thousands.

By the time you rack up the charges you will probably find its not worth it!

Put another way, by the time you would have paid out all the costs etc, the amount you will have left would not take long to collect in annual pension.