Financial Conduct Authority Certificate

nxdmsandkaskdjaqd

Hi

I have a Defined Contribution pension and because I am retiring, I want to move my pension pot away to a SIPP on a platform such as HL. I have no plans to take the pension at the moment and have just been informed of the following by my company pension administrators:

Before a Transfer can take place it’s necessary to receive a Financial Conduct Authority certificate signed by an IFA to indicate that you have received Financial Advice.

My initial investigations has put this advice at thousands of pounds, which seems expensive.

What would the market rate be for an IFA to produce the Financial Conduct Authority certificate? Also is this really necessary?

Thanks

PensionTech

You should not need IFA advice to go ahead with a transfer unless a) HL insist on it, in which case, find a new SIPP, or b) what you have at the moment isn't a pure DC pension, and has some element of "safeguarded rights" (e.g. an underpin, a guaranteed annuity rate, etc.). Do you know which of these applies?

HappyHarry

What would the market rate be for an IFA to produce the Financial Conduct Authority certificate? Also is this really necessary?

Rates will vary from IFA to IFA. You can look some local ones up at www.unbiased.co.uk

The IFA will need to provide you with documented advice, so it is not as straightforward as just signing a certificate.

If the pension has safeguarded benefits, then yes, it is really necessary as it is a legal requirement. In these circumstances, no SIPP provider will permit the transfer without IFA approval.

If the transfer from your company pension to a SIPP turns out to clearly not be in your best financial interest, then you may find difficulty in finding an IFA who is happy to provide you with advice.

nxdmsandkaskdjaqd

PensionTech wrote: »

or b) what you have at the moment isn't a pure DC pension, and has some element of "safeguarded rights" (e.g. an underpin, a guaranteed annuity rate, etc.). Do you know which of these applies?

The words from the Company Pension advisor were:
"Due to the GMP Underpin, the benefits in the Hybrid plan are considered as ‘safeguarded benefits’ under legislation"
Does that help?

xylophone

"Due to the GMP Underpin, the benefits in the Hybrid plan are considered as ‘safeguarded benefits’ under legislation"

http://adviser.royallondon.com/news/pensions/2015/may/safeguarded-benefits/

nxdmsandkaskdjaqd

xylophone wrote: »

http://adviser.royallondon.com/news/pensions/2015/may/safeguarded-benefits/

Is there any way to overcome this? All I want to do is transfer my pot to another provider (I don't even want to crystallise any of the pot)

xylophone

Is there any way to overcome this?

https://www.handbook.fca.org.uk/handbook/glossary/?filter-title=pension+transfer

It seems that you'll require a Pension Transfer Specialist.

dunstonh

Before a Transfer can take place it’s necessary to receive a Financial Conduct Authority certificate signed by an IFA to indicate that you have received Financial Advice.

There is no such thing. However, it is normal for an IFA to be required on a defined benefit transfer as the default position from thee regulator is mis-sold unless proven othwerwise.

My initial investigations has put this advice at thousands of pounds, which seems expensive.

Why does it seem expensive to you?

Typically, the excess on complaints for adviser firms on defined benefit schemes is at least £5000. It is approx only suitable to transfer in about 1 in 10. It is expensive in terms of PI insurance, regulatory action and the FOS are likely to uphold any complaint.

It is not just a cert to sign (there is no cert). It has to be an advice process involving research and analysis. Plus, an IFA is unlikely to recommend HL as they are expensive compared to IFA platforms.

What would the market rate be for an IFA to produce the Financial Conduct Authority certificate? Also is this really necessary?

Anything less than £5000 is cheap.

Is there any way to overcome this?

Seeing as you want to transfer it, this would indicate you have done some of your own research already. If so, what was the critical yield?

sandsy

Proof that you've taken advice before giving up safeguarded benefits is a legislative requirement, not an FCA requirement, under s48 of the Pensions Act 2015. The onus is on your ceding scheme to ensure you've had the advice, not the receiving scheme.

Once you've got proof that you've had regulated advice, you can do what you want with the fund, subject to finding a provider who'll accept it - some will refuse if the advice was not to transfer as they don't want to be seen to be colluding to make you worse off than if you left it where it is.

nxdmsandkaskdjaqd

dunstonh wrote: »

There is no such thing. However, it is normal for an IFA to be required on a defined benefit transfer as the default position from thee regulator is mis-sold unless proven othwerwise.

Why does it seem expensive to you?

Seeing as you want to transfer it, this would indicate you have done some of your own research already. If so, what was the critical yield?

Several thousands pounds to just transfer to another provider seems expensive to me. Maybe if I needed advise on what to do with the pension then the fee might be justified. But I don't.

What is Critical Yield?

xylophone

What is Critical Yield?

It is the growth required to match the benefits due from the ceding scheme at scheme NRA.

As far as I know, ( but I have no experience of a COMP with GMP underpin), these schemes are treated as defined benefit because at their simplest, they offer a guarantee of the better of the money purchase benefits or the GMP at NRA?

Pension Tech may well know more about them.

What exactly are you being offered under the terms of your scheme?