Financial Conduct Authority Certificate

AnotherJoe

nxdmsandkaskdjaqd wrote: »

dunstonh stated that there is no such thing as a Financial Conduct Authority Certificate. Could you advise on what document is required to facilitate a transfer? A report from an IFA stating the pros and cons of trasferring, most likely with a recommendation not to. I dont know if there is a specific name for that report. Note, it doesn't matter if the recommendation is "dont" you can still go ahead. You need a report, and not a report that says "do it". Most likely it will say "no" because ist in the advisers interests to say that but they can and have been fined merely for facilitating such a transfer against their advice.


One thing that puzzles me at the moment is how the GMP affects the pension pot I have. Is it as simple as, it may increase the pot size? I can perhaps see how this works in annuity situation (gives a better pa rate), but with drawdown it's not so clear.

No, it doesnt affect the pot size at all. There will be no drawdown. Once a pension (witha minimum value) is being paid out of the scheme, the GMP affects the uprating of the pension due to inflation. Whats unknown at present is, what the scheme may pay out on which that uprating is working.

It may be for example that irrespective the pot is £1k, £10k or £100k it pays out (say) £3k a year. So if your pot is £1k or £10k you'd be barking to transfer it out. If its £100k, not so much.

Yet, without knowing this basic info, you seem inclined, almost desperately so, to find an IFA and get cracking without knowing the basic info. Once you've got that info, then it may be you may rule out transferring it since it will be obvious to you that its a bad idea.

nxdmsandkaskdjaqd

Thank you all for your replies and in particular the last replies which have helped in my understanding. It's been a learning experience, I knew about the GMP element of the pension plan, but didn't appreciate its possible value. The next bit is going to give a little more about me and why and I was going down the transfer route.

I am 60, and now to be dismissed on the grounds of ill-health. I have an incurable Leukaemia for the last 14 years and have received several courses of chemo. When I was first diagnosed, I was given seven years, but with medical advances and careful choices of treatments I have extended my life. However, I believe that I am on borrowed time and will never be around to take my state pension. (I could be wrong, but research of my condition and survival statistics suggest that will not be receive the state pension).

So my plan was not to touch the pot for a number of years and live on some cash we have. Then when the time is right, each year crystallise, say £20k, using the UFPLS approach. Upon my death my wife inherits the remaining pot with the benefit of this being tax free.

So an annuity, with a say 10 Year guarantee doesn't work for me or my wife.

My wife having a £300k pot under drawdown should satisfy her needs upon my demises.

Sorry that I have left this bit of information out in the original mail, but I had no idea that the GMP bit of this thread was going to through up these issues.

Thank you all for your replies. Does this changes any of the replies received? Am I right with my approach? I am more comfortable in seeing and IFA if the need arises!

PS, I am comfortable with my condition and pending end result, so we don't need to go there (if you understand what I mean).

dunstonh

So an annuity, with a say 10 Year guarantee doesn't work for me or my wife.

What about an annuity with 30 year guarantee or value protect? Why did you select 10 year in that example?

With your medical conditions, a joint 100% annuity could be viable as your medical conditions would improve the terms and on your death, your wife would continue to be paid the enhanced amount.

Not saying they would be the right option but you would certainly want them costed up to put you in an informed position.

xylophone

Sorry that I have left this bit of information out in the original mail,

That "unconsidered trifle" is vital to your case!

"The GMP part of your pension accrued since 6 April 1988 will be increased each year in line with inflation subject to a maximum of 3% per annum. If inflation is above 3% per annum, the Government will provide any additional increases on the GMP up to inflation. This will be payable through the State pension."

You fall into the new state pension scheme where this system does not operate as it did in the old.

Have you obtained a new state pension statement?

Re a pension transfer specialist - see http://www.pruadviser.co.uk/content/knowledge/technical-centre/pension_switches_transfers/

"Currently a pension transfer specialist must have CF30 (customer function) and hold a qualification from:

G60 or AF3 (CII)

Pensions paper of Professional Investment Certificate (IFS)

Fellow/Associate of Pensions Management Institute

Fellow/Associate of Faculty of Actuaries

Full details of the qualifications accepted are available in the FCA Training and Competence Handbook. The FCA heavily discourage direct offer or execution only in pension transfers and if this is to take place then the firm must make, and retain indefinitely, a clear record that no advice was given."

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

nxdmsandkaskdjaqd

xylophone wrote: »

That "unconsidered trifle" is vital to your case!
Have you obtained a new state pension statement?

Yes I have run a state pension statement, but as previously stated,doubt that I will start it.

nxdmsandkaskdjaqd

dunstonh wrote: »

What about an annuity with 30 year guarantee or value protect? Why did you select 10 year in that example?

The last annuity quote I ran was several years ago and I thought 10 years was the max, so 30 years was a surprise.

I have run some enhanced annuity quotes today just to see the level of payments. I will keep and open mind on this.

nxdmsandkaskdjaqd

nxdmsandkaskdjaqd wrote: »

I have just found another document which states:

"The GMP part of your pension accrued since 6 April 1988 will be increased each year in line with inflation subject to a maximum of 3% per annum. If inflation is above 3% per annum, the Government will provide any additional increases on the GMP up to inflation. This will be payable through the State pension."

Could I just ask for clarification on the payment of the GMP component:

So If inflation is above 3% this is paid via the state pension. If inflation is below 3% then its paid via the annuity.

Is this correct?

jamesd

nxdmsandkaskdjaqd wrote: »

I have run some enhanced annuity quotes today just to see the level of payments. I will keep and open mind on this.

That's also an area where an IFA who is willing to negotiate - probably a smaller local firm - can potentially get s significantly higher payout.

Your particular circumstances are those where a transfer out may well be recommended, due to severely reduced life expectancy.

If your wife has normal life expectancy it could well be the case that including her significantly reduces the potential annuity income by making it her life that ends up setting the rate. Similar considerations can apply to the length of the guarantee period, a 30 year guarantee means that the dominant pricing factor might be the 30 years, not your actual life expectancy. A shorter guarantee intended to boost the annuity payout level for a given spend while preserving capital might offer a better deal overall.

While you like drawdown and so do I, it's possible that spending some money on an annuity could produce a sufficiently higher income to make the likely remaining pension pot size larger. Courtesy of cross- subsidy from those who live short lives to those who live long ones. The potential benefit comes if you live longer than expected, when it can save drawing so much.

Given your apparent life expectancy it's unlikely that GMP would provide a sufficient uplift compared to your medical situation.

Just to be sure you understand it, an annuity guarantee means that it will pay out from date of purchase for the number of years in the guarantee regardless of whether you're alive or dead. So if you have a five year life expectancy buying a 30 year guarantee multiplies the time the money has to be paid out by potentially six times, with corresponding potential reduction in how much income the annuity pays during the years when you're most likely to still be alive. So you may get several times the income for say a 30k spend with five year or no guarantee vs thirty year guarantee, while still having the annuity income for longer if you do turn out to live a long time.

dunstonh

The last annuity quote I ran was several years ago and I thought 10 years was the max, so 30 years was a surprise.

The pension freedom options changed the legislation on annuities. However, the media didnt cover that sort of thing. And dont assume it will cost more. One provider at the moment, is giving better terms for 20 year guarantee than 10 year.

xylophone

Could I just ask for clarification on the payment of the GMP component:

So If inflation is above 3% this is paid via the state pension. If inflation is below 3% then its paid via the annuity.

Is this correct?

As I said above, you are in the new state pension system which does not operate in respect of the GMP linking as the old system did.

Under the old system, the company pension scheme would provide index linking up to 3% CPI on the part of the pension that related to post 88 GMP while anything above this was provided through increased additional pension paid with the state pension.

The new state pension is single tier so that there is no longer an additional state pension.

What is your starting amount shown on your new state pension statement?