Transfer SERPS pension- protected rights?

EdInvestor

dunstonh wrote: »

AFAIA, all the providers that allow it at present (or allow it with decent investment options) require an IFA.

That's right.So for your small fund (most PR funds are quite small) you will have to pay an IFA 500 quid to "certify" that taking the 25% tax free cash and putting it into drawdown is an appropriate thing for you to do.

There is no guarantee that the IFA will decide in your favour and the fee is not refundable.

Regulatory guidance from the FSA to advisors is that drawdown should only be done with funds worth 100k or more (very unlikely there is any such PR fund).

Now I may be too cynical, but this appears to me to be an arrangement designed to boost the IFA beneveolent fund.My own IFA agreed with me that anyone who went along with this idea clearly had too much money for his own good. :rolleyes:

dunstonh

That's right.So for your small fund (most PR funds are quite small) you will have to pay an IFA 500 quid to "certify" that taking the 25% tax free cash and putting it into drawdown is an appropriate thing for you to do.

Why £500? If it is execution only like the other IFA sites you recommend on here, then it will either be fund based trail only like HL or a one off fee. Indeed, if the fund is large enough, it could be cheaper then HL.

There is no guarantee that the IFA will decide in your favour and the fee is not refundable.

If it isnt best advice, then dont expect the recommendation. However, that only applies to advice and not execution only.

Regulatory guidance from the FSA to advisors is that drawdown should only be done with funds worth 100k or more (very unlikely there is any such PR fund).

That is guidence on all retirement provision and not just one element.

Now I may be too cynical, but this appears to me to be an arrangement designed to boost the IFA beneveolent fund.My own IFA agreed with me that anyone who went along with this idea clearly had too much money for his own good. :rolleyes:

I think you are biased and you let that cloud your judgement. In some posts in here you tell people use an execution only IFA and in others you "forget" that execution only exists. In some posts you promote options more expensive than others.

The fact is that drawdown is available on funds from around £3000 in total (protected rights or ordinary rights or combined) and it doesnt have to be expensive or done on advice basis.

EdInvestor

This is not an execution-only matter. if only it were. The providers will not accept the transfer without advice - as you said.The advisors will not guarantee the advice will favour the transfer.The fee I quote is the one charged by your own network.

dunstonh

EdInvestor wrote: »

This is not an execution-only matter. if only it were. The providers will not accept the transfer without advice - as you said.The advisors will not guarantee the advice will favour the transfer.The fee I quote is the one charged by your own network.

The only transfers that providers will not accept without an IFA submitting the application is on final salary scheme transfers. That is for good reason as 9 times out of 10 it is best not to transfer the pension.

It doesnt apply to money purchase schemes.

I have done a number of execution only cases into unit trust funds on lower charges than HL's SIPP which include protected rights. If I was approached to do execution only for a final salary scheme I would reject it.

You also misunderstand what a network does. It is not an employer and there is no reason for a member firm to use network services if they do not want to. I assume that the £500 you mention is for an adviser using the network to sign off on the case. I dont know as I dont use that service but know it exists. Some do use it because they prefer the network to take on the liability. Others do not becuase they take on the liaiblity themselves. Typically, if you transact drawdown cases you have to do enough of them to make the extra cost and liability worthwhile. If you dont do many, then using the network to sign off on it can be cheaper.

Networks do not dictate the charges that an IFA firm can choose to levy (unless the charge is not compliant and breaches rules). If an IFA wants to levy £500 they can. If they dont want to levy £500 they can. They can levy a zero charge or a £2000 charge if they want.

MoneySavingTart

Are transfer penalties allowed on PR funds?

I have a PR fund built up from Pre 1997 contracted out NI contributions. It is invested with Scottish Equitable in unit funds invested in cash. I have asked for a quotation for the transfer value to transfer it into my employers funds prior to taking early retirement next year. SE are offering a transfer value 7.5% less than the selling price of the units on the day the quotation was made.
Are they allowed to make this penalty charge?
I see this question was raised and not answered further up this thread.
Can anyone offer guidance please?

TIA

MST

dunstonh

Are transfer penalties allowed on PR funds?

Yes

transfer penalties are allowed on transfers. However, most are reduced over time so you should find out if leaving it until next year will see a reduction.

MoneySavingTart

Thanks Dunstonh

I have heard that these penalties are not levied when a pension is taken either when an annuity is purchased from the company or an open market option purchase is made. Is this the case?
I could leave the funds where they are until DEC08 when I retire early at age 55. DO you know if the penalty is only zero at NRD.
When SE gave me the quotation they did not know of my intention to retire early.

TIA

Bob

dunstonh

I have heard that these penalties are not levied when a pension is taken either when an annuity is purchased from the company or an open market option purchase is made. Is this the case?

Depends on what age you are taking it and the terms of the contract.

I could leave the funds where they are until DEC08 when I retire early at age 55. DO you know if the penalty is only zero at NRD.

SE have issued so many versions over the years (like most providers) that its hard to know without asking. Many providers removed penalties from selected retirement date if it was after 60 or 65 (even if they were there in the original contract). 55 may be pushing it too far.

I have heard that these penalties are not levied when a pension is taken either when an annuity is purchased from the company or an open market option purchase is made. Is this the case?

That isnt the case generically. A few providers might but not all.

EdInvestor

MoneySavingTart wrote: »

Thanks Dunstonh

I have heard that these penalties are not levied when a pension is taken either when an annuity is purchased from the company or an open market option purchase is made. Is this the case?

This can be the case when an MVR on a With profits pension is involved.However with an old unit linked pension like this it is more likely that it will be penalty free only on the NRD in the original contract - which will usually differ from the Govt-set NRD.

It's something worth pointing out: always set the NRD on a personal pension contract at the lowest age possible under the law, as it gives you the flexibility to retire early without penalty. If deferring a matured pension, set it for the next year, on a rolling basis.

diamond9_2

Is there any reason for them charging a penalty other than they like taking your money?