IFA Costs for Transfer of Benefits

Silvertabby

“ They should be able to take the charge out of the pension.
Originally posted by zagfles ”
Only if the transfer goes ahead to a product that allows charges to be taken from the pension.

But there's a huge chance that the advice will be not to recommend a transfer which then leaves the individual paying out of their own pocket if the adviser refuses to transact even though the individual wants to go ahead.

Sandsy is right - very few reputable IFAs will recommend a transfer from a DB scheme to a DC scheme unless you are very seriously ill and have no dependants. I'm retired now, but I was a LGPS adminstrator when the 'pension freedoms' were announced. We dealt with a lot of requests to transfer benefits from the LGPS to a personal pension 'cash it in' plan, but hardly any IFAs would sign off the discharge forms. This meant that some pension fund members tried other IFAs - I think the record was 4 - before finding one that would sign the forms. I dread to think what they had had to pay out in fees.

Just a thought, but who is your DB scheme with? If it's public sector then, with the exception of the LGPS (which is a funded scheme) transfers out to DC schemes are no longer possible. Full stop.

Tron1969

Silvertabby wrote: »

Sandsy is right - very few reputable IFAs will recommend a transfer from a DB scheme to a DC scheme unless you are very seriously ill and have no dependants. I'm retired now, but I was a LGPS adminstrator when the 'pension freedoms' were announced. We dealt with a lot of requests to transfer benefits from the LGPS to a personal pension 'cash it in' plan, but hardly any IFAs would sign off the discharge forms. This meant that some pension fund members tried other IFAs - I think the record was 4 - before finding one that would sign the forms. I dread to think what they had had to pay out in fees.

Just a thought, but who is your DB scheme with? If it's public sector then, with the exception of the LGPS (which is a funded scheme) transfers out to DC schemes are no longer possible. Full stop.

Its with the electricity supply pension scheme. I am not looking to "cash out" I am 8 years away from 55 and looking at the transfer value compared to the benefits I can get at 60 within the scheme it is a no brainer for me. I am single with no dependents and I am looking to add the transfer value to my existing pension pot

dunstonh

Silvertabby wrote: »

Sandsy is right - very few reputable IFAs will recommend a transfer from a DB scheme to a DC scheme unless you are very seriously ill and have no dependants. I'm retired now, but I was a LGPS adminstrator when the 'pension freedoms' were announced. We dealt with a lot of requests to transfer benefits from the LGPS to a personal pension 'cash it in' plan, but hardly any IFAs would sign off the discharge forms. This meant that some pension fund members tried other IFAs - I think the record was 4 - before finding one that would sign the forms. I dread to think what they had had to pay out in fees.

Just a thought, but who is your DB scheme with? If it's public sector then, with the exception of the LGPS (which is a funded scheme) transfers out to DC schemes are no longer possible. Full stop.

I would not be surprised if there are some doing it much cheaper with the full intention of closing down in a few years time transferring their liability to the FSCS leaving all the genuine firms to pick up the bill.

atush

Tron1969 wrote: »

I am under 55 and I am aware that you can't take any benefit until 55. The transfer value has increased substantially recently and was wanting to get all my old pensions into a SIPP but looking at the charges quoted below I don't have that sort of cash free so it may be a non starter

Why would you want to send your valuable DB guaranteed pension into an un guaranteed Sipp? What makes you think you can do better?

Do you think you will die early? Do you not have any spouse or dependents?

Tron1969

atush wrote: »

Why would you want to send your valuable DB guaranteed pension into an un guaranteed Sipp? What makes you think you can do better?

Do you think you will die early? Do you not have any spouse or dependents?

I don't have a spouse or dependents no. The Transfer value is approx. £220k of which I can start at 55 if I wished. The DB pension is £5.5k a year and £16.5k lump sum at 60 or £6.4k a year and £19.7k lump sum if taken at 63. No I don't think I will die early but no guarantees so I would rather take it earlier.

I think due to the size of the transfer value that would suite me better but I have to take independent Financial advice to release the fund into my SIPP that woulkd be costly advice if the cost is (£2.5 to £10k as quoted above)

Agreed there is no guarantee in the SIPP but looking at historical performance the funds I would choose have performed pretty well over the last 15 years (and I understand they can also go down). The above DB pension also increases with RPI to max 5%

dunstonh

I don't have a spouse or dependents no.

So that eliminates one area of justification that can sometimes be used.

The DB pension is £5.5k a year and £16.5k lump sum at 60 or £6.4k a year and £19.7k lump sum if taken at 63.

Those figures include annual indexation whilst in payment and will be higher by the time you get there as well.

I think due to the size of the transfer value that would suite me better but I have to take independent Financial advice to release the fund into my SIPP that woulkd be costly advice if the cost is (£2.5 to £10k as quoted above)

I dont think it is that obvious when you factor inflation and life expectancy into it. Sure, you would be better off on day one but within a couple of decades you could well regret it.

Tron1969

dunstonh wrote: »

So that eliminates one area of justification that can sometimes be used.



Those figures include annual indexation whilst in payment and will be higher by the time you get there as well.



I dont think it is that obvious when you factor inflation and life expectancy into it. Sure, you would be better off on day one but within a couple of decades you could well regret it.

Agreed but I did say in my post it goes up with RPI upto maximum of 5% but if you look at the funds historically long term they have all gone up way beyond RPI if taking the long term view. Plus I can take the benefits 8 years earlier too. There is an element of risk but there is also an element of risk with the guaranteed DB pension, who is to say they will be able to meet their commitments in full in the future (ie, is it really guaranteed) I would like to manage my own risks, I understand about indexation life expectancy etc

dunstonh

Agreed but I did say in my post it goes up with RPI upto maximum of 5% but if you look at the funds historically long term they have all gone up way beyond RPI if taking the long term view.

But that isnt taking into account withdrawals that increase annually. It would depend on your draw rate.

If you recall the pension mis-selling days of the late 80s, early 90s, people thought exactly the same thing. For many of us, this looks like history repeating itself.

Silvertabby

I would not be surprised if there are some doing it much cheaper with the full intention of closing down in a few years time transferring their liability to the FSCS leaving all the genuine firms to pick up the bill.

Dunstonh - I know which 'pension advice' set ups you mean! I was dealing with a transfer out request for a deferred member (who was well under 55), but there was a delay due to having to wait for the GMP figure from HMRC. The 'pensions advice' firm rang every second day, chasing payment of the funds - ending with me being screamed at 'that the member was going to sue me, because he needed his money urgently'. When I pointed out that the member was only in his 40s, and so couldn't access his benefits for some time, she hung up on me.

Stubod

I recently had a quote re a CETV offering about £66k for a pension worth £1.5k yr with virtually no index / cpi linking..so seems like a bit of a no brainer for me to take the CETV? (..am over 55...).