DB transfer value shock

Thrugelmir

Dark_Sunday wrote: »

This is NOT right. In fact it's abhorrently wrong.

Blame the litigation culture that persists these days. Everything is fine until it isn't. Then people look to pass responsibility elsewhere and expect their losses to be covered. Things are never as black and white, nor as predictable as they might seen. There's a huge amount of grey. That many will fall foul of.

Dark_Sunday

Yes but as I understand this arrangement was set up to protect innocent people from being ripped-off from the financial industry, as many of them undoubtedly were. Just to be ripped-off again by the financial industry if you think about transferring out of a DB scheme.

Bazofts_Revenge

Your only real option then will be to claim your pension at the earliest opportunity and extract as much as you can from it for as long as you can.

I worked out if I take my heavily penalised Pension at 55 I would only lose out in terms of Pension paid out if I lived beyond 77 and retired at 65. Even if that is the case I would have had 10 years extra retired and no amount of money can buy you an extra ten years of life.

greenglide

this arrangement was set up to protect innocent people from being ripped-off from the financial industry,

Err - no.

It was setup with a safeguard so that people who do not understand the true value of their DB pension had take advice so that they would find out how much it was worth.

Since the legislation was put in place gilt yields have come down significantly meaning the DB -> DC transfer may be more attractive but there still seems to be a steady flow of people here who seem determine to get a hold of the money behind a DB pension "so I can invest it myself", "put it in the bank" etc.

It people actually understood pensions and their underlying products there would be no issue but loads of people don't. The government has put the rules in place to reduce the number of people who make catastrophic mistakes, nothing to do with being "ripped off " by any industry.

Presumably gilts may return to a higher return again or some other change may reduce the CETV values to a more sensible level so that DB -> DC transfers again become clearly stupid in the majority of cases. People would still complain that they were being "ripped off" because the CETV wasnt as large as it was.

soulsaver

Dark_Sunday wrote: »

After several weeks of in-depth research I've concluded that this DB debacle whereby you need to pay circa 3% to an IFA if you want to transfer to another pension fund is nothing short of a SCAM.

Many if not most pension companies appear to not accept a transfer unless an IFA advises that you should transfer. So if you have a DB CETV of say £200k & you know that you defo want to transfer it to another fund, you pay an IFA £6k but he /she advises not to transfer so you basically lose £6k.

Apparently only something like 1 in 10 IFAs conclude that a transfer from a DB scheme should proceed.

This is NOT right. In fact it's abhorrently wrong.

If you're interested in progressing a transfer now, rather than debating the pros & cons of IFAs 'greed' fuelled by regulations forcing you to seek qualified advice, you need to accept there is the rule, like it or not.

I know you'd prefer not to pay an IFA anything, but as someone said 'them is the rules'.
However, you should write up your reasons for the enquiry & for preliminary discussions; you can find your way to suitably quailed IFAs, that do it for much less than 3% and:

A) You may be able to establish that you're going to get a positive recommendation from the IFA at the free preliminary discussion.

If you exhaust plan A with no offer of positive advice maybe you ought to reconsider? But if you still wish to transfer, you take the lowest cost negative advice and transfer your CETV to a receiving scheme that will accept 'an insistent client'.

And there are well known and trusted schemes/platforms that will accept with negative advice... at the moment.

Good luck.

mgdavid

You can continue to whinge and wail and gnash your teeth but nothing will alter the law in the short term.
Or you could go back and read post #30, and perhaps comment why that doesn't provide a workable solution?

msallen

Dark_Sunday wrote: »

... as I understand this arrangement was set up to protect innocent people from being ripped-off from the financial industry...

No, it is to protect the ignorant and/or stupid from their own ignorance/stupidity.

scdandem

We have a similar conundrum. We understand the fees and whilst not happy appreciate 'thems the rules'.

60th birthday tomorrow and three DB schemes. Two to be taken at 60 and one at 65.
DBS 1 - £5000 pa index linked + £15k TFLS + 2/3 spouse or £95k CETV
DBS 2 - £6000 pa index linked + £0 TFLS + 1/2 spouse or £205k CETV
DBS 3 - £3000 pa index linked + £0 TFLS + 2/3 spouse (CETV requested 25/11/16

Working on published life expectancy rates inc fitness/activity levels I may live another 31 years and my wife (9 years younger) may outlive me a further 5 years.

DBS 1 would pay us circa £190k, index linked with no hassle, until death (if reach expected ages) whereas only providing £95k CETV. We decided to take this. The £15k cleared the remaining mortgage and the £5k pa all but covers essential bills. Sorted.

DBS 2 would pay us around £201k index linked, no hassle, or £205k CETV which I think would need a performance of around 3/4% if take 1% mngmnt fees and initial advice fee into account? If we take the monthly DB now it will be taxed in full but I believe there is the option to defer it.

DBS 3 is in a good scheme and we don't have to make a decision but they're taking the full 3 months to send the calculation.

We also have £60k isa savings and £100k in personal pension pots. We both intend to work part time for the next 6 years bringing in around £30k net.

What we'd like is a financial advisor who can help us put together a cohesive portfolio but our long term one has retired and his replacement just wants to deal with my imminent pension provision and doesn't seem to be willing to take our personal pots, savings and future state pensions into the equation!

Are we expecting too much from an IFA? We've now been told we've run out of time to get the advice for the £205k from DBS 2 (deadline 28 Feb) so will have to pay for another CETV and hope it hasn't decreased.

All very last minute for various unavoidable reasons but we are where we are and any advice on the way forward would be much appreciated. ��

atush

Dark_Sunday wrote: »

Yes but as I understand this arrangement was set up to protect innocent people from being ripped-off from the financial industry, as many of them undoubtedly were. Just to be ripped-off again by the financial industry if you think about transferring out of a DB scheme.

No. This was set up (by govt- not he industry) to make sure numpty holders of DB pensions know exactly what they are giving up (ie a guaranteed indexed linked income for life) for a life of investing in the market that goes up and down. With no guarantees of any kind.

The fact that some who have already done this (and have decided after losing money and they wont get the same income in retirement they gave up) have sued the IFAs who gave them advice it was a bad decision but they sue anyway. And being sued (winning or losing and sometimes they lose) costs a whole lot of money each year in insurance.

justme111

What is wrong with drawing DBS 2 ? Why creating additional headache for yourselves?