IFA Pension advice

AnotherJoe

bostonerimus wrote: »

Given the apparent lack of general consumer knowledge and the poor decisions that seem to be made I'd question the efficiency of those education schemes. Looks like pretty poor value for money.

You can lead a horse to water ...etc

It doesn't matter how many schemes there are if people wont take the responsibility to learn.

Look at the posts here from people in the NHS and teachers, who you would think/hope are brighter than the average, and they are often utterly pathetic - "oh poor me i cant work out if its best to get lots and lots of free money for my pension or just save into an ISA". If those people cant take a few minutes out to educate themselves, what hope the masses?

bostonerimus wrote: »

There needs to be a strong and stable regulatory environment to give people the confidence to make financial decisions and so that people can take responsibility for those decisions,

I think there is but unfortunately it treats people as witless fools (on account of a substantial % meeting that criteria, see above) and so the compensation is arranged accordingly, essentially "its someone elses fault" and it doesn't matter how many disclaimers they will sign, they wil claim (quite possibly correctly) that they didn't understand them.

So we are literally in a position where an IFA can recommend that soemone doesn't transfer, they then transfer against IFAs advice, and IFA is successfully complained against since (it seems) they shouldn't even have examined the question. This is why I understand many IFAs wont touch this area at all now.

bostonerimus

AnotherJoe wrote: »

You can lead a horse to water ...etc

It doesn't matter how many schemes there are if people wont take the responsibility to learn.

I'd rather see mandated attendance at a training course than IFA consultation before a DB plan cash out.

So we are literally in a position where an IFA can recommend that soemone doesn't transfer, they then transfer against IFAs advice, and IFA is successfully complained against since (it seems) they shouldn't even have examined the question. This is why I understand many IFAs wont touch this area at all now.

The whole arrangement seems like an expensive disaster. Give a good faith attempt at educating people before cash out and then let them get on with it. No need for the iFA, compensation or litigation insurance.

Linton

POPPYOSCAR wrote: »

Am I missing something here?

The OP says the Transfer value is £39,000.

At the pension quoted that would take over 40 years to pay out?

How can that be right?

If that is correct I can understand why they want the cash now.

Dont forget these pensions are inflation linked which will reduce the pay off time significantly. Also we dont know how old the OP is. Though even then the £39K seems unusually generous giving a factor of 45X, certainly at the high end (or beyond) what we are used to seeing.

Linton

bostonerimus wrote: »

I'd rather see mandated attendance at a training course than IFA consultation before a DB plan cash out.
....

And a compulsory test at the end on the course? How long do you think such a course should last? I doubt whether most people even understand compound interest, so it would have to start at the very basics.

bostonerimus

Linton wrote: »

And a compulsory test at the end on the course? How long do you think such a course should last? I doubt whether most people even understand compound interest, so it would have to start at the very basics.

Yes, some basics would probably be necessary given the lack of finance education in schools....don't get me started on that.

dunstonh

I'd rather see mandated attendance at a training course than IFA consultation before a DB plan cash out.

IFA consultation would be personalised and lead to better outcomes. Time and again, it has been found that flow chart style advice leads to poorer outcomes and in a quarter of cases, the completely wrong outcome.

The current system protects the 95%. What you propose would protect around 50%. No system can ever be perfect. You have to find balance and that means experienced investors and knowledgeable consumers may find it frustrating but they are in the minority. So, do you have a system that suits that minority or one that suits the majority?

You appear to have a personal dislike of advisers (nor personally but at the profession as you are never rude in your discussion. It seems more of a dislike of the role). From what i have read of the US system, I can understand that. The UK used to be like the US and have significant numbers of reps like the US but it changed some years ago to remove those problems. It its height, the UK had over 200,000 advisers, agents, IFAs etc. Today it is just over 20,000. The difference is mainly the insurance agents/FAs tied to a provider. It isnt a sales environment any more, like it still is in the US.

You see advisers as a drag on returns. However, a provider in the UK that caters for both DIY investors and advised investors said a couple of years ago that their customers with advisers resulted in higher pensions than those without advisers. The main difference was due to better planning. So, yes, advisers are a cost but they can be a cost that prevents much bigger losses or shortfalls. You shouldnt be so negative towards UK advisers based on what the situation is in the US.

dunstonh

POPPYOSCAR wrote: »

Am I missing something here?

The OP says the Transfer value is £39,000.

At the pension quoted that would take over 40 years to pay out?

How can that be right?

If that is correct I can understand why they want the cash now.

There is a lot of info missing.

For example, the op says they have a pension fund with Aviva. So, that suggests money purchase. However, the op says it is a defined benefits scheme. So, it cannot be money purchase.
If it is a defined benefit scheme with Aviva then the OP must have been an employee of Aviva (or predecessor companies).
Or it may have been a DB scheme that was transferred to Aviva and is in a section 32 buy out bond. So, no longer a DB scheme. But it may have GMP and possibly a GAR.
The £870 figure may not be the current figure. It may be the figure after the 25%. It maybe before. Aviva also have a lot of hybrid S32 that are ex-occupational that have greater than 25% TFC.
What level of indexation is on that £870? What alternative options are available?
There is so little information in the post and a number of inconsistencies that need to be answered that you cannot reasonably assume that the £870 is relative to the £39k

Dasa

dunstonh wrote: »

There is a lot of info missing.

For example, the op says they have a pension fund with Aviva. So, that suggests money purchase. However, the op says it is a defined benefits scheme. So, it cannot be money purchase.
If it is a defined benefit scheme with Aviva then the OP must have been an employee of Aviva (or predecessor companies).
Or it may have been a DB scheme that was transferred to Aviva and is in a section 32 buy out bond. So, no longer a DB scheme. But it may have GMP and possibly a GAR.
The £870 figure may not be the current figure. It may be the figure after the 25%. It maybe before. Aviva also have a lot of hybrid S32 that are ex-occupational that have greater than 25% TFC.
What level of indexation is on that £870? What alternative options are available?
There is so little information in the post and a number of inconsistencies that need to be answered that you cannot reasonably assume that the £870 is relative to the £39k

It was an employee scheme taken over by Aviva and is defined benefits stated in their letters to me.(Preserved pension benefits)

£876.00 pa with no tax free cash taken.

Max TFC is 25%

5% increase pa

Why is the £876 not relative to the £39,000?

Linton

At what age can you take the pension?

Dasa

Linton wrote: »

At what age can you take the pension?

Minimum retirement age is 55 but I'm coming up to 60 so contacted them to get my options. I was really surprised by the amount of the TV and thought on such a low pension amount it would be less than £30000 and I wouldn't need to go down the IFA route.

Their letter also says
This is a Defined Benefits Pension Scheme
The member does not have a pension sharing order
Benefits have not been crystallised
Benefits are equalised except GMP
The member was not part of a bulk transfer
and it gives a PSTR number.