IFA needed to transfer small pension pot!!!

Tom_Brine

Many moons ago I worked part time for Swindon Borough Council as a lifeguard to put me through University. I recently was looking into my retirement planning and found that I had contributed into the Wiltshire Pension fund whilst I had done this.


I contacted them last week to talk about the pension as I hadn't had a statement since 2012. I requested a statement and also a cash equivalent transfer value along with any forms required to enact this should I wish to. This is because I have a very well performing workplace pension scheme which is averaging 7-8 percent growth per annum over the last 5 years.


I received the forms on Friday and found that my pension was worth £50 a year with a cash lump sum of £125. The cash equivalent transfer value was roughly £418.


So I thought id transfer it and hope for some more growth. However, it appears that to do so I need to pay an Independent Financial Advisor to sign a document saying they have given me advice on the matter.............. for £418 of my money! i've had a quick look online and the cost of getting this advice would heftily eat into that princely sum and then some........ However without it I can not instigate the transfer. This seems ridiculous to me and means my pot is kept held to ransom with Wiltshire Pensions.


Does anybody know a way around this, a free service or low cost document signature. Advice can be garnered by oneself and to say you can not act without paying someone to move a few hundred pounds is infuriating.


Any help or advice appreciated

PeacefulWaters

That CETV is awful value.

Why would you even think about taking it? Stick with the lump sum and nominal income.

jamesd

Why does it appear that you need advice? Was it something specific to you or maybe just a standard document?

The usual threshold for needing advice is a value of £30,000 so you might ask why a CETV of £418 has a protected benefit value of more than £30,000 or otherwise why they want proof that advice has been taken.

xylophone

Advice from an IFA would be required where the value of the benefits exceeded £30,000.

https://www.lgpsmember.org/arl/already-left-tvout.php

dunstonh

I received the forms on Friday and found that my pension was worth £50 a year with a cash lump sum of £125. The cash equivalent transfer value was roughly £418.

So clearly appears that keeping the pension there is best value for money.

So I thought id transfer it and hope for some more growth. However, it appears that to do so I need to pay an Independent Financial Advisor to sign a document saying they have given me advice on the matter.............. for £418 of my money!

its not your money.

i've had a quick look online and the cost of getting this advice would heftily eat into that princely sum and then some..

It would wipe it out. However, I cannot see an IFA recommending a transfer either.

This seems ridiculous to me and means my pot is kept held to ransom with Wiltshire Pensions.

you do not have a pot. It is a defined benefit pension. You are not being held to ransom. You will be paid the benefits as agreed.

Does anybody know a way around this, a free service or low cost document signature.

Why would an IFA take on the liability of one of the highest risk transactions going in a case that is clearly not in your interests to transfer for free?

Advice can be garnered by oneself and to say you can not act without paying someone to move a few hundred pounds is infuriating.

Consumer protection is in place to stop people making silly decisions.

Any help or advice appreciated

The administrators probably send that form out for all transfers. However (until next April) it is only legally required where the cost of benefits exceeds £30,000. So, they probably dont need the form back.

However, you haven't got to the next stage which is where most receiving schemes will require an IFA to sign off on the transfer.

Tom_Brine

dunstonh, keeping the pension there may be the best value for money. You state it is not a pot of my money and I take that with DB pensions you are buying the benefit, not accumulating a pot with which to purchase one at a later date. Hence the need for a CETV.

However, Its just such a small amount I would really rather combine it with my current, solidly performing active scheme. The information on minimum CETV's for IFA's is helpful thanks to everyone.

I have other schemes, one year in a career average DB from a University which I would not touch as it had reasonable amount paid into it during a year in employment with a good salary. And a second with £32,105.25 currently in from a total investment of £27,654.92 since January 2015 (£13,411.11 employer, £6705.40 me, £7497.45 transferred from a previous DC scheme and £40.96 AVC's ive just started paying).

Every month I save over £1275 across SAYE share save, SIP share scheme, S&S ISA and cash.

Its more a matter of tidying up, you state its worth keeping but we are talking less than a fiver a month.

Thanks again for everyone's responses

Silvertabby

How old are you?

Under current LGPS rules - and as long as you don't have any other LGPS benefits - you will be able to take this as a one-off lump sum under triviality rules at 60 (65 if you have a GMP).

dunstonh

However, Its just such a small amount I would really rather combine it with my current, solidly performing active scheme. The information on minimum CETV's for IFA's is helpful thanks to everyone.

But have you checked with that scheme that they will accept a defined benefit pension transfer in without an IFA being involved? In the majority of cases they will not.

I understand the sentiment about it being small, but financially, the investments are unlikely to match the benefit of the DB scheme. Remember that the DB scheme figures go up each year too. So, the investments are not only starting from a massively poorer position, they are trying to catch up with a figure that would be increasing each year as well.

PeacefulWaters

Why would you cash in something likely to give you over £1,000 for less than half that amount.

Screw simplifying what you've got and do what will pay you the most.

Tom_Brine

Im 33, turn 34 in November

I could transfer the money into my scheme and have checked that this is the case. However I didn't mention the IFA not being involved.

Seems the best thing to do is leave the pension un-touched. Looking on the bright side, less admin for me.

Thanks for everyone's advice

dunstonh

I could transfer the money into my scheme and have checked that this is the case. However I didn't mention the IFA not being involved.

It is important that they know it is a defined benefit scheme. Most pensions accept transfers in. So, if the question asked was "do you accept transfers?" they would answer yes. However, where pension have GMP or are defined benefit, they will usually answer that they wont accept those or they need an IFA to sign off on it.

It is both sides that look to protect themselves. The one you leave is required to insist on advice where benefits exceed over £30k. The receiving scheme has no requirement in law but will nearly always require it due to the FCA's position on a DB transfer being mis-sold unless proven otherwise.