Help _ Final salary pension to Drawdown

Trace46

Hi, could do with some advice.
My husband is looking to move his final salary pensions into a drawdown. We have analysed our options and feel that this is best for our situation.
We have found a company to place the funds with for investment that we are happy with, however we need to confirm we have had independent financial advise to our pensions provider before they will release the funds to transfer.
The problem is the FCA have frightened off IFA’s from dealing with type of transfer from Final Salary schemes and we cannot find anyone prepared to even just write us up their financial advise..even if negative for fear of being sued later.
I am told we can choose to do what we want with our pensions, even if the advise is not what we take. However without the written confirmation that we have taken financial advice cannot proceed forward.
I know what many will think, why go against financial advice, but our circumstances are such we think this is correct for us.
Anyone got any advice or experience of this step in the process and what can be done?.

tacpot12

If you want to do this thing, which is very likely to be a bad idea, you need to change your approach.

You need to approach an entirely new set of IFAs, as you have probably revealed too much of your intention to the IFAs you have spoke to. They suspect that transferring will be a bad idea, and have deduced, or you have told them, that you will move even if the advice is not to move, and so they are helping you by refusing to offer any advice - it is the only way they think they can protect you from yourself.

With the next set of IFAs you approach, explain you want advice as you don't know what you want to do, play up any ill health (and any news about the DB pension being in trouble) and any desire to leave something to your family when you die. Agree a fixed fee for the advice, and agree a rebate of the cost of the advice, if you use them to setup the drawdown product. Make sure you can just pay for the advice and that your only have to do so when you have received the advice.

This is the only way I can think that you will get the negative advice you seek.

bigadaj

Trace46 wrote: »

Hi, could do with some advice.
My husband is looking to move his final salary pensions into a drawdown. We have analysed our options and feel that this is best for our situation.
We have found a company to place the funds with for investment that we are happy with, however we need to confirm we have had independent financial advise to our pensions provider before they will release the funds to transfer.
The problem is the FCA have frightened off IFA’s from dealing with type of transfer from Final Salary schemes and we cannot find anyone prepared to even just write us up their financial advise..even if negative for fear of being sued later.
I am told we can choose to do what we want with our pensions, even if the advise is not what we take. However without the written confirmation that we have taken financial advice cannot proceed forward.
I know what many will think, why go against financial advice, but our circumstances are such we think this is correct for us.
Anyone got any advice or experience of this step in the process and what can be done?.

You will struggle to do what you want with your pension, there are a limited number of IFAs that will deal with db transfers, and those that do can be picky and also charge significantly.

You oay for their advice, be that positive or negative, and with a negative recommendation it's very difficult to get schemes to accept the transfer.

Would be more helpful if you posted your circumstances and reasoning.

HappyHarry

The problem is the FCA have frightened off IFA’s from dealing with type of transfer from Final Salary schemes and we cannot find anyone prepared to even just write us up their financial advise..even if negative for fear of being sued later.

Not true at all.

Part of the problem is that only a few IFAs with the necessary transfer permissions (I've seen figures here quoted as 1 in 10 advisers have the permissions).

The FCA have made clear to advisers that they must give advice, which must include advising on where the funds should eventually be invested. Providing the advisers can substantiate their advice, and it is suitable for the client, there is nothing for the IFA to be concerned about as far as the FCA is concerned.

What is probably unnerving the IFAs you have spoken to is that you have determined the investments you want to be in beforehand. That would make me very nervous, especially if the investments you wanted were not diversified or did not meet your attitude to risk or were just plain inappropriate.

An IFA could find themselves in a position of either recommending something they were uncomfortable with (which they generally will not do), or having an unhappy client for whom they are proposing a transfer to an investment that the client doesn't want. Either of these scenarios are likely to lead to complaints in the future.

What investments are you interested in, and why?

Malthusian

The Financial Conduct Authority recently reviewed a selection of final salary pension transfer recommendations and found that 1 in every 2 were not suitable. What that means is that there are plenty of bucket shops out there who will happily sign off your transfer if you cross their palms with silver, regardless of whether it's a good idea. Your problem is that the IFAs you have contacted have been too reputable.

Trace46

Thank you all for replying. The reason we want to do this is the following.
Over the last 10 years we have been caring for several family members to death from illness and we now have our final 3 relatives in care. We have lost 3 in the last 18 months.
The toll of doing all this caring and both trying to work full time has taken a considerable impact on our health and life. So we took the decision for one of us to finish work ( my husband as he is 55 and I am only 46) to manage the day to day issues we have so I could concentrate more on work and not loose my job.
I have a good pension to pull in the future and and a good earning level.
As most of our family have not lived past 71, we have weighted up the DB that we would need to live to 96 to match the transfer value in benefits for my husband and as you say, we cannot pass this on in our will via DB.
As the transfer value is higher than the pension funds for my husband, this means we would get a higher 25% tax free sum now that would go towards helping us manage through this period of care we are performing. It also means we could pull up to the tax level each year, tax free until my husband is 67 and receives his state pension and convert to cash if needed to support us further.

HappyHarry

Trace46 wrote: »

Thank you all for replying. The reason we want to do this is the following.
Over the last 10 years we have been caring for several family members to death from illness and we now have our final 3 relatives in care. We have lost 3 in the last 18 months.
The toll of doing all this caring and both trying to work full time has taken a considerable impact on our health and life. So we took the decision for one of us to finish work ( my husband as he is 55 and I am only 46) to manage the day to day issues we have so I could concentrate more on work and not loose my job.
I have a good pension to pull in the future and and a good earning level.
As most of our family have not lived past 71, we have weighted up the DB that we would need to live to 96 to match the transfer value in benefits for my husband and as you say, we cannot pass this on in our will via DB.
As the transfer value is higher than the pension funds for my husband, this means we would get a higher 25% tax free sum now that would go towards helping us manage through this period of care we are performing. It also means we could pull up to the tax level each year, tax free until my husband is 67 and receives his state pension and convert to cash if needed to support us further.

There are a few pros and cons you mention above, but ultimately, it is probably the fact that you are choosing your own investments that is putting off IFAs. Again, what investments are you looking at and why?

I would be surprised if your husband needs to live to 96 to match the CETV. Are you taking inflation into account? The DB scheme will (most likely) have an element of inflation proofing in it.

With a much younger spouse, your husband's pension may need to last significantly longer than his lifetime, unless you can entirely self-fund your own retirement.

Has your husband enquired about taking his DB pension early? Could that go anyway to helping your situation? If so, can he commute any pension to a tax-free lump sum? If so, what is the commutation factor?

I can understand why you are looking at transferring this pension, but it may be that doing so isn't actually in your best interest.

CFrog

Trace

I've just completed the transfer of a DB pension into a SIPP, taken the 25% tax free lump sum and put the balance into a drawdown a/c (although I am not taking any money out for another 12 months or so).

I did have some difficulties in finding IFAs who were willing to perform the process at a reasonable cost. I settled on Intelligent Pensions in the end. Costs were c. £1k (+VAT) for the TVAS report plus 1% for moving the funds to my (SIPP) pension provider (for me to self manage). Other quoted transfer costs were higher than this (2-3%) from those IFAs who appeared to be less enthusiastic for a self-managed transfer and slightly lower if they were to manage the transferred funds.

I know you say you've analysed your situation. I don't know how much you have done but as a minimum I would model your income / expenditure for you and OH thro' to at least your SP age to get an idea of the 'numbers' and how your financial circumstances stack up (both with a transfer and keeping the DB pension where it is). This, along with your personal circumstances such as life expectancy, inheritance(s), desire to pass on funds etc will help in any conversation with a qualified IFA. (The latter bit worked for me as my TVAS analysis alone would not have been sufficient for the IFA to support the transfer.).

There are a number of threads on this forum covering transfers; have a look at the following:


https://forums.moneysavingexpert.com/discussion/5563654
https://forums.moneysavingexpert.com/discussion/5593154
https://forums.moneysavingexpert.com/discussion/5611225
https://forums.moneysavingexpert.com/discussion/5618560
https://forums.moneysavingexpert.com/discussion/5665088

Send me a PM is you need any more help.

Regards

Trace46

Thank you for this.

This really helps me. We are confident we know our situation well and best interests without going into too much detail about our future income.

garyjones1962

Is that the same Intelligent Pensions that have suspended DB transfer advising?

https://www.moneymarketing.co.uk/intelligent-pensions-agrees-fca-suspend-db-transfer-business/

GDB2222

garyjones1962 wrote: »

Is that the same Intelligent Pensions that have suspended DB transfer advising?

https://www.moneymarketing.co.uk/intelligent-pensions-agrees-fca-suspend-db-transfer-business/

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