Advice please. Firms for Final Salary Transfer £330k

Malthusian

leicestersq wrote: »

How did we get to such a situation?

Google "pension misselling scandal 1990s".

The entire raison d'etre of defined benefit pension schemes is that the members don't want to manage their own money. The guarantees they come with are expensive. The management of them is expensive. The actuarial calculations are expensive. This means that if every member of the scheme invested their pension contributions individually - including the money the employer puts into the scheme for them - on average they would be virtually guaranteed to get better outcomes as those costs would no longer be coming out of the investment return.

However the trouble with "on average" means that some members would do well and some would do badly due to poor investment decisions or poor timing. The reason people are willing to put their money into a defined benefits scheme is because the risk of being one of the unlucky ones weighs more heavily on their mind than the extra returns that they might get if they were lucky.

You invested your pension contributions in a scheme which offered potentially lower returns than you might obtain yourself in exchange for guarantees and security. Now you have changed your mind. Fair enough. But having invested in a scheme on the basis you didn't want to have control over your pension, and secured valuable guarantees, it is perfectly natural for the government to say "are you really sure about this?" when you say you now do want control and you want to give up the guarantees.

I sympathise because it sounds like you have thought this through carefully. But if you are that certain you will do better by transferring out of the scheme then the cost of taking independent financial advice should be insignificant. (Even if you view it as completely wasted and the IFA does not give you any extra peace of mind or come up with any suggestions to improve your planning that hadn't occurred to you.) If paying 1% or 3% for advice is going to be the difference between your SIPP outperforming the DB scheme and underperforming, then the margins are too close to risk it.

xylophone

A client approaching me because they have decided that they want to transfer their DB pension is far from the best starting point.

Hang on, that doesn't hold water.

Surely the only reason that certain people have for approaching an IFA is that they are compelled so to do because they want to transfer out a pension with guaranteed benefits over £30,000?

It would make life easier for everybody if there were a "permissions" heading on the register under which all firms/individuals were listed by geographical area and then in alphabetical order, rather than an individual's having to look up firms, find them on the register and then look up the permissions.

See post 4.

https://forums.moneysavingexpert.com/discussion/5760567

HappyHarry

leicestersq wrote: »

So it looks to me as if people like me who do see risks in DB plans, and who want to mitigate them and manage their own money, are almost in a Catch 22 situation. In order to gain control over your own capital, someone else who might not be competent, gets to decide whether or not you can take control of your own money. How did we get to such a situation?

There is a catch-22 situation for those that have the skills and knowledge themselves to deal with a DB transfer. This is something which is regularly highlighted on these boards, and something that I personally have sympathy with.

The issue is that many people believe that they have the skills and knowledge necessary, when in reality, they do not. In order to stop a very large number of people making an incredibly poor decision to transfer a DB scheme, the government legislated to ensure that all DB pensions with a CETV of over £30,000 need to be advised on by an appropriately qualified adviser. For the vast majority of those wishing to transfer, this makes sense, and many, many people will hence be stopped from making the worst financial decision of their lives.

To put in place a one-rule-fits-all regulation has a couple of consequences;

1. The adviser has to provide good advice. There are quite clearly a few rogue individuals (see British Steel pensioners) who are giving dreadful advice. Personally, I would quite happily see all these rogue "advisers" strung up. I don't know any of them, but they are damaging my professional credibility, and doing untold damage to individuals who trust them.

2. Those with the knowledge and skills to manage their own DB transfers are not allowed to do so without paying unnecessary fees to an adviser. I have sympathy with this, and have helped a couple of those individuals, on an initial fee only basis. However, it is high-risk business, and there is a risk that the individual will screw things up, and then come back in twenty years time with a complaint. The fees I charge need to reflect this risk.

If there was a way to check an individual has the skills and knowledge to perform their own DB transfers, then I, for one, would support that. However, the government have decided that an appropriate qualification is required, and the FCA have decided that the appropriate qualification is that of a pension transfer specialist.

A change in legislation would be required, and for that, I guess you will need to speak to your MP.

HappyHarry

xylophone wrote: »

Hang on, that doesn't hold water.

Surely the only reason that certain people have for approaching an IFA is that they are compelled so to do because they want to transfer out a pension with guaranteed benefits over £30,000?

Indeed. However, they are not necessarily the clients that an IFA wants.

iro

I would like to control my own money

I would like to take the 50x valuation of a DB pension

My expectation is that gilt yields are at least as likely to rise as stay at the same level

I do not want my RPI protection to be changed to CPI post Tata de facto watering down of DB pensions

I do not want exposure to Banks even as the provider of my DB pension

I do not want anything to do with IFAs

.....hold on the Government force me to pay an IFA to achieve the above.

If you are a IFA who claim to advise on pension transfers without the DB qualification stop being a Walter Mitty you make yourself look stupid!

leicestersq

Now you have changed your mind.

As John Maynard Keynes once said, "when the facts change I change my mind".

My pension scheme has closed to new accruals. The company has also stated that the pension will no longer increase in line with any salary increase I receive. This is crucial to my decision. If my pay was increasing and my pension was increasing inline with that, then I would be happy to remain in the DB pension scheme I am in. I would have a pretty good inflation proofing.

But my DB pension scheme isnt going to increase with my pay level. I will get a mix of RPI/CPI (depending on when the accrual was made) up to a max of 5%. There is no way the guarantors of the scheme are going to agree to more than 5%.

Before that change, I felt I had a full suit of armour, I was protected against inflation, and bad investing by the fund managers. I could guarantee a good pension, it was unbeatable.

After that change, I am now at huge risk. A bout of inflation will wreck my pension scheme, hence why I want to change quickly. I am frustrated that there is no easy route to allow me to take responsibility and do this.

xylophone

However, they are not necessarily the clients that an IFA wants.

I can appreciate that.

But you have obtained the permissions - why bother if you do not intend to use them/make clear that you have them?

HappyHarry

xylophone wrote: »

I can appreciate that.

But you have obtained the permissions - why bother if you do not intend to use them/make clear that you have them?

I do use the permissions, quite a lot at present, and I will carry on doing so in order to provide good quality advice to my clients. I have no desire to pass my clients over to third parties so they can get pension transfer advice.

What I don't want to do, however, is use these permissions as a marketing tool.

If I am approached and asked if I have the permissions, then of course I will say that I have. However, I am always a little wary of clients that approach me with that request.

xylophone

What I don't want to do, however, is use these permissions as a marketing tool.

I think I must be being thick.

Is a clear statement on your literature/web site that you are a PTS any more of a marketing tool than stating that you are a chartered accountant or auditor or D Phil etc etc?

I should say that I have no brief/vested interest in transferring out a DB pension - I wouldn't do it and the relatives and friends I have who enjoy them wouldn't do it either.

However, there are some people who do want to do it and they are compelled to obtain the appropriate advice from an appropriately qualified person.

Why on earth should the FCA not do as suggested in my post 33 above?

It would save time for the person seeking advice and it is then up to the advisers concerned to accept or refuse the client as their business model requires.

HappyHarry

xylophone wrote: »

I think I must be being thick.

Is a clear statement on your literature/web site that you are a PTS any more of a marketing tool than stating that you are a chartered accountant or auditor or D Phil etc etc?

I should say that I have no brief/vested interest in transferring out a DB pension - I wouldn't do it and the relatives and friends I have who enjoy them wouldn't do it either.

However, there are some people who do want to do it and they are compelled to obtain the appropriate advice from an appropriately qualified person.

Why on earth should the FCA not do as suggested in my post 33 above?

It would save time for the person seeking advice and it is then up to the advisers concerned to accept or refuse the client as their business model requires.

You're certainly not being thick, and from previous posts, I believe you have a clear understanding of financial services.

My brief personal profile on the website does say I am a PTS, and it also says that I am a chartered financial planner. My business cards say chartered financial planner and do not mention PTS, similarly for my email signature.

I am far prouder of my chartered status than I am of my PTS status, and shout more loudly about it. My chartered status is something that appeals more to the clients I wish to work with. My PTS status is something that appeals to a lot more clients that I don't wish to work with.

Don't get me wrong, there are many clients I would like to work with that are looking for the PTS specialism, but there are an awful lot of people who think a DB transfer is best for them, when it clearly isn't, that I don't want to work with.

I have other certifications and permissions that I don't mention at all anywhere, that are useful to have from time to time, but not something I want to be doing everyday.

In the end, each adviser has their ideal clients, and their non-ideal clients, and my ideal clients are not necessarily those looking for a DB transfer.