Defined Benefit Pension

Chainey

Hi there

I have a defined benefit pension with DHL … they call it a money purchase with guaranteed minimum pension underpin.

I cannot access this pension when 55 or take any of the new options but I can transfer it out. I am 55 in early January.

My current situation is that we lost everything in the credit crunch, became homeless for 2 years but still tried to continue the business.

An online hate campaign including death threats caused me to have a stress breakdown. This made me vulnerable and we were therefore housed in social housing on a very bad estate.

I am on PIP, my partner is my carer and we are on income support.

When I first realised how much was in the pension pot I spoke to the DWP and Income support. They confirmed that to completely draw down the pension to purchase a house would be fine and that we would only lose income support for the brief period that the funds were completely drawn down and in my account.

My health continued to deteriorate both mentally but mainly physically and the only thing that has kept me going is knowing I could access this pension at 55 and buy a house under the new government rules.

Having a house with a workshop, which we have found would allow my partner to potentially start a business whilst still being on hand for me full time. The house also has a garden, which would be extremely beneficial to my health.

I know of all of the other options and this is the best one for us.

The problem I have is finding a Pension advisor that is qualified to deal with this type of pension.

I have researched this a lot. I know I will lose around £25K in tax doing this but this will still allow us to buy a small house and be able to afford the Pension Advisors commision and the conveyancing fees.

Please does anyone know of a Pensions Advisor who would be able to do this.

Many Thanks

Dazed_and_confused

Others will no doubt comment about adviser s but does your 25k take account the possibility of splitting the withdrawal/drawdown across two tax years?

Timing may not be possible but it seems unlikely you will be able to complete this as soon as you are 55 but if you proceed and can do it in March you would then have a new Personal Allowance (and basic rate tax band) on 6 April 2018.

Chainey

Dazed_and_confused wrote: »

Others will no doubt comment about adviser s but does your 25k take account the possibility of splitting the withdrawal/drawdown across two tax years?

Timing may not be possible but it seems unlikely you will be able to complete this as soon as you are 55 but if you proceed and can do it in March you would then have a new Personal Allowance (and basic rate tax band) on 6 April 2018.

Hi Yes that has been discussed but if we are to get the property we want (there are so few we can afford ) we have agreed to a complettion at the end of Jan. This is clearly not going to happen now but the original FA didn't realise he wasn't authorised to deal with this type of pension. The house is vacant posession and the seller is desperate. There is also the problem that I will be taxed at the highest rate and have to claim back the overpaid tax from HMRC. They have advised that this should only take 3 weeks. At a push all of this could be done but as it's looking unlikely now your advice is certainly beneficial and thank you

sandsy

You need an FCA authorised adviser who is able to advise on pension transfers. Lots of names provided in the forums in the threads on DB transfers. Otherwise, look up names of advisers local to you, put their company name into the fca register (https://register.fca.org.uk), scroll down to look at the ‘permissions’ which is the activities they are allowed to undertake and check if they are registered for ‘advising on pension transfers and opt outs’.

From what you’ve posted elsewhere online, you could end up paying £3-4K for advice. Your transfer value is in excess of £100k so you will pay 40% tax on a significant portion of it if withdrawn totally and risk losing your personal allowance for the year too. The tax position alone is likely to make the chance of getting a positive recommendation to transfer unlikely if you insist on taking it all out in one tax year.

Chainey

sandsy wrote: »

You need an FCA authorised adviser who is able to advise on pension transfers. Lots of names provided in the forums in the threads on DB transfers. Otherwise, look up names of advisers local to you, put their company name into the fca register scroll down to look at the ‘permissions’ which is the activities they are allowed to undertake and check if they are registered for ‘advising on pension transfers and opt outs’.

From what you’ve posted elsewhere online, you could end up paying £3-4K for advice. Your transfer value is in excess of £100k so you will pay 40% tax on a significant portion of it if withdrawn totally and risk losing your personal allowance for the year too. The tax position alone is likely to make the chance of getting a positive recommendation to transfer unlikely if you insist on taking it all out in one tax year.

Hi Sandsy ... I know about the FCA Authorised site but because this is a Defined Benefit Pension they must have additional qualifications. DHL would not deal with them otherwise, as I found out to my cost There are no such advisors anywhere near us as I have already checked.

I realise that the job of the Pensions Advisor is partly to save us tax and I understand the implications here, although I hadn't realised I would lose my personal allowance for this year.

This thing is that the vendor has accepted a reduced price for a quick sale which all in all with the income support restrictions means it really would be in my best interests.

I also know the amount I am looking to pay for an advisor.

This isn't something I've rushed into, we have been looking for property for 2 years and there is virtually nothing on the market for us

Sorry, Had to take the url out of your quote to be able to post

Hi Sandsy do you have a link to the DB Transfers thread

xylophone

https://www.moneyadviceservice.org.uk/en/articles/transferring-out-of-a-defined-benefit-pension-scheme

The Money Advice Service has a retirement adviser directory you can use to draw up a shortlist.

All the advisers and firms on the directory are regulated and will also show whether they have advisers who are qualified to deal with transfers from DB schemes.

We suggest you contact at least three firms to find one that suits your needs.

The Directory splits out firms that will see you face to face and those that deal only by telephone or online.

You might find that firms who deal with customers by telephone have lower costs, and therefore the cost to you is lower.

It’s a good idea to include at list one firm that provides advice by telephone in your shortlist so you can compare.

http://www.pruadviser.co.uk/content/knowledge/technical-centre/pension_transfer_conversion/

Currently a pension transfer specialist must have CF30 (customer function) and hold a qualification from:

G60 or AF3 (CII)
Pensions paper of Professional Investment Certificate (IFS)
Fellow/Associate of Pensions Management Institute
Fellow/Associate of Faculty of Actuaries
Full details of the qualifications accepted are available in the FCA Training and Competence Handbook. The FCA heavily discourage direct offer or execution only in pension transfers and if this is to take place then the firm must make, and retain indefinitely, a clear record that no advice was given.

Chainey

Hi Xylaphone ... Thank you so much for that.

I have found the register ... whereabouts will it show whether they have advisers who are qualified to deal with transfers from DB schemes

sandsy

Yes, I know they need special qualifications and that’s reflected on the FCA website through the permission ‘advising on pension transfers and opt outs’. If an advice company doesn’t have that permission, they can’t advise on your DB transfer. That permission is what the DHL trustees will check for before releasing your funds once you give them a certificate to confirm you’ve taken advice.

xylophone

I have found the register ... whereabouts will it show whether they have advisers who are qualified to deal with transfers from DB schemes

You need to choose how you want to receive the advice which will bring up firms and a side menu where you can input details of what you require.

https://directory.moneyadviceservice.org.uk/en/glossary#chartered_fp

xylophone

https://forums.moneysavingexpert.com/discussion/5755823

Some posters in this thread have gone through the process - you might try PMs to ask about their experiences.

dunstonh

This is clearly not going to happen now but the original FA didn't realise he wasn't authorised to deal with this type of pension.

All advisers are able to deal with money purchase schemes. So, initially, there wouldnt have been an issue. However, the adviser writes to the provider/scheme administrator and asks a range of questions. It would almost certainly have been that response that led them to find out there was a final salary underpin. That is a safeguarded benefit and if you want to transfer it you need a pension transfer specialist (about 1 in 10 advisers are).

I have researched this a lot. I know I will lose around £25K in tax doing this but this will still allow us to buy a small house and be able to afford the Pension Advisors commision and the conveyancing fees.

There is no commission. Don't mistake it for a commission. It is fee-based only. The fee is explicitly charged to your fund.

You should also make sure that the adviser will allow transfer even if the advice is to not transfer it. Some will only transfer it if the advice is positive.

Cashing in a pension and paying tens of thousands of pounds in costs, tax and lost benefits is not an easy thing to justify.