Transfer DBS to DCS

mazworld15

Hi all if anyone has the time to comment on this I'd be grateful, I think I've decided to transfer my company DBS to a DCS with Prudential.
Saw an IFA who said he can't actually do it but can refer me to someone who can who charges 2% of the pot which is approx 240k.
If I'm understanding it correctly for the 2% he will do the transfer then the money (less the 25% tax free lump sum which I'm going to take) will be in a Prudential pension with growth of approx 4% pa and I can draw cash from it when I need it with no charge? Probably want draw any until I stop working as I'll prob work for another 3 years and pay tax at the moment.
Is it really that simple?
No problem paying someone for advice, the IFA was excellent but he wont get anything out of it and this guy he's going to introduce me to gets 2%?
Thanks for reading would appreciate any comments x

tacpot12

How old are you?

Does the IFA hold the necessary qualification to advise on pension transfers or is this why he has to refer you to this other IFA? If he doesn't, you haven't yet had the advice you need.

2% of £240K is a lot for the transfer work (£4.8K), the advice on the transfer should be about £1000, the transfer itself should be less than £1000. You need to ask who will manage the DC pension when it is transferred. Portfolio management is usually charged on an on-going basis - so much per annum.

Is the growth of the Prudential pension guaranteed to be 4% pa? If not, and it is invested in the stockmarket it could fall by 20% or more in any year.

and I can draw cash from it when I need it with no charge?

No, the cash you withdraw will be taxed (but you still have your personal allowance which will reduce the amount of tax you pay, and the Prudential may charge for any withdrawals.

mazworld15

tacpot12 wrote: »

How old are you?

Does the IFA hold the necessary qualification to advise on pension transfers or is this why he has to refer you to this other IFA? If he doesn't, you haven't yet had the advice you need.

2% of £240K is a lot for the transfer work (£4.8K), the advice on the transfer should be about £1000, the transfer itself should be less than £1000. You need to ask who will manage the DC pension when it is transferred. Portfolio management is usually charged on an on-going basis - so much per annum.

Is the growth of the Prudential pension guaranteed to be 4% pa? If not, and it is invested in the stockmarket it could fall by 20% or more in any year.

No, the cash you withdraw will be taxed (but you still have your personal allowance which will reduce the amount of tax you pay, and the Prudential may charge for any withdrawals.

Thanks for the reply, I'm 55. The IFA said that not many companies were doing the pension transfer thing as they dont expect the big cash equivelant transfer values to continue when interest rates go up.

bostonerimus

What are the fees and the investments of your Prudential pension.......FYI whenever you get an insurance company involved with your DC pension please understand the fees you'll be paying.

kidmugsy

mazworld15 wrote: »

the money ... will be in a Prudential pension with growth of approx 4% pa

At least you didn't say that growth "should" be 4% p.a. Are you happy to become an amateur investment manager at 55? Will you still be happy managing a sizeable fund at 80?

Thrugelmir

mazworld15 wrote: »

The IFA said that not many companies were doing the pension transfer thing as they dont expect the big cash equivelant transfer values to continue when interest rates go up.

Likewise the value of equity based investments may fall. As QE is unwound concurrently.

Dox

mazworld15 wrote: »

Saw an IFA who said he can't actually do it but can refer me to someone who can who charges 2% of the pot which is approx 240k.

No problem paying someone for advice, the IFA was excellent but he wont get anything out of it and this guy he's going to introduce me to gets 2%?
Thanks for reading would appreciate any comments x

£4.8K is about twice the amount I'd expect to see someone paying - ask how much of it the referring IFA gets in exchange for the introduction.

dunstonh

I think I've decided to transfer my company DBS to a DCS with Prudential.

Why Pru? They are not well priced. Their offering is basic. They only have one thing going for them and that makes them a niche offering.

Saw an IFA who said he can't actually do it but can refer me to someone who can who charges 2% of the pot which is approx 240k.

Only around 1 in 10 advisers hold the increased permissions required.

Is it really that simple?

If only.

The biggest issue for advisers is the liability. They will still be paying increased PI premiums long after transfers have dried up again. Indeed, in todays press, another DB transfer firm has closed today as it could not get PI insurance. It is a significant risk to your business and many firms dont want it.

mazworld15

bostonerimus wrote: »

What are the fees and the investments of your Prudential pension.......FYI whenever you get an insurance company involved with your DC pension please understand the fees you'll be paying.

This is partly what I didn't get he said there were none? will have to research

mazworld15

kidmugsy wrote: »

At least you didn't say that growth "should" be 4% p.a. Are you happy to become an amateur investment manager at 55? Will you still be happy managing a sizeable fund at 80?

No kid definitely not capable that's why I thought a SIPP wouldn't work for me

mazworld15

Thrugelmir wrote: »

Likewise the value of equity based investments may fall. As QE is unwound concurrently.

Yes that bit I understand I saw a graph of how it had performed over 20 years and one year was minus 10%