Financial advisor for LGPS transfer out £31000

hogpog12

Hi

I have a LGPS pension with a transfer out value of £31000. As this is more than £30000 I am legally required to get financial advice before I can transfer the LGPS to an existing defined contribution scheme.

However, I am struggling to find a financial advisor who is willing to offer the required advice as they all seem to say that there advice would be to leave the LGPS where it is. The advisors tell me that they would be in trouble with regulators if I went against their advice. The term they are using is that I am a potential "insistent client" who wants to transfer out regardless of the advice given.

I'm 48 and want the flexibility of drawing down the pension when i'm 55 rather than waiting until i'm 65.

If the LGPS was worth £100000+ I would leave it where it is, but my LGPS only offers annual pension of approx £2500 with lump sum of approx £1200 so we're not talking about life changing amounts.

Can anyone please recommend a financial advisor who would be able to provide the advice required (regardless of whether i choose to take that advice) so i can transfer my LGPS out?

Incidentally, the form required by the LGPS administrator to confirm that I have sought financial advice does not actually ask the financial advisor to state what their advice is, i.e. leave the LGPS where it is or transfer out, it just asks them to confirm that they have given me the advice.

Any recommendations would be most welcome.

Thanks
Hogpog

HappyHarry

I think you're going to struggle to find an adviser for a number of reasons.

Giving up an inflation linked £2,500 per year plus a £1,200 lump sum and instead taking a £31,000 transfer value looks like very, very poor value.

Not many advisers have the necessary permissions to advise on these transfers. For advisers with the permission to do so, these transfers are probably the highest risk business the adviser could do, and the adviser will charge accordingly. With a transfer value of only £31,000, even if you found an adviser, it would be an incredibly expensive process to undertake.

Advisers are, quite rightly, very wary of insistent clients. Although the FCA give clear guidance on how to deal with insistent clients, the FOS and the advisers PI insurers take a dim view of such transactions. This leaves the adviser with a huge risk of an expensive upheld complaint 20 years in the future. Not many advisers will be willing to take on this risk.

Whilst the LGPS only needs to see that you have received advice, you may find that any receiving scheme wants to see positive advice, and that will restrict your options on where to move it to.

Out of curiosity, what do you think you could do with this £31,000 that would give you a better outcome than the LGPS pension?

Alibert

I am not clear, are you prepared to pay for advice that tells you to stay in the LGPS ? Or will you only employ an IFA who is prepared to give you advice to transfer out

hyubh

hogpog12 wrote: »

I'm 48 and want the flexibility of drawing down the pension when i'm 55 rather than waiting until i'm 65.

If drawing benefits before 65 is your main reason to transfer out, then that isn't a good reason because you could draw the pension early anyway, albeit with a actuarial reduction (which is intended to be cost-neutral rather than penal). So long as you left the scheme on 1 April 1998 or later, then the minimum age is now 55 (it's just been [retrospectively] changed for pre-April 2014 leavers - previously was 60).

ConMan

I wouldn't give up £2500 pa for £31k.

Credit-Crunched

ConMan wrote: »

I wouldn't give up £2500 pa for £31k.

I Agree 12 times CETV....no thank you

I have friends who have had 30 - 40 x transfer values. Albeit not in LGPS and private companies

Silvertabby

If drawing benefits before 65 is your main reason to transfer out, then that isn't a good reason because you could draw the pension early anyway, albeit with a actuarial reduction (which is intended to be cost-neutral rather than penal). So long as you left the scheme on 1 April 1998 or later, then the minimum age is now 55 (it's just been [retrospectively] changed for pre-April 2014 leavers - previously was 60). Posted by hyubh

For members who left the LGPS before 1 April 1998:

• Retirement from age 55
  This is only available if you apply for payment of your retirement benefits before you reach age 55. If you are over age 55 you can only take your benefits from your NPA. NPA for members who joined the pension fund after 1 April 1993 may be later than age 60.

hyubh - are you aware of the new pre 1998 leavers regs?

Silvertabby

Credit-Crunched wrote: »

I Agree 12 times CETV....no thank you

I have friends who have had 30 - 40 x transfer values. Albeit not in LGPS and private companies

Private company transfer values are linked to gilts, hence the recent 'generous' transfer factors.

Transfer factors for the LGPS are set by GAD.

Marcon

Try LEBC Group: https://www.lebc-group.com

You are only required to demonstrate that you have received advice, NOT that you have followed it, to enable the transfer out to proceed.

Just be aware that some receiving schemes will only accept transfers in from a DB scheme if the financial adviser confirms they recommend the transfer.

GunJack

Those amounts look wrong, are you sure it's not £2.5k pa and £7.5k lump sum (i.e. 3x pension)?? Maybe SilverTabby can shed some light??

Silvertabby

GunJack wrote: »

Those amounts look wrong, are you sure it's not £2.5k pa and £7.5k lump sum (i.e. 3x pension)?? Maybe SilverTabby can shed some light??

Hi GunJack - it depends on dates of service -

Up to 2008 = pension accrual rate of 1/80th plus standard automatic lump sum of 3 x pension.

2008 to 2014 = pension accrual rate of 1/60th and no automatic lump sum.

2014 onwards = (CARE) 1/49th accrual rate and no automatic lump sum.

OP's pension/lump sum will be a mixture of pre and post 2008 service.