CETV IFA Advice Costs

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
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PursuitPursuit Forumite
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Hi


I have recently requested CETV from DB pension and want to get an IFA sorted before it arrives. I'm not sure what the figure will be but it could be substantial enough and was wondering if there was a general rule of thumb on what is an acceptable charge rate. Some IFAs seem to be looking 3-4% to facilitate transfer which could be a lot of money.


DB statement at time of leaving in Nov 2016 was £18979.84 and is broken down into the following elements. I turn 55 next March


post 06.04.1988 GMP - £1223.56
pre 6.4.1997 excess - £4583.38
6.4.1997 to 05.10.2005 - £6338.54(Scheme pays RPI up to 5% at retirement on pension pre 2005)
06.10.2005 to 20.04.2007 - £1147.25
21.04.2007 to 17.04.2009 - £1200.03
18.04.2009 to 5.10.2014 - £3277.04 (Scheme pays RPI up to 2.5% at retirement pre 2014)
6.10/2014 to date of leaving - £1210.04 (Scheme pays CPI up to 2.5% at retirement post 2014)


Scheme is 95% funded I think, employer covenant is strong and scheme has been de-risking by investing more in long term bonds. My thinking is that these factors could mean a substantial CETV value.
So my question is if I want to engage an IFA now what should I consider to be a reasonable fee should I consider a cap on the fee?


Any help would be appreciated.
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Replies

  • edited 28 September 2018 at 3:27PM
    BrynsamBrynsam Forumite
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    edited 28 September 2018 at 3:27PM
    Misread post! Sorry.
  • AlbermarleAlbermarle Forumite
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    DB statement at time of leaving in Nov 2016 was £18979.84 and is broken down into the following elements. I turn 55 next March


    Just to be clear do you mean the statement said your pension would be £18,979 pa at Normal Retirement age ? ( and what is this age )
  • PursuitPursuit Forumite
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    My deferred pension as of 2016 was £18979.84 p.a.


    This will be increased as follows
    GMP by 4.75%
    Pre 2009 pension by up to 5%
    Post 2009 pension by up to 2.5%
  • PursuitPursuit Forumite
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    Also pension age is 65 so another 10 years or so to go.
  • AlbermarleAlbermarle Forumite
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    There are a lot of threads on this subject , so probably worth your while having a look through some of them:
    The general advice is not to cash in DB pensions , even if the CETV is very tempting ( I guess will be over half a Million for you )
    In any case you have to go to an IFA with the right qualifications and indemnity insurance, to be advised if it would be a good idea for you or not. If they advise against ( which is likely) you can still go ahead ( as you have had the mandatory advice ) and you become what is called an 'insistent client' which means you are going against the advice given. Many IFA's and pension providers will not deal with a CETV transfer from an insistent client , Your current DB scheme will be happy for you to transfer out but there will be a restricted number of providers who will accept the transfer in .
    It's due to the highly publicised issues with British Steel pension transfers and other similar situations has made the financial services a bit wary about getting involved in anything with pensions that might come back to bite them at a later stage.
  • PursuitPursuit Forumite
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    Thanks Albermarle


    How much would be a reasonable figure to pay for such advice given the possibility of the CETV being >500k (I also have a £40k AVC) I do understand the requirement for a specialist but it seems unreasonable to pay £15-20k for this advice. As I say I want this IFA on board before the CETV comes in so that he already has a an idea of my personal circumstances. Is it reasonable and possible to negotiate a cap on the fee....and is £10k a reasonable figure?
  • dunstonhdunstonh Forumite
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    How much would be a reasonable figure to pay for such advice given the possibility of the CETV being >500k (I also have a £40k AVC)

    The AVC would need to be reviewed with the main scheme as some AVCs are linked to the main scheme in ways that can be beneficial but that linking would be lost on transfer.
    I do understand the requirement for a specialist but it seems unreasonable to pay £15-20k for this advice.
    more like £5k is reasonable. But it depends on how risky the transaction is to the adviser.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • HappyHarryHappyHarry Forumite
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    Depends on where you are located, but a figure of £5k to £10k would be around the ballpark.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • sandsysandsy Forumite
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    Why are you thinking of transferring?

    Just because you think it might be a good idea doesn't mean that an adviser will agree with you. Bear in mind that in some cases you'll need to pay the adviser's fee even if they don't recommend you transfer.
  • PursuitPursuit Forumite
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    Numerous reasons and I'm not saying that they are all compelling


    1. Had a heart attack 5 years ago and don't think I will see 90
    2. Need to get my son on to the property ladder. I pay half his rent and its financially painful. Added to this he now has a son of his own (3months old) so the chances of him saving for a deposit looks unlikely
    3. The alternative to the CETV is take pension early so that I get a lump sum. This will have a large penalty probably 40% reduction
    4. I am remarried and we don't have kids of are own. I want to make sure something is left to both my children.
    5. After using 25% TFLS from CETV I have no intention of touching it as I'm still working and in a good job that I actually like.
    6. My wife and I own 2 properties if I buy another property it will mean these three properties are her safety net in retirement. I will rent this 3rd property to my son and this will have a significant financial benefit to me probably £8k p.a.
    7. We both have DC pensions. At 55 my wife's will be £300k. At 65 mine will be £180k. This should help meet our initial retirement needs. I get full state pension at 67.


    Also after taking advice not to transfer, where do people get the £5-10k from to pay IFA, surely this adds to the pressure of transferring. I have the money for the advice so this is not an issue for me in particular but it did make me wonder.
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