Pension Transfer fee

Norbvan

Hi
My husband has a pension to the value of £158000 which he wants to take this year, it is in a defined pension at the moment and he wants to put it into a flexible pension. He does not need advice on how to do this as he fully understands the process.

The company he is with now have sent a form out telling him he must seek independent advice and the financial advisor must sign the forms with all their details. The pension company will not allow my husband to transfer without this.

My husband has had a conversation with a financial advisor who has said he will do this but the fee will 4% ( £ 6355) of the value of the pension , he has said no one will sign the form without doing all the transfer of the pension, as he will have to take insurance out, and all financial advisors will tell him the same.

My husband does not need someone to do this for him as he fully understands the pension and the process of transferring it.

He will phone around for a cheaper quote but is this correct, how can they charge so much and is it necessary for a financial advisor to have to do the transfer.

This is extortion on your hard earned money 😡

Any advice would be appreciated.

[Deleted User]

Hello, Certainly not extortion . It is a very complicated subject and requires advice. Others with expertise and knowledge of DB transfers will give you a detailed response.
Regards

Norbvan

Yes I agree, but my husband is fully aware and more than understands what is involved.
Just think £6500 is a massive amount to charge.

dunstonh

My husband has had a conversation with a financial advisor who has said he will do this but the fee will 4% ( £ 6355) of the value of the pension

The monetary amount seems to be in the right ballpark.

Especially given the PI farce that occurred in the last week that has reduced the market even further.

He will phone around for a cheaper quote but is this correct, how can they charge so much and is it necessary for a financial advisor to have to do the transfer.

It is the highest risk transaction an adviser can do. It is also a transaction that will be costing the firm each and every year for the rest of their trading period. It is also a current hot potato with the FCA. Your husband wants to do a transaction that the FCA default as being missold unless proven otherwise and historically only 1 in 10 people would be suitable for transferring.

This is extortion on your hard earned money ��

It is consumer protection to prevent people from making a costly mistake. It is hardly extortion.

Yes I agree, but my husband is fully aware and more than understands what is involved.

Fully aware of what? If he was fully aware of risks and reward he would understand why advisers have to charge so much for DB transfers.

westv

Do you mind me asking what benefits you would be giving up?

xylophone

My husband has had a conversation with a financial advisor who has said he will do this but the fee will 4% ( £ 6355) of the value of the pension , he has said no one will sign the form without doing all the transfer of the pension, as he will have to take insurance out, and all financial advisors will tell him the same.

Your husband needs advice from a Pension Transfer Specialist.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

He is not compelled to follow it but without a positive recommendation, his choice of pension provider may be limited.

https://adviserbook.co.uk/

He would tick "confirmed independent" and "pension transfer".

AnotherJoe

Norbvan wrote: »

Hi
My husband has a pension to the value of £158000 which he wants to take this year, it is in a defined pension at the moment and he wants to put it into a flexible pension. He does not need advice on how to do this as he fully understands the process.

The company he is with now have sent a form out telling him he must seek independent advice and the financial advisor must sign the forms with all their details. The pension company will not allow my husband to transfer without this.


That is, indeed, the law.


My husband has had a conversation with a financial advisor who has said he will do this but the fee will 4% ( £ 6355) of the value of the pension , he has said no one will sign the form without doing all the transfer of the pension, as he will have to take insurance out, and all financial advisors will tell him the same.


4% is cheap from what I've seen here.


My husband does not need someone to do this for him as he fully understands the pension and the process of transferring it.



The law is that he does need someone to do it.


He will phone around for a cheaper quote but is this correct, how can they charge so much and is it necessary for a financial advisor to have to do the transfer.

This is extortion on your hard earned money 😡

Any advice would be appreciated.

The "extortion" is because, in say five or ten years time when your husband has spaffed all his money away he'll go screaming for compo, and more than likely get it even if he was advised not to do it by the IFA, but went ahead anyway, the IFA can still be found guilty and made to pay up (or, their insurance can) !


So that money essentially is for the insurance policy the adviser has to pay for due to the nanny state not letting people screw up because it will be headlines in the Daily Fail or similar.

AnotherJoe

Norbvan wrote: »

Removed by Forum Team

Woosh!! Think general. Think averages.



This is what a large % of claimants will be doing in a few years time if their investments dont pan out. Maybe not your husband. But a significant % of the people currently doing this. And why not your husband if his investments didn't work out and he sees others claiming and its a simple PPI-like form to fill in with no cost?
Nice one-way bet since the current position of the relevant government bodies seems to be "if you transferred, even if you were advised against it, we will assume your provider was in the wrong and pay compo". Seriously.

Now you know why it costs and why so few will do it. He's lucky even to find someone who will advise against it let alone for it. Many IFAs are running for the hills.



So, the IFA (and I am NOT one, BTW) needs to protect themselves with a whacking big insurance policy and your husband even if he doesn't claim, has to pay for all the losers who will.

HappyHarry

I am a PTS, and have occasionally transacted on DB pensions.

As dunstonh mentions above, the recent farce over PI insurance means that the cost of this insurance for DB work has just gone through the roof, if it is available at all.

It wouldn't surprise me if your husband's adviser has had his insurance for this type of work cancelled in the last couple of days. Many advisers have just faced this issue.

Regardless of how certain your husband is that this is the correct course of action, he legally needs an adviser to advise on it, and the adviser needs the PI insurance to do it, and the FCA have just implemented changes to the FOS limits which means PI insurers are no longer happy to provide cover for this type of business.

Your husband, and others, may find that such transactions will now rarely be possible, let alone affordable.

tacpot12

Assume for a moment that transferring this pension is a bad idea, but your husband wants to do it anyway. Who will you blame when there is no money left, and you are both living on just your state pension entitlement, when you could have an income for life?

His pension will almost certainly guaratee you a pension of 50% of his pension were he to die. Do you have enough of your own pension provision to be able to live without this 50% if he were to die?

xylophone

I was looking at this (but from last August)

https://citywire.co.uk/new-model-adviser/news/biggest-advice-firms-commit-to-db-transfer-market-amid-pi-jitters/a1144002

Minds changed?