IFA charges to transfer from a final salary scheme

jerry098

Sorry if this has been asked before but I couldn’t find it;

I have just been made redundant at the age of 63.5.
I’m considering transferring out of my final salary pension scheme to a flexible drawdown.
I’m obliged to take advice from a IFA.
I have been quoted the following charges, are they reasonable?

Initial fee of £3K plus 2% of transfer value
A yearly fee of 1% to manage the investment.

Thanks,
Jerry

Pension_Geek

1% per annum is on the steep side, but i suppose it depends on the value. What's the CETV?

The initial £3,000 is ok, but again, depends on the value and what 2% will add.

dunstonh

Initial fee of £3K plus 2% of transfer value
A yearly fee of 1% to manage the investment.

Around £5k initial total (possibly a bit more at the moment given the extreme high risk nature and drying up of the PI market that has seen the number of adviser firms doing DB transfer drop significantly in the last few weeks.,

1% onoging for small values is normal (under £100-150k). However, 0.50% is the dominant figure used on larger portfolios.

beamyup

You should consider what you need vs what you are able to choose,

You do need the initial service to transfer the pension.

Then, after that you are free to choose your path, be it through an IFA (doesn't have to be the same one of course), or a SIPP or something else.

A flexible draw-down can be managed by yourself from a SIPP if you wish.

Albermarle

https://forums.moneysavingexpert.com/discussion/5986362/pension-transfer-fee
A link to one of the numerous threads on the same subject .

sandsy

Have you looked at what the DB scheme would pay out as an early retirement option instead? Or do you have any other pensions you could use until the DB scheme's normal retirement age?

Even if you get advice, there's no guarantees you'd get advice to transfer.

jerry098

Thanks, transfer value is about £330K and I could hold off drawing from the DB scheme until normal retirement age (65)

IvanOpinion

Sorry , but those number look extortionate.
That would be nearly £9600 transfer plus £3300+ per year. At those rates I would be looking to do the absolute minimum through the IFA and then create a SIPP with a platform like Interactive Investor. Would you have enough knowledge/confidence to manage it yourself?

Silvertabby

jerry098 wrote: »

Thanks, transfer value is about £330K and I could hold off drawing from the DB scheme until normal retirement age (65)

Is that you speaking, based on your own finances, - or have you confirmed that with your pension provider, as many pension schemes have a rule which forbids transfers out within 12 months of normal retirement age.

How much guaranteed (index linked?) pension and additional tax free lump sum would you be giving up for this £330K? Are you married?

Brynsam

Silvertabby wrote: »

Is that you speaking, based on your own finances, - or have you confirmed that with your pension provider, as many pension schemes have a rule which forbids transfers out within 12 months of normal retirement age.

Check if the scheme rules forbid transfers within 12 months of normal retirement age (i.e. 12 months before, not after!), or if such transfers are possible at the discretion of the trustees/employer.

Silvertabby

Brynsam wrote: »

Check if the scheme rules forbid transfers within 12 months of normal retirement age (i.e. 12 months before, not after!), or if such transfers are possible at the discretion of the trustees/employer.

Exactly. Thanks !