Defined Benefits Pension Transfer Rip-Off

JillyC8

agent69 wrote: »

I have a defered DB pension which when combined with my state pension (when I get to 66) will easily cover all my normal expenditure. It's index linked, and there for life.



The only reason I can see for giving that up is if you are worried about getting run over by a bus the day after you retire.

Some of us have more than one deferred pension and would like to pay off part of the mortgage with one of them.

AnotherJoe

beamyup wrote: »

The point us that consumers are being ripped off. The charges for the service are much too high and in some cases are causing the wrong outcome.

I (as a consumer) do not care what the cause is - whether greedy IFA or the nanny state.

My definition of Rip-off = "something that is not worth what you pay for it"
My definition of Rip Off is something that is not worth what you pay for it but you have no option but to pay it." In this case you dont have to take the transfer. Your choice to pay the fees. Hence, your choice whether you pay too much or not (which is not the same as being ripped off).


Something needs to be done about this situation. IFA's should be pushing for changes in legislation. Government should take note and act.
Hahahahahaha


If IFA's are truly independent advisers, they should NOT be swayed by the fear of litigation against them for giving the correct advice.
! Easy for you to say not having to pay £££k a year for insurance to cover this.

Theres no independent objective measure by which you can determine if the advice is correct. So of course they should be swayed if the regulator may make them pay punitive fines even if the advice was "correct" because its ultimately the regulator who determines it,retrospectively eg if two people do the exact same transfer out and then one screws up their investments and they go to the regulator they will quite likely be told they were given incorrect advice because by dint of having screwed it up that "proves" it was not suitable -> Even if the advice was NOT to transfer !
.
The current litigation risk situation with DB transfers means that the advice is not correct in some cases.

I think it more likely means that advisers simply dont wish to make a comment one way or the other since even venturing "no" can lead to a penalty.


Write to your MP and get the government to change the law and direct the regulator. And then in ten years time after scandals where little old ladies decide to become stock traders with their pension and teh Daily Fail has headlines about them losing their life savings, wait for the backlash and the retrospective changes.

JillyC8

nigelbb wrote: »

The simplest bit of legislation would be a prohibition on transferring out from a DB scheme. This prohibits idiotic trustees offering overgenerous CETVs which is the only reason to transfer out. It also prevents IFAs giving bad advice or being sued whether the advice is bad or good. It's not the Nanny State it's just the government being prudent with offering tax incentives for people to save for their pensions.

This is too black and white. There are numerous reasons to transfer out:

- Ill health
- Desire to leave money to someone else
- Debts to pay off to avoid being homeless
- Multiple pensions
- Pension freedom

I'm sure there are more.

cloud_dog

I find it hard to believe that some posters cannot see that IFAs who do quote for DB transfers, by and large quote high numbers to undertake the transfer because the risk (for themselves) is indeed large or they really do not want the business.

There is zero difference between this situation and car insurance. Some insurance companies will quote ridiculously high premiums for young drivers, simply because they do not want the business.

I appreciate that the individual person involved may find it frustrating or impossible to understand but, that is the reality of the situation; it is not about fleecing the person it is about protecting their company.

nigelbb

JillyC8 wrote: »

This is too black and white. There are numerous reasons to transfer out:

- Ill health
- Desire to leave money to someone else
- Debts to pay off to avoid being homeless
- Multiple pensions
- Pension freedom

I'm sure there are more.

However that's not what the DB pension is about. Fundamentally it's deferred salary to support your retirement & should be viewed in that light.

While you might like to cash in your DB pension to buy your house or fund a trip to Las Vegas that isn't why the government gave you tax relief on your contributions it was to ensure that you had a decent pension & didn't become a burden on the state in retirement.

nigelbb

JillyC8 wrote: »

Some of us have more than one deferred pension and would like to pay off part of the mortgage with one of them.

However nice that might be buying your house isn't why the government gave you tax relief on your pension contributions. It was to provide a decent pension to support yourself in retirement.

nigelbb

beamyup wrote: »

I see your point of view.
You have argued FOR a nanny state approach (its odd that you don't think so ). That in itself would cause the wrong decision to be enforced in a number of cases.

When is providing for a DB pension in retirement ever the wrong decision? Don't try & give me the other nice options that you would prefer to spend the money on just tell me when it would be wrong.

JillyC8

nigelbb wrote: »

However that's not what the DB pension is about. Fundamentally it's deferred salary to support your retirement & should be viewed in that light.

While you might like to cash in your DB pension to buy your house or fund a trip to Las Vegas that isn't why the government gave you tax relief on your contributions it was to ensure that you had a decent pension & didn't become a burden on the state in retirement.

And the pension freedoms were introduced by the government in 2015 to give people a choice about managing their pension savinGs.

Those who cash in and use their pensions to travel to Las Vegas or buy a Lamborghini may be idiots but what I’m saying is there are very real and non-idiotic reasons someone may want to transfer.

JillyC8

Plus it’s clearly stated on HMRC that those who cash in pensions then try to claim off the state later will face problems making those claims.

soulsaver

nigelbb wrote: »

When is providing for a DB pension in retirement ever the wrong decision? Don't try & give me the other nice options that you would prefer to spend the money on just tell me when it would be wrong.

There are the pretty obvious examples that may not have the life span nor the qualifying pension beneficiaries (spouse) but may have heirs that would benefit from the CEV.