DB Preserved Pension Transfer Value

Dasa

I've received figures from a small DB pension with Aviva when I was contracted out years ago.


They've given a transfer value but I'm not really understanding why as from what I've seen and heard it's virtually impossible to get an IFA to sign off on it which is essential if it's to a DC arrangement.


So is there any point in transferring to another DB arrangement, if this is possible and would I have to go to an IFA?


The pension is £876 pa
Full commutation is £26,300
TV £40,000

cloud_dog

Dasa wrote: »

I've received figures from a small DB pension with Aviva when I was contracted out years ago.


They've given a transfer value but I'm not really understanding why as from what I've seen and heard it's virtually impossible to get an IFA to sign off on it which is essential if it's to a DC arrangement.


So is there any point in transferring to another DB arrangement, if this is possible and would I have to go to an IFA?


The pension is £876 pa
Full commutation is £26,300
TV £40,000

To get some meaningful opinions you will need to let us know what other benefits the scheme provides, i.e. any annual indexed increases, or spouce pension (what percentage) etc.

At a very simplistic level the TV is 45 times the pension, which in general terms is high. You would also need to incur significant costs in taking the TV as you would need to undertake an IFA review by a pension specialist for DB transfers, which as a percentage of the £40k would be significant.

Albermarle

Also if the IFA ( if you can find one to deal with a relatively smaller amount ) does not recommend you to transfer you have another issue.
You can still transfer but you will be significantly limited on the number of providers who will accept the transfer .

Brynsam

Albermarle wrote: »

You can still transfer but you will be significantly limited on the number of providers who will accept the transfer .

Easy to get round this. Transfer to a stakeholder pension (the only arrangement which must accept transfers in from any other UK regulated pension scheme) and then transfer from there to any other DC arrangement you choose. The second transfer will be DC to DC, so there'll be no problem with providers refusing to accept it.

Brynsam

Dasa wrote: »

So is there any point in transferring to another DB arrangement, if this is possible and would I have to go to an IFA?

You won't be able to transfer it to another DB scheme unless you are an 'active' member of that scheme. If you are currently an active member of a DB scheme (i.e. you are building up benefits in it) and they accept transfers in, ask them what your transfer would 'buy'. You don't need financial advice if the transfer is DB to DB.

Dasa

Brynsam wrote: »

Easy to get round this. Transfer to a stakeholder pension (the only arrangement which must accept transfers in from any other UK regulated pension scheme) and then transfer from there to any other DC arrangement you choose. The second transfer will be DC to DC, so there'll be no problem with providers refusing to accept it.

I'm assuming you still need to get an IFA to sign off on this?

Dasa

cloud_dog wrote: »

To get some meaningful opinions you will need to let us know what other benefits the scheme provides, i.e. any annual indexed increases, or spouce pension (what percentage) etc.

At a very simplistic level the TV is 45 times the pension, which in general terms is high. You would also need to incur significant costs in taking the TV as you would need to undertake an IFA review by a pension specialist for DB transfers, which as a percentage of the £40k would be significant.

Thanks.


Spouse pension 2/3 of pension at date of death
Pension increases in payment by 5% pa.


That's what I'm thinking is it worth the cost of an IFA?

cloud_dog

It also depends on what other pension arrangements you / your partner have? If you will be sufficiently covered by other retirement investments/schemes then that adds another layer to the opinions.

Brynsam

Dasa wrote: »

I'm assuming you still need to get an IFA to sign off on this?

The adviser will need to certify to the ceding scheme (i.e. the DB scheme from which the transfer is being paid) that OP has received financial advice (doesn't have to follow it - and the ceding scheme won't be interested in knowing what the advice says) before a transfer to any sort of DC arrangement, stakeholder or otherwise, can proceed.

Albermarle

I'm assuming you still need to get an IFA to sign off on this?

To be clear most IFA's have not got the required qualifications . For the ones who have they are wary about possible future claims against them . So they charge what seems to be a very high charge .

xylophone

Your deferred DB pension is a "safeguarded benefit" - the value is greater than £30,000.

See

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

You will need to take advice from a Pension Transfer Specialist before you can transfer to a DC Scheme.

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

Pension transfer specialists

Currently a pension transfer specialist must have CF30 (customer function) and hold a qualification from:

G60 or AF3 (CII)
Pensions paper of Professional Investment Certificate (IFS)
Fellow/Associate of Pensions Management Institute
Fellow/Associate of Faculty of Actuaries
By October 2020 FCA will require PTSs also hold the level 4 RDR qualification for advising on investments (or equivalent by other existing qualifications and gap-fill exercises) before they can advise on or check pension transfer advice.

https://adviserbook.co.uk/

You could look at the above - you would tick "confirmed independent" and "pension transfer".

The advice is unlikely to be cheap.