Help on what to do with pension received in divorce settlement

SonOf

Ask the IFA why a SIPP is better suited to your needs than a stakeholder plan.

That should be a pretty easy answer. Stakeholder pensions are not RDR compliant. So, they can be compared on a stakeholder vs SIPP basis without the inclusion of adviser charging. In most cases, you would expect the SIPP to come in cheaper.

The fees are high in this case. Initial is about double the cost you would target and ongoing really should be tapering down from 1% by £300k. Ideally towards the dominant 0.50% figure.

He says that a good financial advisor should make that money back for me and more.

The investments should make it back but that's not the point. If the charges were double that they would still make it back sooner or later. A bit of marketing that comment.

Teejanddeej

Brynsam wrote: »

Finally, are you the sort of person who is easily impressed, especially by someone who is talking about areas you know little about? Much to be said for meeting a second IFA and comparing what each said/proposes to charge.

Yes I am easily impressed and the IFA obviously told me what he thought I wanted to hear. I think I will try and see a second IFA. I'm slightly worried about the timescale. It's taken nearly 2 years to get this pension sharing order sorted and now I've got it I'm not sure how long I have until the pension company need to know where its going.
Obviously they're not going to turn around and say 'You took too long you can't have it now'! But if I'm honest a little bit of me does worry that might happen.

Malthusian

You have four months to implement the Pension Sharing Order. Plenty of time to see two or three IFAs.

If it expires then from my Googling it doesn't necessarily mean you forfeit the pension, but you don't really want to try it.

squirrelpie

I have no experience of divorce, thankfully, but is any advisor required to implement a pension sharing order? If the transferring firm is competent and willing, which it sounds like they might be, and if the receiving firm is similarly capable, can it not be done between the two of them? I would be inclined to ask a firm that does SIPPs and has a good reputation for customer service whether that is possible. They might even pay you. (I have HL in mind but there are others).

Malthusian

squirrelpie wrote: »

I have no experience of divorce, thankfully, but is any advisor required to implement a pension sharing order?

Not unless you are trying to transfer out of a scheme that has safeguarded rights valued at more than £30k, e.g. your ex had a defined benefit pension which allowed you to stay in the scheme. And that isn't the case here.

If however the OP is not confident in their ability to manage their own pensions the IFA is potentially right to say they can make their fees back. (Though at 1% per year, which is top-of-the-range, they have set themselves a high bar.)

Novice investors who transfer their pensions to HL often end up paying more on an ongoing basis than they would have if they used an IFA, without getting any advice. (Because they end up in their expensive multi-manager funds.) They don't have to, but they still do.

Cashback is a gimmick. D2C platforms only pay cashback because they are so good at directing investors into solutions which will cost them more many times over.

squirrelpie

Thanks. Yes, I wasn't thinking about anything except the original transfer. After it's transferred there may be different criteria for the best place to keep it long term. But I wouldn't select a firm to do the transfer based on their ongoing charges; that sounds like a recipe for self-inflicted troubles.



Personally, I stopped using an IFA quite a few years ago, but I appreciate other people may find them valuable. And I use as few funds (vs shares etc) as possible and no multi-manager ones.

cfw1994

Teejanddeej wrote: »

I did some research initially and not all pensions will accept a transfer in of such a large pension pot. That's why I decided to get financial advice.

You say not all will....but the question is: WILL YOURS?!

If it will, and yours is a decent scheme, that could, I would think, be the easiest thing to do, and might cost you next to nothing to do.

Reading this suggests you should definitely get at least one more IFA to talk through. I would think any ongoing fee should be half that quoted, from reading this forum for many months.

Teejanddeej

cfw1994 wrote: »

You say not all will....but the question is: WILL YOURS?!

If it will, and yours is a decent scheme, that could, I would think, be the easiest thing to do, and might cost you next to nothing to do.

Reading this suggests you should definitely get at least one more IFA to talk through. I would think any ongoing fee should be half that quoted, from reading this forum for many months.

I've just spoken to my present pension company and they said I could transfer the pension in but anything over £40,000 would be taxable and that I should speak to a financial adviser.
Also checked with the company my ex husbands pension is currently with and they said they send a follow up letter after 3 months but otherwise there's no time limit for me to choose where to put the pension.

Clive_Woody

Teejanddeej wrote: »

I've just spoken to my present pension company and they said I could transfer the pension in but anything over £40,000 would be taxable and that I should speak to a financial adviser.
Also checked with the company my ex husbands pension is currently with and they said they send a follow up letter after 3 months but otherwise there's no time limit for me to choose where to put the pension.

Don't be hurried into making a decision, this is a big chunk of money and you have confirmation have time to get this sorted.

I would definitely talk with another IFA (or two) and see who you feel comfortable dealing with and who charges fees that you consider to be reasonable.

As a temporary solution you could move it into a SIPP yourself and invest in a lower risk passive fund for now to give yourself more time to think. Obviously risk is a personal thing and something that you would need to consider given your circumstances (e.g. other savings, investments, your age, planned retirement date, dependents, mortgage, etc...).

There's lots of helpful and very knowledgeable folk on here so feel free to ask lots of questions to make sure you understand advice and suggestions.

xylophone

As above -by way of example, you might consider asking eg HL to organise the transfer into a SIPP and then consider either holding in cash while you investigate your options or consider links in previous.

https://www.hl.co.uk/pensions