DB pension transfer - IFA thought yes But his boss says NO - Stuck.

Mick70

xylophone said:

Made redundant 

With a redundancy lump sum?

Is there any reason why your wife (self employed) should not start contributing to her SIPP?

It seems that you could well afford to have her contribute up to her full relevant earnings?

Has she obtained a State Pension Forecast? Have you?

Do you want to give up the security of the DB pension which provides a bedrock for your retirement?

And as I keep saying, I have now known a number of people who were drawing an index linked DB pension well into their nineties.

And in my relative's quarterly Pensioners' Bulletin, which lists all the old sweats who have been gathered to Abraham's bosom,  I notice a few centenarians.........

Was no redundancy lump sum , it was a grey area simply to close down the DB pension scheme . 

Mick70

SonOf said:

Adviser firms are structured in different ways.
Small local firms (usually made up of 1-6 advisers) tend to use third party compliance companies for checking. Those compliance checkers do not consider the business risk but purely focus on compliance and suitability.    It is often argued the compliance checkers are a bit too much rule book and not enough real world but then so is the FCA.  The owner/directors will assess the business risk themselves and not have a manager or third party decide it for them.
Regional/national firms tend to have in-house compliance and they will consider compliance and suitability (as above) but also factor in company instructions on business risk.

I Just feel that the advisor management are simply looking after their own interests for Insurance and not necessarily best for me 
You are certainly a higher business risk than the average (over the LTA, no previous investing history.   Clear cut cases are often easy to justify.  The more wishy washy the case is, the harder it it justify and that is often where the differences in opinion occur.  If the compliance checker is erring on the "no" side then that is likely how the FOS and FCA would view it.
A 1.7m missold DB transfer could bankrupt a company and end careers.

Does this mean I am stuck now and just accept the decision ?
No.  You do not need a positive decision to complete a transfer.   You just need to have sought regulated advice and paid for the formal recommendation.    Your choice of provider will be severely limited but the adviser firm must provide confirmation that they have given you regulated advice.  Choice of provider will be limited as some will only accept positive recommendations and others will try and get the adviser firm to take liability for setting up the new pension as well.   However, there are providers that will not do that and only require the adviser declaration.

Choice of provider would have been where my current (new) works DC pension is - Royal London governed portfolio .  As say the IFA thought I had strong case and said he would have taken the CETV but it is the guy at the top (who I’ve never met) who says no 

Thrugelmir

Mick70 said:

Thrugelmir said:

Mick70 said:

  I am aware the risk of market crash but was using pessimistic 2% growth on my cetv and felt it would be £2m+ by time I retire.  I am also aware of the LTA  an political risks regarding this .

Where did you derive 2% compound growth from? 

I just spoke with the IFA , indication I got was that 3-4% growth (after fees) would be a realistic norm , so I used 2% to air on side of caution .  If you can’t get a fund to grow 2% and keep up with inflation you may as well put it all in a bank and cut out all risk IMO anyway ? Unsure what others think about this 

If only investing was that easy.  Indications are that corporate profitability in the US for 2019 may well end up being lower than was reported in 2012. Yet share prices are somewhat higher. Inflation has no bearing on corporate profitability. 

xylophone

Is the firm providing a suitability report?
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/
One development worth pointing out here is that PS18/20 introduces the FCA requirement on firms to provide a suitability report regardless of whether or not a transfer is recommended.  FCA believe advising a client it is not in their interests to transfer, and setting out the considerations in reaching this conclusion, needs to be fully documented – although perhaps not as detailed as a suitability report that does recommend a transfer should proceed.

https://adviser.royallondon.com/pensions/personal-pensions/pension-portfolio/defined-benefit-db-transfers/

CSL0183

Mick70 said:

CSL0183 said:

Not understanding pensions all that great but won’t you be heavily penalised having a pension pot over £1.05m? How do you protect the £650k additional? 

Why is it so high in the first place and how are you managing to get a pension at 50? I thought minimum age was 55? Are you military? 

Why would you continue to contribute into a pension scheme when you are already way over your lifetime allowance? Surely you would be better off filling up ISA’s now? 

Part of the redundancy agreement meant our pensions would be triggered at age 50 (protected persons status ) , I was only one under 50 at time so only one who got a CETV .
yes aware Of LTA impact but it’s still worth paying in IF employer is doubling my contributions .  It’s like somebody earning say 30k pa saying i don’t want to earn 50k pa as I would have to pay more tax .

Okay, yes makes sense with employer contributions as you will still benefit. 

Would that work out at a possible 65% tax on withdrawal though? 40% normal tax + 25% Excess LTA charge tax?
And a lump sum taxed at 55%?

Mick70

xylophone said:

Is the firm providing a suitability report?
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/
One development worth pointing out here is that PS18/20 introduces the FCA requirement on firms to provide a suitability report regardless of whether or not a transfer is recommended.  FCA believe advising a client it is not in their interests to transfer, and setting out the considerations in reaching this conclusion, needs to be fully documented – although perhaps not as detailed as a suitability report that does recommend a transfer should proceed.

https://adviser.royallondon.com/pensions/personal-pensions/pension-portfolio/defined-benefit-db-transfers/

Have had no report or anything just email off the IFA (as I was chasing it up) apologising that his boss had said No.
that link from royal London is interesting as unless I’m reading it wrongly it suggests I can still transfer there even though recommendation is not to transfer ? 

Again I feel the No recommendation is mainly about insurance due to the high amount ?

Mick70

CSL0183 said:

Mick70 said:

CSL0183 said:

Not understanding pensions all that great but won’t you be heavily penalised having a pension pot over £1.05m? How do you protect the £650k additional? 

Why is it so high in the first place and how are you managing to get a pension at 50? I thought minimum age was 55? Are you military? 

Why would you continue to contribute into a pension scheme when you are already way over your lifetime allowance? Surely you would be better off filling up ISA’s now? 

Part of the redundancy agreement meant our pensions would be triggered at age 50 (protected persons status ) , I was only one under 50 at time so only one who got a CETV .
yes aware Of LTA impact but it’s still worth paying in IF employer is doubling my contributions .  It’s like somebody earning say 30k pa saying i don’t want to earn 50k pa as I would have to pay more tax .

Okay, yes makes sense with employer contributions as you will still benefit. 

Would that work out at a possible 65% tax on withdrawal though? 40% normal tax + 25% Excess LTA charge tax?
And a lump sum taxed at 55%?

With the LTA once you have drawn £1.05M or reach age 75, (although LTA will rise each year so could be say £1.4m by then ) you pay additional 25% tax on what is left in the pot, as a one off charge , that’s my understanding anyway 

ffacoffipawb

Mick70 said:

CSL0183 said:

Mick70 said:

CSL0183 said:

Not understanding pensions all that great but won’t you be heavily penalised having a pension pot over £1.05m? How do you protect the £650k additional? 

Why is it so high in the first place and how are you managing to get a pension at 50? I thought minimum age was 55? Are you military? 

Why would you continue to contribute into a pension scheme when you are already way over your lifetime allowance? Surely you would be better off filling up ISA’s now? 

Part of the redundancy agreement meant our pensions would be triggered at age 50 (protected persons status ) , I was only one under 50 at time so only one who got a CETV .
yes aware Of LTA impact but it’s still worth paying in IF employer is doubling my contributions .  It’s like somebody earning say 30k pa saying i don’t want to earn 50k pa as I would have to pay more tax .

Okay, yes makes sense with employer contributions as you will still benefit. 

Would that work out at a possible 65% tax on withdrawal though? 40% normal tax + 25% Excess LTA charge tax?
And a lump sum taxed at 55%?

With the LTA once you have drawn £1.05M or reach age 75, (although LTA will rise each year so could be say £1.4m by then ) you pay additional 25% tax on what is left in the pot, as a one off charge , that’s my understanding anyway 

Think of any LTA charge as the government receiving the PCLS instead of you. 😀

CSL0183

Mick70 said:

CSL0183 said:

Mick70 said:

CSL0183 said:

Not understanding pensions all that great but won’t you be heavily penalised having a pension pot over £1.05m? How do you protect the £650k additional? 

Why is it so high in the first place and how are you managing to get a pension at 50? I thought minimum age was 55? Are you military? 

Why would you continue to contribute into a pension scheme when you are already way over your lifetime allowance? Surely you would be better off filling up ISA’s now? 

Part of the redundancy agreement meant our pensions would be triggered at age 50 (protected persons status ) , I was only one under 50 at time so only one who got a CETV .
yes aware Of LTA impact but it’s still worth paying in IF employer is doubling my contributions .  It’s like somebody earning say 30k pa saying i don’t want to earn 50k pa as I would have to pay more tax .

Okay, yes makes sense with employer contributions as you will still benefit. 

Would that work out at a possible 65% tax on withdrawal though? 40% normal tax + 25% Excess LTA charge tax?
And a lump sum taxed at 55%?

With the LTA once you have drawn £1.05M or reach age 75, (although LTA will rise each year so could be say £1.4m by then ) you pay additional 25% tax on what is left in the pot, as a one off charge , that’s my understanding anyway 

Okay, so it’s once you have drawn £1.05m rather than the funds drawn above it? i.e, £2m in the pot. £950k is withdrawn incurring the additional 25% and then when the pot hits £1.05m, this 25% additional charge is no longer relevant. (Figures at today’s rates) Or as above, the PCLS not applicable on the withdrawals where the pot remains above £1.05m

Say you got £750k out and then died, leaving £1.25m in the pot to family you (family) wouldn’t fall foul? I guess there would then be Inheritance/estate due. 

xylophone

The requirement is to obtain advice from  a properly qualified person, not necessarily to follow it.
See https://adviser.royallondon.com/technical-central/pensions/transfers/safeguarded-benefits/
However, you may find that your proposed receiving scheme will not accept a DB transfer unless the advice is positive.
To add, in respect of RL's position, you need to read the will accept/may accept/won't accept very carefully.
I am still not sure of what kind of advice you have paid for or what permissions this firm has or in what form the proposition would be made to RL.