Defined Benefit Pension Transfer on Divorce - please help

Please can you advise me on the below.
Parents have got a divorce last year and agreed to split the husbands pension as part of it. I believe it is a Defined Benefit Pension as they provided a CETV. The amount the wife will get is around £70k. FYI both are 60 years old.

The husbands pension department have said they can't take the wife on the scheme so a pension credit will be given to her and she needs to set up her own private pension to get it transferred in to.

This suits the wife as she needs the cash as she needs to buy a house. The money from the matrimonial house is not enough for her and she's hoping to bridge that gap with a tax free lump sump and maybe a bit more that will get taxed. 

A few questions I have.
  • Does the wife need to get financial advice? I understand for £30k or greater it is needed (FCA rules) but does it apply in a scenario like the above where she receiving a pension credit? It's not like she has the pension already and is choosing to change it which I understand would be not preferred as Defined Benefit pensions are good. 
  • If so, how much is the going rate for this? I've seen 3 to 3.5% of the pension value being asked to perform this. Too much? 
  • How long can she expect it to take considering she is just receiving a pension credit?
  • Anything else I should be aware of?
Thanks. Really need some help on this as I've been roped in to it as my mum has no understanding of these things.
Divorces are a nightmare. Don't get married. 
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Replies

  • edited 30 July 2020 at 10:49PM
    MarconMarcon Forumite
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    edited 30 July 2020 at 10:49PM
    If your mum definitely can't keep her benefits within the DB scheme, then no, there is no requirement for her to take advice from a pension transfer specialist. This isn't classed as a 'transfer' but a 'switch' (in case anyone else reading this is curious!), so advice isn't needed.

    As for your other questions, there's a much better informed source of free help readily available: the people who administer the pension scheme on a day to day basis. They should be well placed to give information (not advice) and have all the relevant records to hand.
  • sj15sj15 Forumite
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    Reading through the documents they've sent through, the below was written on it:
    "Please be advised we are unable to retain any benefits for Mrs xxxxxx in our scheme and any pension share awarded by the courts will need to be transferred to another pension arrangement"
    and
    "The trustees have decided that this pension credit will then be transferred out of our plan and in to ex spouse's own pension plan"
    They've also sent forms asking for details of where to transfer the pension. So I'm thinking that's a no. To be honest, to get a clean break it's better she sets her own one u.
    When you say people who administer the pension, do you mean pension department transferring out the credit or a pension company (yet to be found) we are transferring in to? 
    Thanks for the info.
  • sj15sj15 Forumite
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    Also, I guess my next question is, what's a good Pension provider in the UK? 
    I was looking at Aviva and they will charge around 0.75% per annum for a pension. Seems excessive to me. But I'm not an expert. That's like £500 a year to manage a £70k pot.
    I think flexible drawdown seems like what we need but what well known companies provide this with the lowest managements fees? Need easy access to the cash and we understand the tax implications.
    If we go with a drawdown, will we have to find a fund to stick it in to ourselves? I have just set up a Vanguard fund for myself so I get investing, but is similar with choosing a pension fund to invest?
  • xylophonexylophone Forumite
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    You seem to be saying that she will wish to access the PCLS  almost immediately and then at least some of the balance - this will reduce the pension to a fairly modest sum.

    For ease of administration, she  might consider Hargreaves Lansdown. Full details available here.
    https://www.hl.co.uk/pensions/transfer-to-the-vantage-sipp
  • xylophonexylophone Forumite
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    And has your mother obtained a State Pension Forecast?
    https://www.gov.uk/check-state-pension
  • uk03878uk03878 Forumite
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    sj15 said:
    Also, I guess my next question is, what's a good Pension provider in the UK? 
    I was looking at Aviva and they will charge around 0.75% per annum for a pension. Seems excessive to me. But I'm not an expert. That's like £500 a year to manage a £70k pot.
    I think flexible drawdown seems like what we need but what well known companies provide this with the lowest managements fees? Need easy access to the cash and we understand the tax implications.
    If we go with a drawdown, will we have to find a fund to stick it in to ourselves? I have just set up a Vanguard fund for myself so I get investing, but is similar with choosing a pension fund to invest?
    I feel for you as this must be daunting
    There is no way I can explain all the things you are asking in a single post (others may though)
    A good port of call is to read this
    https://www.moneysavingexpert.com/savings/cheap-sipps/
    btw The Vanguard SIPP doesn't support drawdown at the moment - so don't choose that for your parent

  • AlbermarleAlbermarle Forumite
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    xylophone said:
    You seem to be saying that she will wish to access the PCLS  almost immediately and then at least some of the balance - this will reduce the pension to a fairly modest sum.

    For ease of administration, she  might consider Hargreaves Lansdown. Full details available here.
    https://www.hl.co.uk/pensions/transfer-to-the-vantage-sipp
    Just for reference - Hargreaves Landsdown charge 0,45% for the platform /admin charge per year + you will have the charges for the fund(s) you choose to invest the money into . These charges can vary from 0.1% to 2 %.
    Just be aware that the pension provider you choose , is less important than how the money is invested within the pension. 
  • sj15sj15 Forumite
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    xylophone said:
    You seem to be saying that she will wish to access the PCLS  almost immediately and then at least some of the balance - this will reduce the pension to a fairly modest sum.

    For ease of administration, she  might consider Hargreaves Lansdown. Full details available here.
    https://www.hl.co.uk/pensions/transfer-to-the-vantage-sipp
    Thanks. Yeah she may access most of it, maybe £20-30k left behind in the pot of £70k. So I'm thinking just to put it in a fairly semi-safe pot until retirement 6 years from now. But as someone suggested above i'll get a state pension forecast to see what looks like too.
  • sj15sj15 Forumite
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    xylophone said:
    And has your mother obtained a State Pension Forecast?
    https://www.gov.uk/check-state-pension
    She has not, just filled it out and sent it off today. As well as filling in the form for national insurance credits check online (for some reason it could not verify her identity). Thanks.
  • BrynsamBrynsam Forumite
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    sj15 said:
    Reading through the documents they've sent through, the below was written on it:
    "Please be advised we are unable to retain any benefits for Mrs xxxxxx in our scheme and any pension share awarded by the courts will need to be transferred to another pension arrangement"
    and
    "The trustees have decided that this pension credit will then be transferred out of our plan and in to ex spouse's own pension plan"
    They've also sent forms asking for details of where to transfer the pension. So I'm thinking that's a no. To be honest, to get a clean break it's better she sets her own one u.
    When you say people who administer the pension, do you mean pension department transferring out the credit or a pension company (yet to be found) we are transferring in to? 
    Thanks for the info.
    That's clearly a 'no' to staying put, so advice not needed. The pension department transferring out the credit should be able to give you a timescale to actual make the payment, but to be honest it'll be whatever it'll be. Get a new scheme set up as your  priority.
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