Transfer Defined Benefit Pension & the great suitability report ripoff

AlanP_2

RoadToRiches said:

Natalius said:

 I know legislation has changed but my colleague had this report done for himself with a transfer value of £550,000 last October for £450.00  Yes I am using that as a yardstick

I am in the same boat, I've been quoted £5k plus a percentage of the valuation to do a 75K transfer.  That is a rip off and just a way to stop us getting at our pensions that we paid into. I'm also expecting a valuation next year for another scheme I suspect that value will be closer to the half million mark but someone somewhere is going to try and put the blockers on it.  Even though I know almost definitely that I will never get anywhere near that through lifetime income from 60 onwards.

Let me know if you find anyone approving with fees in the hundreds though :-)

Legislation has not changed since last October so presumably you can both get sorted out at £450 each?

That assumes Natalius' mate had the figures correct and the IFA they used is still in business and not shut up shop as he was running a business that was designed to lose money hand over fist.

Have you read this thread, or the hundreds of similar ones? If you have you will have realised that the only people who can change the law to read as you would like it to are MPs, so suggest you contact yours ASAP and get them on to it.

£5k on £75k is only 6.67%, a DC pot can move by that in a week easily, so if you want to transfer jump through the legal hoops and start raking in those gains (or losses).

To put the £70k after transfer fees in context for you, your employers contribuition probably accounts for £40K plus of that so you are still quids in compared to what you have paid in.

Albermarle

That is a rip off and just a way to stop us getting at our pensions that we paid into

There will be nothing to stop you taking the guaranteed income for life from the pension , which is the whole idea of a DB scheme in the first place . Most likely the large majority of the money was paid in by the employer rather than you and if you had been in a DC scheme you would most likely be much worse off.

Cus

MarkCarnage said:

 Paid separate advice fee for Lifetime Allowance planning - that was in the hundreds of pounds and good value

Bit off topic but I'm interested to know what that looked like?

[Deleted User]

NottinghamKnight said:

ZingPowZing said:

NottinghamKnight said:

The money isn't yours at the end of the day, you signed up to a scheme that agreed to pay you an agreed sum at a future date, nothing in that regard has changed. Many years later legislation was enacted that gave the possibility that the income could be exchanged for a lump sum, however to do this there had to be an independent report to demonstrate that this would be in your interest.

Apologies, MallyGirl. Above is what was posted. It is wrong in fact.

Is everyone of eligible age entitled to a CETV? Certainly. 
Is  everyone with a CETV then entitled to a suitability report? I should hope so.
Is anyone who buys a suitability report then entitled to transfer his DB pension? Yes, regardless of whose interest the report purports to serve.

To say that it is not the clients money "at the end of the day" speaks of a certain resistance and resentment in the industry that "ordinary" now have this agency. But it is law.

Please stop posting misleading information. Not everyone of relevant age is entitled to a cetv, not even those that have a defined benefits pension. Why is someone 'entitled' to a suitability report, that is a business decision to be made by those who can produce such a document, and they can determine the cost of that service (more accurately their PI insurers in most cases). No one is entitled to transfer their pension, that is dependent on the nature of the report and the requirements of the receiving scheme. It is generally poor advice to recommend a transfer in most cases as you couldn't buy the level of income with the cetv, whether you could generate more money by moving up the risk scale is a very different thing.
I'm not sure why you make reference to the industry, I have never worked in financial services but do take time to do some research and enquire as to what a situation might be, have a numerical background and am able to assess risk. The 'pot' isn't the clients money, the guarantee of a future income is.  I don't understand what is meant by 'ordinary' in your sentence but given the rest of the post makes little sense, and is wrong and misleading I guess that is a minor detail.

Well, ok, let us start from the principle that anyone who has a transferrable DB scheme can apply for a CETV when eligible to do so. If he is then unable to secure a suitability report, then a transfer cannot follow in any case; contradicting the spirit of the law. It is not beholden on any individual or firm to provide that service but it must be possible otherwise the process is completely broken. You're not still saying the suitability report has to demonstrate a transfer is in the client's interest to enable a transfer, are you NK? Because the client has the right to make the final determination.
That is a fact that many on this board clearly don't like but - for another group of readers looking in - the condescending assumption that they should be denied that freedom "for their own good" is something of a turn-off; though I can see how the notion appeals to regulars who flatter themselves they belong in a smaller, more select, group who are capable of "assessing risk" and navigating such affairs. Heck, they could probably write the report themselves.

The FCA is often quoted for stating that most schemes should not be transferred but that's not all it has to say on the subject of DB pensions:
https://citywire.co.uk/new-model-adviser/news/fca-db-transfer-advice-shouldnt-cost-more-than-3500/a1254565

Tommyjw

Silvertabby said:

Joey_Soap said:

Myself, I am very happy to see the system is working quite well to protect people from their own mistakes. It is quite correct that the presumption in DB to DC transfers should be that it's a bad idea in all but exceptional circumstances. Without this safeguarding, we'll see the same people ranting about how the industry robbed them of their final salary pension benefits in a few years time.

Think I'm joking about the wedding etc?  No, based on what LGPS members told me when I asked why they wanted to transfer out.  Many of whom expected 'their' money to be just transferred into their current accounts.

Made me laugh.

Our company has a complaint just come through (obviously very soon to be laughed out..) against a colleague because she emailed a man to tell him that no, his DB pension cannot be "transferred" to a company to purchase a diamond.

Albermarle

Apart from some personal opinions, I think we all know what the real issue is .
The Government/FCA have put in strict controls to 1) Protect many people from themselves . It is not condescending , it is just fact that the large majority know almost nothing about personal finance and for many the transfer money would just burn a hole in their pocket until it was all or mostly gone. 2) Protection against dodgy advisors/investment schemes ( British Steel etc ) 3) Govt protecting its own coffers by not having to pay out pensions credit, care costs when it did not work out.

So caught unfortunately in the middle are people who are able to make a considered judgement on transferring but are forced to go through an expensive process to get there , if they can find someone to do it . So they complain a lot.....

Silvertabby

Tommyjw said:

Silvertabby said:

Joey_Soap said:

Myself, I am very happy to see the system is working quite well to protect people from their own mistakes. It is quite correct that the presumption in DB to DC transfers should be that it's a bad idea in all but exceptional circumstances. Without this safeguarding, we'll see the same people ranting about how the industry robbed them of their final salary pension benefits in a few years time.

Think I'm joking about the wedding etc?  No, based on what LGPS members told me when I asked why they wanted to transfer out.  Many of whom expected 'their' money to be just transferred into their current accounts.

Made me laugh.

Our company has a complaint just come through (obviously very soon to be laughed out..) against a colleague because she emailed a man to tell him that no, his DB pension cannot be "transferred" to a company to purchase a diamond.

Some time ago, pre pension freedoms, a deferred LGPS member wanted to transfer their benefits to invest in a hardwood plantation in South America.

The CETV was something like £300K, so a considerable amount of money to lose.  As pensions administrators, we weren't allowed to offer advice, but could and did refuse to make the transfer because the gaining scheme (for want of a better word) wasn't a HMRC registered pension fund. 

Cue screams and complaints, and a claim for £Ks 'compensation' because our refusal to transfer had lost a lot of money in missed investment returns.

The complaint went nowhere because LGPS rules simply don't allow transfers into non-regulated schemes.  However, the member could and did transfer into a SIPP.  Their parting shot was that they would then be free to invest their money as they saw fit, presumably in hardwood. 

xylophone

presumably in hardwood. 

Let's hope it didn't go up in flames in a forest fire!

NottinghamKnight

ZingPowZing said:

NottinghamKnight said:

ZingPowZing said:

NottinghamKnight said:

The money isn't yours at the end of the day, you signed up to a scheme that agreed to pay you an agreed sum at a future date, nothing in that regard has changed. Many years later legislation was enacted that gave the possibility that the income could be exchanged for a lump sum, however to do this there had to be an independent report to demonstrate that this would be in your interest.

Apologies, MallyGirl. Above is what was posted. It is wrong in fact.

Is everyone of eligible age entitled to a CETV? Certainly. 
Is  everyone with a CETV then entitled to a suitability report? I should hope so.
Is anyone who buys a suitability report then entitled to transfer his DB pension? Yes, regardless of whose interest the report purports to serve.

To say that it is not the clients money "at the end of the day" speaks of a certain resistance and resentment in the industry that "ordinary" now have this agency. But it is law.

Please stop posting misleading information. Not everyone of relevant age is entitled to a cetv, not even those that have a defined benefits pension. Why is someone 'entitled' to a suitability report, that is a business decision to be made by those who can produce such a document, and they can determine the cost of that service (more accurately their PI insurers in most cases). No one is entitled to transfer their pension, that is dependent on the nature of the report and the requirements of the receiving scheme. It is generally poor advice to recommend a transfer in most cases as you couldn't buy the level of income with the cetv, whether you could generate more money by moving up the risk scale is a very different thing.
I'm not sure why you make reference to the industry, I have never worked in financial services but do take time to do some research and enquire as to what a situation might be, have a numerical background and am able to assess risk. The 'pot' isn't the clients money, the guarantee of a future income is.  I don't understand what is meant by 'ordinary' in your sentence but given the rest of the post makes little sense, and is wrong and misleading I guess that is a minor detail.

Well, ok, let us start from the principle that anyone who has a transferrable DB scheme can apply for a CETV when eligible to do so. If he is then unable to secure a suitability report, then a transfer cannot follow in any case; contradicting the spirit of the law. It is not beholden on any individual or firm to provide that service but it must be possible otherwise the process is completely broken. You're not still saying the suitability report has to demonstrate a transfer is in the client's interest to enable a transfer, are you NK? Because the client has the right to make the final determination.
That is a fact that many on this board clearly don't like but - for another group of readers looking in - the condescending assumption that they should be denied that freedom "for their own good" is something of a turn-off; though I can see how the notion appeals to regulars who flatter themselves they belong in a smaller, more select, group who are capable of "assessing risk" and navigating such affairs. Heck, they could probably write the report themselves.

The FCA is often quoted for stating that most schemes should not be transferred but that's not all it has to say on the subject of DB pensions:
https://citywire.co.uk/new-model-adviser/news/fca-db-transfer-advice-shouldnt-cost-more-than-3500/a1254565

Right that's good we are getting back to sensible levels of debate. A suitability report is required, but that doesn't mean that any individual or company is forced to complete one. What is unclear is what the spirit of the law was intended to be. It was an element of promoting a free market, much of the intent was to promote spending and so provide a boost to the economy, subsequent issues around the wider economy and interest rates have pushed cetv numbers to huge ratings which was not foreseen at the time of the legislation. It must be frustrating for many that they can't get a report completed at what they believe is a reasonable price but that is the requirement, the cost of completing the report is effectively just another fee, given inflated cetvs then if a few thousand for the report makes that much difference it suggests that the transfer may not be worthwhile, especially as it may well be a fraction of the volatility of the dc pension it is being transfered to. 
The FCA is the regulator but shows evidence of incompetence on many levels - if they believe there is a maximum cost for advice then they should be stepping in and providing PI cover to achieve that as commercial insurers do not believe that is economic.

Thrugelmir

Great pity that there aren't stickies on topics such as this. Would save the constant repetition of the same facts and discussion. Technology you would have thought should have made people better rather than less well informed. 
The fact that the FCA started their review in 2015 shows how long the problem has existed.