Defined contribution Pension: transfer value to SIPP

grau

I have started a transfer process from one of my existing pension providers (let’s call them A) to a SIPP provider (let’s call them .The pot is a simple, plain defined contribution scheme, no benefit etc. and I am told that there is no transfer out and transfer in fee.

I have received an email from B saying that the transfer value they received from A is, let’s say, 50K, apparently from a valuation on 16 November.

The value of that pot on my record (from my account on A’s website page) was, say, 53K on 16 November. 3K difference on the same day?

My questions are:

1)      What is the 3K difference?

2)      Today, from my record on A’s website page, the value is, say, 58K. I guess that I am still invested in those funds and if A divests today, they would get about 58K. Where does the difference go? Is it an accounting procedure ? Is it A’s “capital gain”, to compensate for when the difference is negative (if the value of the investment had gone down in the period)?

3)      I am asked by B to confirm within a week whether I wish to proceed or not. In the latter case the transfer will not happen and I will have to re-start the process all over again. That sounds odd, as it looks as if I can start as many requests as I wish hoping that market conditions will make the “transfer value” higher than the "current" value. Technically it would be equivalent to a sort of put option...Surely A will prevent that. Where is the catch?

Of course I am now being tossed from B to A and within A's many departments.

I would appreciate if you have any comment. Thank you.

dunstonh

1)      What is the 3K difference?

Insufficient information to go on.    Based on comments later in your post about it not even being transferred yet, it would appear an error is likely (which could be an error from either provider or your reading of what has been sent).

2)      Today, from my record on A’s website page, the value is, say, 58K. I guess that I am still invested in those funds and if A divests today, they would get about 58K. Where does the difference go? Is it an accounting procedure ? Is it A’s “capital gain”, to compensate for when the difference is negative (if the value of the investment had gone down in the period)?

This does not make any sense.   If the pension has been transferred then there would be no value on the ceding scheme.    as it stands, you appear to be saying that the receiving scheme has emailed you to say they have had a transfer in but the ceding scheme appear to be saying it is still with them.  One of them has to be wrong.

Are you referring to the current value or the transfer value?

And it appears from your later comments that you haven't even submitted/confirmed the transfer can take place yet.

3)      I am asked by B to confirm within a week whether I wish to proceed or not. In the latter case the transfer will not happen and I will have to re-start the process all over again. That sounds odd, as it looks as if I can start as many requests as I wish hoping that market conditions will make the “transfer value” higher than the "current" value. Technically it would be equivalent to a sort of put option...Surely A will prevent that. Where is the catch?

There is no logic in that because the receiving scheme requests the transfer value from the ceding scheme.     If you send the transfer forms in, the receiving scheme appears to be giving you a final opportunity to confirm before posting them (or submitting via Origo).  The ceding scheme wouldn't know if you aborted or not as they would not have had the transfer request at that point.   If you keep starting and aborting then it's likely the receiving scheme would withdraw its services.

It may be an idea if you can clarify the situation as to whether the pension has been transferred, or been requested to transfer or if this whole thing is hypothetical.

grau

Thank you very much for your prompt reply. What you say makes perfect sense to me, and I was as puzzled as you are, and so were a couple of IFAs I talked to. It is not hypothetical. The fact that it has no logic does not surprise me at all. I have always found very little "logic" in pensions, bureaucracy and online services. I have spent a considerable time on this.   So I decided to check if anyone in the forum had a similar experience.

All I know is that I started the application and that B sent me messages with progress reports. A few days ago they said that they were waiting for the cash to arrive. Yesterday they sent me an email telling me about the transfer value and if I wanted to proceed. I checked again on my account at A and the funds are still there, stating “valuation at 11 December”. I called A and they said that they had to check with other departments. Still waiting. 

Albermarle

It sounds unusual. When I transferred pensions I requested the transfer to the receiving scheme and the next thing to happen  was that the money arrived . There was no checking whether I wanted to still go ahead or not . I though that was normal but sounds like some providers do it differently.
Also of course you should get the full transfer value , not minus £3K , so bit of a mystery .

dunstonh

 Yesterday they sent me an email telling me about the transfer value and if I wanted to proceed.

How would they know the transfer value unless they have received the money?   

I wonder if they are using a figure off a discharge form (which would be a historic valuation,not current).  Discharge forms often include a value at the date the form was prepared.

grau

I am sure you are all dying to have an update on this!

It turns out that A, the provider I am transferring from, has a policy that says that if the value quoted at the transfer request date varies by more than 10%, they request a confirmation to proceed. What I understood is that it is an internal process lasting some days and they check the first and last day of the process and see if the value has changed by more than 10%.

Having spoken to them, they said that the value is updated until the day it leaves my account, so I should receive the most updated value.   

Yes, it is still quite obscure to me too, but I am just reporting what I was told.

Right now, all I know that I do not see my pot in my account at A, so I guess it’s on the way to B. But I still have not received any communication from B.  To be continued….

Albermarle

You will probably see it actually arrive in B , before you receive official confirmation.