Pension Transfer-In Refused Due to Protected Tax Free Cash

CoastingHatbox

Hello,

I've been trying to get my pension situation sorted out. I had 4 defined-contribution pensions, 1 with my current employer, 1 private pension and 2 historic company pensions. Initially I enlisted the help of an IFA to help me transfer the 2 historic company pensions to my current pension scheme. The IFA dragged their feet and messed me around over almost 3 months. At the third meeting, I was asked to provide some up-to-date information for current pension scheme as they had not sent on a letter of authority to that pension provider and so much time had elapsed since I originally provided information. Only after some pushing did the IFA disclose what the charges would be and I walked away. I was into this for over six hours of my time at this point, with collating information, creating spreadsheets and form filling and It was going to cost me the equivalent of a years worth of contribution in fees. I wasn't really after advice, just someone to handle the transfer of the two old schemes.

At that point I decided to do it myself, but I've hit a snag. The 1st scheme is now transferred successfully into my current company pension. My current company pension provider are refusing to transfer-in the second scheme on my instruction, even though I've expressely indicated that I am happy to sacrifice the "protected tax free cash" held within the pension I'm transferring-in. They have told me I need to apoint an IFA to enact the transfer. The tax penalty of losing the tax protection is most likely less than what I would have paid in fees to the IFA, as it is a relatively small amount. Especially when taking into account that my pension provision has ~30 years still to mature.

This transfer-in that they the current provider are refusing, is actually the pension I'm most concerned about. The pension provider for this old scheme often issues statements dated in April of each year, but I don't actually receive them until November/December each year. To receive a statement 8 months out of date, in this day and age when most pensions can be checked and administrated on-line, is ridiculous. They are also incredibly slow when it comes to dealing with any correspondence, and in the event of my early demise, I would prefer my family did not have to deal with them.

Apologies for all the pre-amble. My question is this: Are the current pension provider acting under legal compliance when they tell me I need to instruct an IFA to enact this transfer-in? Or are they just being cautious?

Thank you in advance for the advice
CoastingHatbox

Albermarle

I just checked the T's & C's of my SIPP provider and they will accept a transfer of a pension with protected tax free cash with no need for an IFA to be involved .
However you would have to talk to them ( recorded conversation presumably) to make sure you understood what you were giving up. So it is not a legal requirement as far as I know but different providers may take a different view on what is OK for them. 
You could always transfer out to a more flexible scheme and the transfer again to your workplace pension .
Or maybe be happy to end up with two pensions rather than four.

CoastingHatbox

Albermarle said:

I just checked the T's & C's of my SIPP provider and they will accept a transfer of a pension with protected tax free cash with no need for an IFA to be involved .
However you would have to talk to them ( recorded conversation presumably) to make sure you understood what you were giving up. So it is not a legal requirement as far as I know but different providers may take a different view on what is OK for them. 
You could always transfer out to a more flexible scheme and the transfer again to your workplace pension .
Or maybe be happy to end up with two pensions rather than four.

Thank you for this.
My intention is to retain the private pension and the current company scheme. I don't really want to have three schemes for anyone dealing with my estate to contend with.

I'll write back to the current company scheme provider and see what they say.

dunstonh

My current company pension provider are refusing to transfer-in the second scheme on my instruction, even though I've expressely indicated that I am happy to sacrifice the "protected tax free cash" held within the pension I'm transferring-in.

Protected tax free cash is not a safeguarded benefit.   So, there is no need for an adviser with PTS permissions to sign off on it.   However, often plans that have protected tax free cash also have GMP and/or GARs.   Could you be looking at the wrong thing?  (i.e. is there an actual safeguarded benefit that is triggering the restriction)

Receiving schemes are free to restrict beyond the safeguarded benefits if they feel there is a commercial risk.

CoastingHatbox

dunstonh said:

My current company pension provider are refusing to transfer-in the second scheme on my instruction, even though I've expressely indicated that I am happy to sacrifice the "protected tax free cash" held within the pension I'm transferring-in.

Protected tax free cash is not a safeguarded benefit.   So, there is no need for an adviser with PTS permissions to sign off on it.   However, often plans that have protected tax free cash also have GMP and/or GARs.   Could you be looking at the wrong thing?  (i.e. is there an actual safeguarded benefit that is triggering the restriction)

Receiving schemes are free to restrict beyond the safeguarded benefits if they feel there is a commercial risk.

Thank for you that information.

I can categorically say there is no GMP or GAR. I have a statement in writing from the transfer-out pension provider which I provided to the transfer-in provider with my original request for the transfer to take place.

Brynsam

Your company scheme can impose any conditions it likes on a transfer in, otherwise it doesn't have to accept it.

There is only one type of pension in the UK which must accept transfers from any other UK registered pension scheme: a stakeholder pension. Check that your company scheme would definitely accept a transfer from a stakeholder pension and if they would, consider transferring your 'second scheme' to a stakeholder, then transferring on to your company scheme. There is no exit penalty allowed in a stakeholder pension, BTW.