Final Salary Pension transfer success

agent69

I have a medium size DB pension due to start paying out at the end of the year. I will probably be content to take the pension, as I have no need for a big wodge of additional cash, but I am interested in how the advice works.

Do you pay the same for the advice irrespective of whether the advice is to stay put or cash in? I thought part of the high cost of advice was to cover insurance against being sued by people who cash in and then squander their money. I assume there is limited risk of legal action if you are advised to stay put?

Albermarle

agent69 said:

I have a medium size DB pension due to start paying out at the end of the year. I will probably be content to take the pension, as I have no need for a big wodge of additional cash, but I am interested in how the advice works.

Do you pay the same for the advice irrespective of whether the advice is to stay put or cash in? I thought part of the high cost of advice was to cover insurance against being sued by people who cash in and then squander their money. I assume there is limited risk of legal action if you are advised to stay put?

Maybe to complicate matters I understand some advisors have a kind of initial mini session for a smaller fee ,to screen out the most obvious negative cases ( and probably the more difficult customers ) 
With Fidelity it is pretty clear that it is £3.5K full stop as it is quoted on their website, but maybe a smaller IFA office could have some flex depending on the client and maybe follow on business.

dunstonh

Tony4625 said:

soonretire said:

Dear Eggy1971 I have used this forum for really helpful advice on the same topic. In the end it looks like Fidelity are working out best at £3500 plus VAT for the advice which more often than not is don't transfer. But with that certificate of taking advice, AJ bell have confirmed to me they will accept the transfer. I was worried that Fidelity's lead time to get the advice done (8-12 weeks) might be an issue because my Pension provider only hold the CETV for 3 months. I am likely to use another IFA who charges a about £500 more but wont take as long and that will ensure I get the paperwork back to BT in time. Incidentally I found other IFA's ready to do the transfer for £3.5k but it was conditional on them managing the pot for a number of years and charging a % management fee. I would rather pay more for the advice and then manage the pot myself. Hope that helps and best of luck!

Can I ask if Fidelity want the £3.5 k up front before the transfer takes place or deducted from your transfer amount . I was quoted around £9k from HL vat included with an almost 100% certainty of a stay put decision (no surprise really)  advisor was very informative when we had an hours chat over the phone to be fair.

VAT should not be charged on full advice but would be charged on triage (the cheaper half house option).

Fidelity can take the charge out of the pension if they proceed with the transfer.   However, you will need to pay directly if they do not and you arrange it yourself.

soonretire

I spoke to Fidelity and this was definitely the position:
1. fee is charged after advice is produced. I did not ask if it can be deducted from pot. I presume it would be yes IF the advice was positive to proceed and the pot was then going to Fidelity
2. if the advice is positive the total fee is £3500 and you have the option to transfer to Fidelity's own platform
3. if the advice is negative the total fee is £3500 + VAT = £4200. You get a certificate to confirm you have had the advice which you can use with other SIPP platform providers. 
4. To kick the process the first one hour session with Fidelity is FREE. That is possibly the mini-triage equivalent whereas I know others may charge a few hundred pounds for this.

[Deleted User]

Interesting, 'cos 

"When it comes to HMRC & VAT, while there may be no product linked to the advice provided (in the event of advice not to transfer), HMRC has advised that VAT will still not apply."

Is VAT applicable or not and, if not, since when?

soonretire

https://www.fidelity.co.uk/fidelity-retirement-service/#frs-fees
Their website says VAT where applicable. When I contacted them they were very clear it would be charged if the advice was not to transfer. 

squirrelpie

ZingPowZing said:

Interesting, 'cos 

"When it comes to HMRC & VAT, while there may be no product linked to the advice provided (in the event of advice not to transfer), HMRC has advised that VAT will still not apply."

Is VAT applicable or not and, if not, since when?

Sorry, but where does your quote come from? Somewhere authoritative I hope?

[Deleted User]

https://illuminate.nucleusfinancial.com/blog/beyond-ban-new-fca-rules-db-transfer-advice#:~:text=When it comes to HMRC,taken from anoth

Also, dunstonh's 12:18 post.

Albermarle

From reading that it looks like Fidelity are misinterpreting the VAT rules /new guidelines . Maybe send them the link? 

dunstonh

3. if the advice is negative the total fee is £3500 + VAT = £4200. You get a certificate to confirm you have had the advice which you can use with other SIPP platform providers. 

That is an interesting interpretation of VAT.
Advice is exempt from VAT where there is an intention to purchase a retail financial product via an intermediary.   The key bit is intention.     So, the intention would be to buy an individual retail pension to transfer the DB pension into.    So, VAT should not be chargeable.

Where the advice process breaks down the fees into segments (which some do, most do not), then VAT could apply to some of those segments.