Final Salary Pension transfer success

[Deleted User]

To imagine both Fidelity and Hargreaves Lansdown are charging VAT against HMRC guidelines...that's a stretch.
My money would be on their lawyers but I assume we may quote dunstonh, if not Albermarle.

soonretire

https://citywire.co.uk/new-model-adviser/news/fca-seeks-hmrc-clarity-on-vat-for-pension-transfer-advice/a1161567
Hi everyone, I had a look around and found the article above. It sounds like Fidelity do not charge VAT where they are providing the "intermediation" service, in other words: the transfer. 

dunstonh

soonretire said:

https://citywire.co.uk/new-model-adviser/news/fca-seeks-hmrc-clarity-on-vat-for-pension-transfer-advice/a1161567
Hi everyone, I had a look around and found the article above. It sounds like Fidelity do not charge VAT where they are providing the "intermediation" service, in other words: the transfer. 

It is quite funny to see the FCA seek to clarify ambiguity when so much of the FCA rule books are written that way.  And if you ask to seek clarity from the FCA, they reply their rules are for you to interpret and if you get it wrong we will take appropriate action.

However, in this case, I can't see why the fact it is a DB pension makes it any different to other products.   If someone is paying for advice with the intention of buying a product from that intermediary and then decides to change their mind, the advice remains free of VAT as the intention was to buy but the process was aborted.        If the intention was to seek advice but arrange their own product then it is VATable.  There was no intention of intermediation in that case.

professional_direction_vat_and_adviser_charging_no_5.pdf (thepfs.org)

HMRC have stated that a firm would need to evidence that the customer intended to purchase a

retail investment product, following on from recommendations made by the adviser. If the customer,

subsequent to committing to effecting a policy, decides not to progress, the service would still qualify

for VAT exemption as it would fall into the category of an aborted transaction.

sandsy

dunstonh said:

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.

Dunstonh, think you mean abridged advice (not triage) when you talk about the half house option. 

[Deleted User]

That is interesting, dunstonh; but Fidelity, HL and others are adding VAT in hundreds of cases today.

They haven’t been pulled up for this as far as we know from what is in the public domain.

Antysam

Does anyone have any experience of Pension Help and transfer of a final salary pension? I have a CETV which is valid for 3 months - I’m a little concerned that they’ll advise against transfer and then I’m out of time and having to pay for a CETV . Is it possible to source the pension transfer company myself ? The company I’m wanting to transfer from use Hargreaves Landsdown ,does anyone have experience of dealing with them ? Any advice would be greatly appreciated 🙏x

[Deleted User]

My experience of dealing with Hargreaves Lansdown on final pension transfer was that their pension transfer analyst recommended not transferring - because he was constrained by his firm's legal team who are paranoid about a future claim. But upfront he said my case was "in the balance" to entice me to commit to the (more expensive)  full analysis.
Ask yourselves, if the people you are employing  face future liabilities according to their recommendation yet get paid the same either way, what do you imagine the recommendation would be?   

Unfortunately, you have to use  FA, IFA  or PTA as a provision of transferring a final salary pension. Any advice will be to the advantage of your adviser, rather than yourself, so be prepared to countermand advice and push on yourself with the transfer.

You can do this by going through AJ Bell, who will accept an insistent client transfer while the guys who took your money for their advice decline to acknowledge the fact on a written form. 

If you are determined to transfer, push on. 

Had I, in 2018,  accepted the advice of my Hargreaves Lansdown PTS  on a relatively modest final salary pension, I would be worse off by a quarter of a million £ today.

Good luck.

TVAS

Eggy1971 if I was reviewing your transfer it would be a fail because there is no need to transfer at the age of 50 assuming you were born in 1971.
You are talking unnecessary risk and cost and there is no need at this juncture because you cannot take benefits. So this would fail on timing. We call this why now?

If the adviser has taken a fee then they are liable. An adviser who thought this was a bad idea should walk away from the sale and he could have done a very small amount of work to determine it is not a good idea.

I would also have to decide if compensation would be due to you but I think not because you seem to want to transfer no matter what is said to you. A high multiple suggests you are giving up very valuable benefits and when we do a loss calculation we would calculate the capital sum one needs how much to buy back your benefits and I bet that value would be higher than your transfer value hence a loss.     

This is a classic case of a pension scheme member being bewitched by the large transfer values instead of seeing it as an increasing guaranteed pension and a spouses pension. It won't be a factor of 54 because you have not taken into account that it will increase in payment. We also think we won't live for a long time when in reality we will. 

[Deleted User]

TVAS said:

Eggy1971 if I was reviewing your transfer it would be a fail because there is no need to transfer at the age of 50 assuming you were born in 1971.
You are etc..

That's all as maybe but not the reason Eggy 1971 will get a negative recommendation. The reason Eggy 1971will get a recommendation not to transfer is because it is safer for the (independent) financial adviser and he gets paid either way.

Also, it is not up to TVAS to "pass" or "fail" a final salary pension transfer. The starting point of pension freedom is recognition that
the individual is best able and responsible for her/his own fortune.