DB Transfer Fees

segovia

Hi 
The same old question, what is a fair target price for a DB transfer. We have been quoted 3% for the first 25k and 2% for the remainder. Total cost £10,000. 
Seems a bit on the high side, I also want it going into my SIPP and I'll manage myself. The firm has quoted 0.5% ongoing but I haven't advised that I won't need ongoing as yet.  
This isn't our only pension. We already have £500,000 in SIPP's and £1,000,000.00 in property assets. We figured that the safety net of a DB pension of 9k a year with inflation guarantees wasn't really high on our priorities and decided that we could manage and accept the risk of managing the DB pot ourselves. 
I speak jointly for myself and my wife. 
 J

dunstonh

The same old question, what is a fair target price for a DB transfer.

With the same old answer.

We have been quoted 3% for the first 25k and 2% for the remainder. Total cost £10,000. 

£3k to £5k per scheme is the sort of ballpark to look for.

 I also want it going into my SIPP and I'll manage myself. 

That makes you higher risk and a less attractive to firms.  Probably better going to Fidelity.

xylophone

This isn't our only pension. We already have £500,000 in SIPP's and £1,000,000.00 in property assets. We figured that the safety net of a DB pension of 9k a year with inflation guarantees wasn't really high on our priorities 

Why would you not be appreciative of the security of your index linked state and DB pensions which enable you to be adventurous with your other assets?

wjr4

xylophone said:

This isn't our only pension. We already have £500,000 in SIPP's and £1,000,000.00 in property assets. We figured that the safety net of a DB pension of 9k a year with inflation guarantees wasn't really high on our priorities 

Why would you not be appreciative of the security of your index linked state and DB pensions which enable you to be adventurous with your other assets?

Completely agree with this. 

Fermion

xylophone said:

This isn't our only pension. We already have £500,000 in SIPP's and £1,000,000.00 in property assets. We figured that the safety net of a DB pension of 9k a year with inflation guarantees wasn't really high on our priorities 

Why would you not be appreciative of the security of your index linked state and DB pensions which enable you to be adventurous with your other assets?

I know a number of regular posters keep making this point, but I do believe there are a number of scenarios with DB pensions when this isn't necessarily the case, particularly if there is a large age gap between married couples or the pensioner has a terminal illness.  Many DB pensions for example only provide a 1/2 widows pension which is even lost if the Widow or Widower remarries. I recall that my Mother (who was 13 years younger than my Father) only received a 1/3 Civil Service Widows pension which meant that she had to rely on the family for financial support. The attraction of an SIPP or Income Drawdown Pension is that 100% of the fund is transferable to the surviving spouse or even other beneficiaries. If the particular individual is financially astute and capable (as the questioner appears in this case)  I don't see a problem transferring from a DB pension so long as they have done a full risk assessment and fully understand the implications. 

Marcon

segovia said:

Hi 
The same old question, what is a fair target price for a DB transfer. We have been quoted 3% for the first 25k and 2% for the remainder. Total cost £10,000. 

As you say, it's the same old question - so why not just look at previous answers, and perhaps shop around for a few quotes, assuming you can find more than one adviser who is prepared to quote?

Thrugelmir

segovia said:

We figured that the safety net of a DB pension of 9k a year with inflation guarantees wasn't really high on our priorities and decided that we could manage and accept the risk of managing the DB pot ourselves. 

Are you intending to invest purely in equities and ride the waves?  Fixed interest options on the open market don't come cheap nor will offer the same value in terms of what they'll cost. 

TVAS

You are asking the wrong question. The first question is why do you want to transfer? You already have £500,000 in a SIPP why do you want to put your DB pension at risk as well. It is nice to have a mixture of guaranteed DB and State Pension and non guaranteed the SIPP where you can tax cash and income on an ad hoc basis therefore minimise tax. I review DB pension transfers and the reasons why cases fail on advice are, no reason to transfer, timing. Timing means you do not intend to take benefits imminently so you might as well leave the plan as it so the scheme bears the risk and the cost rather than you UNTIL you want to take benefits. Just because you have an appetite for risk, and you have investment experience does not justify transferring per se.  

I do not like the way IFAs process DB transfers. They do all the work and then the TVAS (Transfer Value Analysis Report) shows it is not viable but the IFA wants to be paid for all the reports, graphs and admin work he has undertaken. What they should do is ask a few questions over the phone in order to proceed. 

Assuming the transfer values is £487,500 the £10,000 charge is not only fair it is cheap. What you have to realise is giving advice on DB transfers is high risk.  I have reviewed transfers of this size and when compensation is due, due to bad advice the the loss is £100,000 so the £10,000 they received in fees wasn't worth the effort.

Again assuming the transfer value is £487,500/9,000 is a factor of 54. This seems an extremely generous transfer so I have to ask is £9,000 p.a. the pension at date of leaving employment or the revalued pension on the current transfer statement?

Ongoing advice fee (OAC) if you can manage the SIPP yourself you do not need an OAC. So don't have it and if you decide to proceed check the transfer once completed that is is not on your plan. You can ask the provider to remove it. Also that 0.5% would probably be on the whole of your SIPP funds so including the existing £500,000.  

Albermarle

I do not like the way IFAs process DB transfers. They do all the work and then the TVAS (Transfer Value Analysis Report) shows it is not viable but the IFA wants to be paid for all the reports, graphs and admin work he has undertaken. What they should do is ask a few questions over the phone in order to proceed. 

I understood from some of the many threads on this subject , that preliminary chats are sometimes used to weed out the most unsuitable clients ( maybe even ones the IFA does not like or considers a potential troublemaker)

Then now there is also Triage , which is a kind of first step analysis as I understand it , before going into the full one. 

[Deleted User]

TVAS, have you a link to cases of compensation for “bad” DB pension advice, please?

Marcon

TVAS said:

I do not like the way IFAs process DB transfers. They do all the work and then the TVAS (Transfer Value Analysis Report) shows it is not viable but the IFA wants to be paid for all the reports, graphs and admin work he has undertaken. What they should do is ask a few questions over the phone in order to proceed. 

TVAS replaced over two years ago by the Appropriate Pension Transfer Analysis.

Enter the abridged advice service introduced last October!