DB Transfer Fees

TVAS

Macron you now what I mean and the cases I reviewed used a TVAS. ZingPowZing. Nope however you can go to FOS website click on decisions and case studies and find a final salary pension transfer case. Google FCA final salary pension transfer and read their report of the findings as a result of a pilot they undertook when they reviewed a sample of pension transfers. 

[Deleted User]

Then did you work for the Financial Ombudsman Service, TVAS? In what capacity have you been reviewing the suitability of final salary pension transfers?

Croeso69

ZingPowZing said:

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

Try this?

https://www.financial-ombudsman.org.uk/decisions-case-studies/ombudsman-decisions/SearchDecisions?Keyword=Final+salary&BusinessName=&Business=&IndustrySectorID%5B2%5D=2&DateFrom=&DateTo=&IsUpheld%5B1%5D=1&Sort=relevance&SecurityID=91739b36658384be805df01d69f1b0da38cd02ff&Captcha=&Captcha_Timestamp=1614022254

TVAS

I am not able to insert links as I have not been here long enough so many thanks  Zingtingping.  

segovia

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 was a factor a few years ago but we have had some good fortune in recent years and the cushion of a regular guaranteed income is less attractive. 

segovia

Fermion said:

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. 

Fermion said:

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. 

This is another factor, my wife want's to leave our only daughter some money when we depart this world. The DB pension is restrictive in this regard 

segovia

TVAS said:

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.  

My attitude to risk has changed since COVID-19, we have just gone/going through the worst financial crisis this century and my SIPP is currently seeing an overall profit of 19.78%. I have come to the conclusion that risk is all about timing and if am prepared to wait the markets will always recover. We have our combined state pensions of £18,000.00 a year and £35,000.00 in rental income. We don't need to go into drawdown unless we have to and a regular DB pension would just increase our tax liabilities. 

[Deleted User]

Fair enough, segovia.
£10,000 would be normal. Just look on it as a bung you have to pay to a banana republic border official to get to where you want you go.

TVAS

Why didn't you provide the rental income in the first place why did you also not say that income with state pension  is sufficient. Stick to the facts are you suffering from a terminal illness or is there a large age gap I suspect not. So is the plan to transfer to drawdown and leave the funds outside your estate. Covid is not the worst financial crisis. The credit crunch was. You are making a decision because your funds have increased I wonder how you would feel if it was the opposite and said funds halved. At least you have investor experience, you are aware that markets fluctuate. If this transfer is ever reviewed it is likely to be deemed suitable for these reasons although I do not like reasons that do not apply to you such as ill health and spouse age gap.  So good luck however you did not confirm the if £9,000 is at date of leaving or now so I cannot tell if the transfer is good value. 

Albermarle

Why didn't you provide the rental income in the first place why did you also not say that income with state pension  is sufficient.

When you have been on this forum long enough you will realise that the full picture rarely emerges unless the thread gets long and detailed, as most posters are not aware of what info is important to begin with .

You will see some just say ' I have inherited £50K what should I do with it ' with no indication of age, circumstances etc .

It is a public consumer forum so ....