DB Transfer Fees

Thrugelmir

segovia said:

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%.

How many companies can you name that you have invested in have increased their underlying profitability by 20%? 

segovia

I can only go on my figures, I transferred my pension to a SIPP in January last year just before the COVID crash and I am 19% up as of today 

segovia

Some background information regarding the selection of the IFA. We were recommended to the IFA as they have transferred many DB pensions for a group of people who all worked for the same insurance company.  To the best of our knowledge, the IFA has managed the transfer for about 20 of my wife colleagues who all worked at the same place.  Its often said you can't do better than a personal recommendation. However, they don't do the transfer they refer to it as someone else. It turns out their referral fee is 5K! so the actual transfer cost is only 5K providing we can get there referrer to waive their fees