DB Transfer

[Deleted User]

HappyHarry said:

ZingPowZing said:

HappyHarry said:

ZingPowZing said:

Do you actually know - or care - whether your insistent client can proceed past your negative recommendation?

I know that they could proceed past a recommendation to retain their DB pension. 

Thanks HappyHarry, good to know. 

How would they do that? (as you state below every post, it would not be advice)

They find a provider willing to accept the transfer. I would have to sign a form saying that I have given advice, and they would need to show that to the new provider, who would pass it on to the DB administrators.

Thinking about that last point, I have never been asked to sign that form for a client I had recommended retain their DB pension, so I can safely say that none of my clients have insisted on transferring against my advice.

I appreciate that it has not happened to you, Harry. It has to me.
But now that the AJ Bell expedient is no longer available, it seems from other recent posts on the board that finding a provider willing to accept the transfer is complicated to unworkable in the timeframe of a valid CETV. When you say you know that an insistent client can proceed, is that a matter of faith or do you know a workable route you could share if you so choose?

HappyHarry

I do not know a workable route. Though I have never looked into it.

[Deleted User]

Thank you Happy Harry. I do appreciate your candour. 

jamesd

ZingPowZing said:.

But now that the AJ Bell expedient is no longer available, it seems from other recent posts on the board that finding a provider willing to accept the transfer is complicated to unworkable in the timeframe of a valid CETV. When you say you know that an insistent client can proceed, is that a matter of faith or do you know a workable route you could share if you so choose?

Standard Life told me on the phone today that they would accept a transfer into their Stakeholder product by an IFA when that IFA had advised not transferring.

Plenty of others that can be asked if there isn't an IFA willing to transfer on insistent client basis.

One nice thing about the way HappyHarry does it is the being up front and rejecting potential clients where that might happen. I don't like the overall approach that amounts to taking a personal or business view that the pension freedoms were wrong but it's one of the most ethical ways of implementing that view.

jamesd

HappyHarry said:

ZingPowZing said:

Do you actually know - or care - whether your insistent client can proceed past your negative recommendation?

I would be upset to learn that they had. It would make me wonder what I could have done to persuade them otherwise.

Differences in emphasis or availability of methods disliked by the FCA could produce that result.

Say you had a client where a high emphasis is placed on spousal protection.

For private sector transfers today using safe withdrawal rates I'd anticipate a constant income rising with uncapped inflation that's around 50% higher than the DB and with 100% of that going to the spouse. The DB might start with two thirds of 100% so end up being just 44% of the 150%. The income is also likely to increase, since it starts low enough to survive the worst circumstances in the last 125 or so years. 

The FCA may well prohibit that comparison, though perhaps accepting a similar cash flow analysis. For a client who's happy to accept a cut to say DB level if something worse is seen than in the last 125 or so years it could be an attractive option.

I don't have your knowledge of the regulatory constraints but in that sort of situation I suppose that regulation might require me to advise no for a transaction that I expect to deliver substantial value to the client. If so, proceeding to help them achieve it would be the right thing to do.

HappyHarry

No, those are not the kind of constraints imposed by the FCA. The FCA tend to require you do include certain comparisons, such as the TVC, but there is no reason you couldn't use others to justify the advice. If a transfer can be justified, demonstrably so, then a PTS can recommend it.

I can't think of a situation where regulations on DB transfers would stop a TPS recommending something in their clients' best interest.

Linton

jamesd said:

HappyHarry said:

Bear in mind too that at the time these famous 'freedoms' were introduced, there was no suggestion that the FCA and PI insurers would take their current stance...

Though worth remembering that the "pension freedoms" were designed to apply only to DC schemes, and not DB schemes.

The original pension freedoms legislation allowed transfers from DB to DC with no advice requirement at any value. Even with the 30k advice requirement there was a substantial improvement but with hindsight that requirement looks like a bad mistake on the freedom front. The FCA and PI insurers didn't originally have any impact because there was originally no compulsion to use regulated advice.

I thought the ability to transfer DB to DC already existed prior to pension freedoms legislation.  What was different then was that CETVs were too low to make it worthwhile except in extreme cases.  So issues had not arisen except perhaps for a few scams.

dunstonh

Standard Life told me on the phone today that they would accept a transfer into their Stakeholder product by an IFA when that IFA had advised not transferring.

Can I pick you up on that wording James.  It may be how you have written it or it may be how they meant it or how I am interpreting it

"they would accept a transfer into their Stakeholder product by an IFA "

Are they saying that they will accept it if an IFA submits the application?    As that answer pretty much goes for all providers that accept business via an intermediary.   Its when the IFA is not submitting the application that is the key problem

candie01

ZingPowZing said:

HappyHarry said:

jamesd said:

HappyHarry said: 

Agreed, but a DB pension is not part of an individual's own savings. They are are assets of the employer sponsored pension scheme designed to provide an income for their employees in retirement. In no sense could these be counted as an individual's savings.

In many (most?) cases, the DB scheme is unfunded so there are not even any assets to pretend otherwise with.

The DB pension is part of an individual's retirement plan and it's right that they should be able to adjust that plan when it seems right to do so.

The whole "it's my money I should be able to do what I want" brigade do need saving from themselves sometimes. I am not in favour of a nanny state particularly, but I have been an adviser for long enough to see the kinds of errors that many have made, and have come to the conclusion that many people do need saving from themselves.



I think a complete ban would be a better option for most would be transferees.

As one of those who was "saved from themselves" by a financial adviser (for £7,600) let me tell you that we do not see DB pensions and DC pensions as different species. Quite a few of us had both, sometimes with the same company. Like discriminating between types of financial adviser, it can seem to those outside a nice but artificial distinction. Sure, I gave up certain guarantees on the transfer of my DB pension but I could easily buy them back on subsequent gains.

And now that I have full control over my SIPP, I make no distinction between investments there and outside - they are highly correlated. And that is how I am going to use what was my DB pension, for growth in a tax-sheltered environment; at least until I near LTA.

Are you currently advising on DB pension transfers, HappyHarry?

Can you message me with who your financial adviser is please and do they deal with insistent clients?

candie01

HappyHarry said:

Yes, I do advise on transfers. Over the past 12 months I have recommend transfers more often than I recommended retaining the DB pension. However, my clients tend to be amongst the more wealthy of the population, meaning that they have other sources of retirement income.

As I said in my post, some individuals need saving from themselves, and some individuals are quite capable of making their own rational decisions to transfer, and rightly begrudge the need to pay an adviser. How legislation could differentiate between the two is a conundrum.

If you give advice not to transfer will you still help the client with an insistent transfer?