Unable to transfer my DB pension - can anyone help?

enthusiasticsaver

Personally I would accept it and leave it as it stands. That is what I did when I explored transferring my DB pension. The CETV was not particularly appealing though and the costs for transferring high. Is there a particular reason why you feel transferring would be better for you? 

dunstonh

I cannot afford to take Independent Financial Advice again because of the change in regulations in October 2020 requiring fees to be paid even if the advice is not to transfer. I could only afford to pay the fees from my pension fund if it is transferred. I have received a few quotes and the cheapest is £4,500. How can any average person afford that kind of money for advice unless they can use their pension fund to pay for it?

And that could well be the reason that the transfer was not considered best advice.  If you don't have other wealth/means then that would weigh heavy on the decision.

I feel I am only in this position because of the Administrators very poor handling of my case. 

And you are right to feel that way.

but I would really appreciate any input and any suggestions as what I could do next.

Based on what we know about the current position with providers, I think you are basically stuffed.  i.e. at this time, there are no known confirmed providers accepting DB transfers when the advice is not to transfer.   

Malthusian

I cannot afford to take Independent Financial Advice again because of the change in regulations in October 2020 requiring fees to be paid even if the advice is not to transfer. I could only afford to pay the fees from my pension fund if it is transferred. I have received a few quotes and the cheapest is £4,500. How can any average person afford that kind of money for advice unless they can use their pension fund to pay for it?

Transferring out of a DB scheme is extremely high risk and unsuitable for the vast majority of people. The minority for whom it is suitable would typically have substantial other assets and sources of income to cover their income needs in retirement without the DB scheme. And someone like that can probably afford £4,500 out of their own pocket.

Even in the extreme hard cases - e.g. someone with nothing to speak of other than a DB scheme is unmarried and terminally ill, the choices are transfer out and leave a six-figure sum to children, or don't transfer and receive a four-figure return of contributions - would probably find the money from somewhere if the case to transfer was that good. (E.g. the children could lend them the money.)

From what you have said, the DB scheme is to blame for the CETV expiring and the money spent on the recommendation being wasted. (The claim that the adviser "must stick with me while they make the transfer" was nonsense.) They should refund you the money you wasted on the original advice and should also add £8,000 to the CETV in the event that you do decide to transfer out of the scheme. (If you don't transfer out, you haven't lost anything in respect of that lower CETV - only the fee for the advice that was wasted.)

Have you asked the original adviser what they would charge for giving advice again? They might offer a lower fee than other advisers in view of the fact they wouldn't have to "reinvent the wheel" so much.

random129

enthusiasticsaver said:

Personally I would accept it and leave it as it stands. That is what I did when I explored transferring my DB pension. The CETV was not particularly appealing though and the costs for transferring high. Is there a particular reason why you feel transferring would be better for you?

The main reasons I want to transfer are...

1) I am in very poor health and although I have not been given a terminal diagnosis I doubt I will live to an age that would mean leaving the pension where it is would be financially beneficial.

2) I want to transfer and take 25% tax free immediately to clear outstanding debts so I could then use the monthly money I currently need to pay my debts to spend on alternative treatments, such as acupuncture, to help ease my health symptoms. I also need urgent repairs to my home.

3) I am widowed with no dependents so if I die my pension fund will die with me. I want to be able to leave any funds that are left when I die to some of my relatives.

Malthusian said:

I cannot afford to take Independent Financial Advice again because of the change in regulations in October 2020 requiring fees to be paid even if the advice is not to transfer. I could only afford to pay the fees from my pension fund if it is transferred. I have received a few quotes and the cheapest is £4,500. How can any average person afford that kind of money for advice unless they can use their pension fund to pay for it?

Transferring out of a DB scheme is extremely high risk and unsuitable for the vast majority of people. The minority for whom it is suitable would typically have substantial other assets and sources of income to cover their income needs in retirement without the DB scheme. And someone like that can probably afford £4,500 out of their own pocket.

I fully understand the risks involved but feel in my circumstances the risks are well worth taking if, amongst other things, it gives me a better quality of life now before my health deteriorates further and also gives me peace of mind that all my debts have been paid before I die. I genuinely believe I belong to the minority of people who would benefit from transferring but even if I am wrong I am supposed to have the right to transfer provided I take advice first. As far as I am aware I do not legally have to follow that advice so should surely still be allowed to transfer.

Malthusian said:

Have you asked the original adviser what they would charge for giving advice again? They might offer a lower fee than other advisers in view of the fact they wouldn't have to "reinvent the wheel" so much.

I haven't, mainly because I think they were glad to see the back of me last year because of the time they wasted waiting for the Administrators to reply to their requests for the information they needed. I doubt they would want to take on my case again.

It all seems so wrong. If I have a statutory right to transfer my pension under the 2015 ACT, I don't understand how firms can prevent me from exercising that right.

I also don't understand how a receiving company could possibly be sued at a later date for accepting an insistent client. It just doesn't make sense. If I am told quite clearly it is not in my best interests to transfer but decide to do it anyway then surely it would be impossible for me to sue someone if I lose out by going against their advice? What am I missing?

Thanks again to everyone for your input. It's really appreciated.

Malthusian

As far as I am aware I do not legally have to follow that advice so should surely still be allowed to transfer.

You are.

Would your relatives pay for the advice, given that they stand to benefit substantially if you transfer out?

Have you looked into taking the pension early on ill-health grounds? That would at least give you more income (and potentially tax free cash if the scheme rules allow it).

Have you looked at bankruptcy or an IVA? (It would be wise to look at that before you access your pensions, as it may be the case that your creditors would have no call on your pension if you come to an arrangement with them before you drew it, but they would if you had already drawn it.)

Bear in mind that if you die and leave an insolvent estate, the creditors will have no claim on your pension funds; it can pass straight to your nominated beneficiaries without being used to pay your creditors first.

I also don't understand how a receiving company could possibly be sued at a later date for accepting an insistent client. It just doesn't make sense. If I am told quite clearly it is not in my best interests to transfer but decide to do it anyway then surely it would be impossible for me to sue someone if I lose out by going against their advice? What am I missing?

There was an Ombudsman case recently where someone successfully complained about an adviser who advised them not to transfer, after which the punter did it anyway against advice, and lost a lot of money in illiquid investments (apparently also nothing to do with the adviser).

The punter was awarded compensation on the grounds that the adviser didn't advise him against it strongly enough.

Thrugelmir

random129 said:

enthusiasticsaver said:

Personally I would accept it and leave it as it stands. That is what I did when I explored transferring my DB pension. The CETV was not particularly appealing though and the costs for transferring high. Is there a particular reason why you feel transferring would be better for you?

1) I am in very poor health and although I have not been given a terminal diagnosis I doubt I will live to an age that would mean leaving the pension where it is would be financially beneficial.

Have you been forced to stop work through ill health and been diagnosed with an extremely serious condition? If you have, approach the scheme trustees. 

[Deleted User]

Malthusian said:

I cannot afford to take Independent Financial Advice again because of the change in regulations in October 2020 requiring fees to be paid even if the advice is not to transfer. I could only afford to pay the fees from my pension fund if it is transferred. I have received a few quotes and the cheapest is £4,500. How can any average person afford that kind of money for advice unless they can use their pension fund to pay for it?

Transferring out of a DB scheme is extremely high risk and unsuitable for the vast majority of people. 

You keep posting this but FCA data speaks a different story. Since the new regulations, financial advisers have recommended DB pension transfer for over half the cases and two thirds of the money. 

So either your assertion is wrong or financial adviser fear has been overtaken by financial adviser greed (70% of those approved sign up for "ongoing" advice) 

Malthusian

ZingPowZing said:

Malthusian said:

I cannot afford to take Independent Financial Advice again because of the change in regulations in October 2020 requiring fees to be paid even if the advice is not to transfer. I could only afford to pay the fees from my pension fund if it is transferred. I have received a few quotes and the cheapest is £4,500. How can any average person afford that kind of money for advice unless they can use their pension fund to pay for it?

Transferring out of a DB scheme is extremely high risk and unsuitable for the vast majority of people. 

You keep posting this but FCA data speaks a different story. Since the new regulations, financial advisers have recommended DB pension transfer for over half the cases and two thirds of the money. 

So either your assertion is wrong or financial adviser fear has been overtaken by financial adviser greed (70% of those approved sign up for "ongoing" advice) 

"You keep saying that most people can't run a sub 4 hour marathon but data from my running club tells a different story." That's a self-selecting group. People who pay for financial advice are inherently more likely to be in the minority for whom transfer is suitable.

Not many people pay thousands of pounds so an adviser can tell them not to do something they don't want to do anyway.

Most of them either never approach an adviser or are triaged out (i.e. dissuaded with some informal guidance and generic information before they get to the point of paying for a formal recommendation). Neither group appears in those statistics.

The FCA has repeatedly reiterated that transferring out is unsuitable for most people.

Overall the FCA continues to believe that for the majority of people it is not in their interest to transfer out of a DB pension.

The vast majority of DB scheme members stay in their DB scheme, so if you are correct that most people should be cashing in their DB pension, advisers should be ignoring the FCA and signing them up at chicken and chips meetings en masse.

[Deleted User]

If it is a self selecting group, Malthusian, you have to accept that they have a case.

The poor clients have to employ a financial adviser to get where they want to go. It was bad enough in my my day when you had to grease their palms; worse now when you have to pay them with no expectation that you can progress the transfer without the consent of a financial adviser who probably couldn't find the sofa in your lounge.

random129

Malthusian said:

Would your relatives pay for the advice, given that they stand to benefit substantially if you transfer out?

Relatives would only benefit if I was ultimately allowed to transfer. If an IFA's advice was not to transfer and nobody would accept me as an insistent client then my pension will die with me and nobody will benefit. The way things are at the moment it is too much of a risk to pay for advice. It appears to me that it would be much less of a gamble to buy 5 grand's worth of lottery tickets and hope to get lucky rather than line the pockets of an IFA!

It seems to me that the way things are at the moment an IFA can go through the motions, do minimal work and simply advise all their clients NOT to transfer and that will be £5,000 please. Thank you very much. What a nice little earner for them!

Malthusian said:

There was an Ombudsman case recently where someone successfully complained about an adviser who advised them not to transfer, after which the punter did it anyway against advice, and lost a lot of money in illiquid investments (apparently also nothing to do with the adviser).

The punter was awarded compensation on the grounds that the adviser didn't advise him against it strongly enough.

That is absolutely absurd! Maybe people should start trying to sue financial advisers on the basis their advice NOT to transfer was bad advice.

ZingPowZing said:

If it is a self selecting group, Malthusian, you have to accept that they have a case.

The poor clients have to employ a financial adviser to get where they want to go. It was bad enough in my my day when you had to grease their palms; worse now when you have to pay them with no expectation that you can progress the transfer without the consent of a financial adviser who probably couldn't find the sofa in your lounge.

Do you know of any IFA's who would allow someone to "grease their palms" nowadays? I would gladly pay double their fees from my transferred funds if they guaranteed to complete the transfer for me into a fund of my choosing regardless of whether their advice was to transfer or not.