Db pension transfer advice/suitability report.

Prism

RoadToRiches said:

Prism said:

I know. I have never understood why people seem happy to sign up for a DB pension fully understanding the deal and then later get disappointed when they can't have something entirely different. If you don't want a DB pension and its important to you then don't take a job with a DB pension.

Not as simple as that, job comes with a DB pension, there was no other option at the time.  Also DB pension employer was topping up pension with up to 49% of salary. That is unheard of in a DC scheme, where max we get now is 12% for a employee contribution of 6%. Now when you weigh up what I believe to be my life expectancy, through lifestyle choices,.being single with no dependents or children to get their pensions which is accounted for in the full report to compare like for like with an annuity the scheme benefits are no longer suited to me and the CETV becomes very attractive alternative and so going against the advice as an insistent client.

Any given job might come with a particular pension scheme but there are (and were) jobs with DC schemes, jobs with DB schemes and jobs with no pension at all. That has been the case for my whole working life so at least the 1980s. Whenever you take a job you are fully aware of what scheme or schemes it provides. I remember taking a job that specifically provided a higher salary so we could choose to pay into our own personal pension as the company didn't want to run its own. Other people specifically took government jobs to access the DC schemes provided. 

If people chose to take a job and completely ignored a big benefit of that job and then much later on are now not happy with their choice then I guess there isn't a lot they can do about it any more.

Malthusian

Diplodicus said:

Consider the individual with an eligible  DB pension.

Does she have the right to transfer?  Yes.

Only in specific circumstances. There is no right to transfer if you've received a CETV recently or are less than 12 months from the retirement date. Or in an unfunded DB scheme. (There was nothing stopping the Government allowing people to transfer out of unfunded public sector DB schemes without needing a divorce - taxpayer's money is taxpayer's money - but they decided that letting nurses cash in their NHS pensions and spunk them up the wall wouldn't end well for the Government or the nurses.)

Linton is correct, money in a pension is money held in trust on your behalf. In some contexts you have the same right of access as money in your own hands and in others you don't. Understanding the difference between the two can help you understand when you might be able to access it and when not. Pretending there's no difference is likely to lead to frustration.

This is the spirit freighting the pension freedom bill, the right and responsibility of the individual. What never was an intended consequence is the current impasse where, effectively, the Financial Adviser determines whether an individual can transfer a DB pension.

The financial adviser determines nothing. You do not need a positive recommendation to transfer. If you feel you'd like to transfer against advice but can't be bothered it's a free country.

xylophone

The financial adviser determines nothing. You do not need a positive recommendation to transfer. If you feel you'd like to transfer against advice but can't be bothered it's a free country.

But you need to find a scheme which will accept the transfer......

Linton

Diplodicus said:

Consider the individual with an eligible  DB pension.

Does she have the right to transfer?  Yes.

Does she have the final say on whether to transfer? Yes.

Upon that transfer, is the money "hers"? Effectively yes, same as any SIPP.


This is the spirit freighting the pension freedom bill, the right and responsibility of the individual. What never was an intended consequence is the current impasse where, effectively, the Financial Adviser determines whether an individual can transfer a DB pension. 

The impasse was never intended but is the logical consequence of what was enacted.  Everybody involved in the process can be seen to be acting reasonably and as intended given the situation they are/were in (with the arguable exception of the Ombudsman who found the IFA responsible for the customer's foolish investments!).

The basic problem as I see it is that there is a mismatch between the laudable desires to give people the freedom they need to optimise their income in retirement and the need to protect those with the lack of knowledge to manage sums of money far in excess of anything they have had experience of.

If you want freedom you have to accept responsibility. But then you lose protection.  I dont see an answer.  I expect this will muddle on as an uneasy compromise.  Public policy concerns will probably win out in that it will be better for the national finances to limit the freedom of the few in order to ensure the many get sufficient income throughout their retirement.  MPs will be far more afraid of masses of pensioners whio have "worked hard for their country all their lives" expecting compensation when they find they have a much lower income than expected than the relatively few rich people whingeing about what they cant do with a £500,000 DB pension valuation.

In practice I uderstand the system is actually working reasonably well.  Those who clearly need the freedom to access the DB money (eg terminal illness) can do so and most people who get as far as an IFA review of their situation accept it should the IFA's evidence show that a transfer is not in their best interests.

Prism

rich744 said:

'Don't take a job with a DB pension' - So you'd have people base their career choice on the type of pension scheme that a given company provides....? Give me strength! 

Maybe not an entire career but people choose jobs based partly on the pension all the time. I know friends of mine who switched from private companies to government work partly to access the pension benefits. Why should the reverse be true. If someone is unhappy about their future retirement plans being limited to a DB pension then they can change roles, jobs, become contractors etc to take more control. I also know people who have done that.

Linton

xylophone said:

The financial adviser determines nothing. You do not need a positive recommendation to transfer. If you feel you'd like to transfer against advice but can't be bothered it's a free country.

But you need to find a scheme which will accept the transfer......

Indeed, though previous discussions have concluded that you can set up your own pension scheme as an SSAS and then accept your own transfer-in.   Not easy but it may well work. However as far as I know no-one has ever tried it.

Malthusian

To add to the above, threads along the lines of "Should I stick with my current job which offers a Teacher's Pension or a new job offer which has a higher salary but no DB pension" appear here on a semi-regular basis.

If you take job offers at random and don't have the wherewithal to weigh up one remuneration package next to another then transferring out of a DB scheme is unlikely to be suitable.

xylophone said:

The financial adviser determines nothing. You do not need a positive recommendation to transfer. If you feel you'd like to transfer against advice but can't be bothered it's a free country.

But you need to find a scheme which will accept the transfer......

What I said. If they can't be bothered it's a free country

Diplodicus

Malthusian said:

Diplodicus said:

Consider the individual with an eligible  DB pension.

Does she have the right to transfer?  Yes.

Only in specific circumstances. There is no right to transfer if you've received a CETV recently or are less than 12 months from the retirement date. Or in an unfunded DB scheme. (There was nothing stopping the Government allowing people to transfer out of unfunded public sector DB schemes without needing a divorce - taxpayer's money is taxpayer's money - but they decided that letting nurses cash in their NHS pensions and spunk them up the wall wouldn't end well for the Government or the nurses.
I am sorry "Consider the individual with an eligible DB pension" wasn't clear to you, Malthusian; that means consider the individual with a DB pension eligible for transfer.

Linton is correct, money in a pension is money held in trust on your behalf. In some contexts you have the same right of access as money in your own hands and in others you don't.
See above.
Understanding the difference between the two can help you understand when you might be able to access it and when not. Pretending there's no difference is likely to lead to frustration.
When did that happen in the history of this board? The forum abounds with DB transfer/financial advice threads but I have yet to see one concerning a DB pension that was ineligible for transfer in the first place.

This is the spirit freighting the pension freedom bill, the right and responsibility of the individual. What never was an intended consequence is the current impasse where, effectively, the Financial Adviser determines whether an individual can transfer a DB pension.

The financial adviser determines nothing. You do not need a positive recommendation to transfer. If you feel you'd like to transfer against advice but can't be bothered it's a free country.
Great. What is the process now in practical terms? Because a lot of people seem to be under the impression that a DB transfer lies in the gift of the adviser now. 

You're not advocating a transfer to a stakeholder pension, are you Malthusian?
Have you tried doing that? Even if it does work, transferring a DB pension to a place you wouldn't use otherwise doesn't seem like a good move. 
What are Financial Advisers advising in this regard?

xylophone

https://forums.moneysavingexpert.com/discussion/6038905/who-will-accept-a-db-to-sipp-transfer-from-insistent-client/p32

Linton

Diplodicus said:

Malthusian said:

Diplodicus said:

Consider the individual with an eligible  DB pension.

Does she have the right to transfer?  Yes.

Only in specific circumstances. There is no right to transfer if you've received a CETV recently or are less than 12 months from the retirement date. Or in an unfunded DB scheme. (There was nothing stopping the Government allowing people to transfer out of unfunded public sector DB schemes without needing a divorce - taxpayer's money is taxpayer's money - but they decided that letting nurses cash in their NHS pensions and spunk them up the wall wouldn't end well for the Government or the nurses.
I am sorry "Consider the individual with an eligible DB pension" wasn't clear to you, Malthusian; that means consider the individual with a DB pension eligible for transfer.

Linton is correct, money in a pension is money held in trust on your behalf. In some contexts you have the same right of access as money in your own hands and in others you don't.
See above.
Understanding the difference between the two can help you understand when you might be able to access it and when not. Pretending there's no difference is likely to lead to frustration.
When did that happen in the history of this board? The forum abounds with DB transfer/financial advice threads but I have yet to see one concerning a DB pension that was ineligible for transfer in the first place.

This is the spirit freighting the pension freedom bill, the right and responsibility of the individual. What never was an intended consequence is the current impasse where, effectively, the Financial Adviser determines whether an individual can transfer a DB pension.

The financial adviser determines nothing. You do not need a positive recommendation to transfer. If you feel you'd like to transfer against advice but can't be bothered it's a free country.
Great. What is the process now in practical terms? Because a lot of people seem to be under the impression that a DB transfer lies in the gift of the adviser now. 

You're not advocating a transfer to a stakeholder pension, are you Malthusian?
Have you tried doing that? Even if it does work, transferring a DB pension to a place you wouldn't use otherwise doesn't seem like a good move. 
What are Financial Advisers advising in this regard?

The point of using a stakeholder pension is that the theory was that the stakegholder is legally obliged to accept a transfer-in. You could then transfer the now DC pension to wherever you want.  There was never any intenetion to keep the transfered pension in a stakeholder.  However no-one has found any stakeholder pensions that are accepting new business without an intermediary which rather scuppers that idea.

Apart from an SSAS which may well work, though there is no evidence that this has ever been tried, there is no known way to transfer a DB pension against advice.

If an IFA tried to arrange a DB pension transfer against advice the FCA would be very displeased as would the insurers