Db pension transfer advice/suitability report.

dunstonh

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. 

Why do you think that?   You are only using the stakeholder as a stepping stone after all.  Once with the stakeholder, it is free to move where you like.

What are Financial Advisers advising in this regard?

They are not because that would be advice.

Diplodicus

dunstonh said:

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. 

Why do you think that?   You are only using the stakeholder as a stepping stone after all.  Once with the stakeholder, it is free to move where you like.

What are Financial Advisers advising in this regard?

They are not because that would be advice.

Fair enough. 
When a potential client asks the inevitable question "What are my options if your advice is not to transfer"? What do you say then, dunstonh?

Malthusian

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.

Still distinct from money in your own hands because money in your own hands won't suddenly become subject to restrictions 12 months before a normal retirement date. Or after the CETV expires.

When did that happen in the history of this board?

Whenever somebody posts something along the lines of "I should be able to cash in my pension without paying for advice because it's my own money".

If people want to pretend there's no distinction between money in their own hands and money held in trust in a pension then they can knock themselves out, but it won't get their DB pension cashed in. But luckily for them it won't result in them paying extra tax on income and growth either.

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. 

They will need to pay for professional advice from a regulated adviser with permission to advise on DB transfers, after which (if it's "leave it where it is") they can either follow the advice or transfer to a provider that will accept DB transfers without a positive recommendation. Entirely up to them.

You're not advocating a transfer to a stakeholder pension, are you Malthusian?

I'm advocating nothing. I do not give advice on DB pension transfers on Internet forums. If people don't want to transfer their DB pension against advice or think they want to but can't be bothered it's a free country.

Linton said: However no-one has found any stakeholder pensions that are accepting new business without an intermediary which rather scuppers that idea.

Last time I checked there are two providers advertising stakeholder pensions on a direct-to-consumer basis. I've been following quite a few of these threads and I haven't seen a convincing story of someone trying and failing to open a stakeholder pension with either.

I have however seen a lot of stuff like "it doesn't seem like a good move" or "that seems like a faff" or "how am I supposed to spend a few mintues Googling which providers they are" and like I said, if someone feels they'd like to transfer their DB pension but can't be bothered it's a free country.

If people can do something but can't be bothered then that's them deciding not to, not some random third party they paid earlier in the process (and whose involvement has now ceased).

rich744

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. 

Yep - Exactly. 

dunstonh

Diplodicus said:

dunstonh said:

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. 

Why do you think that?   You are only using the stakeholder as a stepping stone after all.  Once with the stakeholder, it is free to move where you like.

What are Financial Advisers advising in this regard?

They are not because that would be advice.

Fair enough. 
When a potential client asks the inevitable question "What are my options if your advice is not to transfer"? What do you say then, dunstonh?

I've not been in that situation.   The two DB transfers for me this year have been advised to transfer.   However, hypothetically, telling someone that a stakeholder pension should take it under stakeholder rules is not advice.   However, telling the person which providers to use could be. 

Diplodicus

dunstonh said:

Diplodicus said:

dunstonh said:

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. 

Why do you think that?   You are only using the stakeholder as a stepping stone after all.  Once with the stakeholder, it is free to move where you like.

What are Financial Advisers advising in this regard?

They are not because that would be advice.

Fair enough. 
When a potential client asks the inevitable question "What are my options if your advice is not to transfer"? What do you say then, dunstonh?

I've not been in that situation.   The two DB transfers for me this year have been advised to transfer.   However, hypothetically, telling someone that a stakeholder pension should take it under stakeholder rules is not advice.   However, telling the person which providers to use could be. 

But you would have to be sure that such a course was viable. Are you sure? Does the industry have real cases to put in front of the client?

Diplodicus

Malthusian said:

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.

Still distinct from money in your own hands because money in your own hands won't suddenly become subject to restrictions 12 months before a normal retirement date. Or after the CETV expires.
So, to recapitulate:
Yes, you agree that someone with a DB pension eligible for transfer has a right to do so.
Yes, you agree that the transfer decision rests with the individual.
And yes, post transfer, the money in that SIPP is effectively in the hands of the individual.

When did that happen in the history of this board?

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. 

They will need to pay for professional advice from a regulated adviser with permission to advise on DB transfers, after which (if it's "leave it where it is") they can either follow the advice or transfer to a provider that will accept DB transfers without a positive recommendation. Entirely up to them.
Who are those providers?

You're not advocating a transfer to a stakeholder pension, are you Malthusian?

Linton said: However no-one has found any stakeholder pensions that are accepting new business without an intermediary which rather scuppers that idea.

Last time I checked there are two providers advertising stakeholder pensions on a direct-to-consumer basis. I've been following quite a few of these threads and I haven't seen a convincing story of someone trying and failing to open a stakeholder pension with either.
Nor a successful one.

I have however seen a lot of stuff like "it doesn't seem like a good move" or "that seems like a faff" or "how am I supposed to spend a few mintues Googling which providers they are" and like I said, if someone feels they'd like to transfer their DB pension but can't be bothered it's a free country.

If people can do something but can't be bothered then that's them deciding not to, not some random third party they paid earlier in the process (and whose involvement has now ceased).

That is a cynical inversion of the client/adviser relationship. The expectation is that the adviser should know more about the practicalities and share that information with the client who pays handsomely. Not leave them up a creek. But I'm not sure a real adviser would altogether agree with Malthusian's "take it or leave it" stance, given that the client has no choice other than to engage an adviser in this business.

Malthusian

And yes, post transfer, the money in that SIPP is effectively in the hands of the individual

No, money in SIPPs is still pension money, i.e. held in trust by pension trustees to provide for the member's retirement, with the registered pensions tax and legal framework applying. If you withdraw it then it becomes money in your own hands (after accounting for tax etc).

Who are those providers?

I don't provide financial advice on Internet forums.

Nor a successful one.

Onus is on the person making extraordinary claims like "it is impossible to open a stakeholder pension on a direct to consumer basis, even with the providers that advertise stakeholder pensions direct to the consumer" to provide evidence.

I'm not actually even asking for evidence; if someone posted a convincing anecdotal account of someone trying and failing to open a stakeholder pension having researched the whole of the market I'm fully prepared to update my knowledge. "It sounds hard so I can't be bothered" doesn't cut it.

That is a cynical inversion of the client/adviser relationship.

What client/adviser relationship? This is about people who have terminated their client / adviser relationship as they wish to transfer a DB pension against the advice they paid for.

Diplodicus

Malthusian said:

Who are those providers?

I don't provide financial advice on Internet forums.

Nobody is asking for financial advice. Simply name the two companies you cited earlier and someone will check out if they provide a conduit for the transfer of a DB pension.

What client/adviser relationship? This is about people who have terminated their client / adviser relationship as they wish to transfer a DB pension against the advice they paid for.

Well no, the basis of the transaction is that the client is forced to hire an adviser if he wants to transfer a  DB pension; not  that the client should adhere to the adviser's advice.  Legislation is quite explicit:- the final determination rests with the individual.

Again, a cynical inversion of the transaction forced upon the client. The client has to hire the adviser. The adviser assures the client that the client has the final say. But the adviser doesn't even know, nor care, whether that is true? You can see how that looks to the individual preparing to start the process. Does a real adviser want to chip in here?

Cus

Linton said:

rich744 said:

Linton said:

rich744 said:

The advice is invariably to stay put. The pension transfer specialists and FA's are running scared of the regulator. 

Wanting to pass on your money seems like a very reasonable desire to me. 

The reason why employers pay into DB pensions and the government provides tax breaks is to help people to have a reasonable standard of living in retirement.  Money in pensions is not your money. It is money held in trust for your benefit. You have probably contributed less than half of it. Why should employers and the government subsidise your gifts to your beneficiaries?

The regulator seems to be taking a similar view.  If a transfer is demonstrably for your benefit eg if you have a terminal illness, you should have no problem with getting a transfer.

All regulated professionals must follow the requirements of their regulator. If they don’t they could be prevented from continuing in business. That is the purpose of having a regulator.

If you want complete freedom of choice with your money don’t put it in a DB pension.

Bizzare  - Pensions are contractual deferred earnings. The idea that 'money in your pension is not your money' is nuts. The pension freedoms bill was implemented to provide errrr, freedom, to do what you like with the accrued contractual value you have attained.

Having been through the process it's a convoluted sham that goes against the spirit of the Bill.  

Thanks for adding extra detail to my argument...

I would be astonished if your contract of employment gave you anything other than the right to a guaranteed income at retirement.  It would not have given you any right of access to the assets held by the trustees to ensure that they can meet the contractual obligations.  Those assets are not your money.  Please correct me if your contract of employment is dfferent. 

The "pensions freedom" bill was only intended to apply to DC pensions.  It did not give DB pensioners any extra freedoms that were not already allowed by the law. Quite the reverse as it added a couple of relatively minor restrictions, one of these being the requirement to receive regulated advice.

Transfer of DB pensions was always legally possible.  It just was very rarely used since prior to the 2008 crash the CETVs were much lower and would be very unlikely to provide sufficient income to replace the DB pension lost.  The main usage of DB pension transfer was for difficult cases such as severely reduced life expectancy and by scammers to swindle naive pensioners. 

The employment contract gives the right to a guaranteed income. This is a liability that needs to be managed by the trustees. If you died them they would adjust their liabilities.  The trustees attach a 'value' to this liability as the CETV. So in my mind this money is the employees money...

Before the 2008 crash and bond yields plummeting, transfers were rare as you say. Was there the £30k advice mandate, and was there the restrictive impact of IFA insurance at that time? Was there the same 'negative advice' concept, and the fear of taking in a transfer etc?

Was it just the case that because cetv's were lower, few people did it, no one worried about it and no one was worried about any come back years later?