DB Pension Transfer Advice

DaveT55

If she seriously wants to transfer (even if it's against advice) I would get on with it. As RoadToRiches has often said, if there is an avenue open at the moment it may be closed by the time you want to transfer. One thing she could do immediately is open a stakeholder pension with a nominal £20 contribution just in case the few remaining ones sold direct to consumer are closed.

I went down the Standard life route on this today, but they won't accept the transfer without the support/ signature of a financial advisor on the transfer forms, to present confirmation that you have received the necessary advice is not sufficient. They are saying an insistent client basis transfer in is fine, but a FA needs to be supporting/ authorising (albeit against advice) the paperwork side. It's a question of liability.    

arty688

Interesting so Standard Life accept insistent clients.

dunstonh

Out of interest are there any cases where negative advise has been been put in front of the FCA and upheld?

The FCA investigations are unknown on a case-by-case basis.  However, the FOS has upheld complaints with insistent clients where the adviser firm carried out the transaction.  

Interesting so Standard Life accept insistent clients.

Most intermediary providers/platforms will accept insistent clients as long as it goes via the adviser's agency.   The problem is that if it goes through the adviser agency, then the adviser takes on the liability.     

xylophone

They are saying an insistent client basis transfer in is fine, but a FA needs to be supporting/ authorising (albeit against advice) the paperwork side. 

"Authorising" the "paperwork side"?

"Supporting" the "paperwork side"?

What in the name of heaven does this mean?

The  properly qualified Financial Adviser has compiled and signed a report (the full advice required) - this is surely "the paperwork side" for his client.

The  FA has  provided  a signed statement  declaring that  he has provided the necessary full advice   and this enables  the administrators of  the client's pension scheme to authorise a transfer out. 

All that adviser could do for SL would be to sign  a SL form stating that he had provided full advice in accordance with legal requirements.

Or is  such an additional SL form "the paperwork side"?

And once again, what is SL's stance when told that the law requires a stakeholder pension to accept a transfer in from any authorised pension scheme?

And where is Standard Life's written response to the question posed above in order that it may be put before the ombudsman?

xylophone

Obviously I have no idea what they are on about

https://www.gov.uk/government/publications/state-pension-fact-sheets/contracting-out-and-why-we-may-have-included-a-contracted-out-pension-equivalent-cope-amount-when-you-used-the-online-service#:~:text=Pension Equivalent amount.-,The Contracted Out Pension Equivalent ( COPE ),had not been contracted out.

On 6/4/16, two calculations were done for you.

Old Rules

NI years/30 x Full Basic of £119.30 + (SERPS/S2P - Deduction for Contracting Out)

New Rules

(NI years/35 x  Full NSP of £155.65) - Contracted Out Pension Equivalent.

Your "starting amount" was the higher of the two.

 In general terms (there  are  rare special cases), some people (particularly but not exclusively those who had never been contracted out) would have had a "starting amount" well in excess of a Full New State Pension - this would mean that they could not  increase the amount by further contributions (even though if working and earning the relevant amount they would still have had to pay NI up to SPA).

The SA in such cases would be split into full NSP and excess over full NSP and up to and beyond SPA would revalue under whatever indexation the government chose - (at present, the full NSP amount under the triple lock and the excess by CPI).

Some people might have found that their SA was equivalent to a full NSP - in this case, they could not increase the SA by further contributions (even  though if working and earning the relevant amount they would still have had to pay NI up to SPA).

The SA would revalue up to and beyond SPA under 9at present) the triple lock.

Some people might have found that their SA was under a full NSP - in such cases there was the possibility of increasing the SA  up to but not in excess of a full NSP by further contributions or credits.

RoadToRiches

DaveT55 said:

If she seriously wants to transfer (even if it's against advice) I would get on with it. As RoadToRiches has often said, if there is an avenue open at the moment it may be closed by the time you want to transfer. One thing she could do immediately is open a stakeholder pension with a nominal £20 contribution just in case the few remaining ones sold direct to consumer are closed.

I went down the Standard life route on this today, but they won't accept the transfer without the support/ signature of a financial advisor on the transfer forms, to present confirmation that you have received the necessary advice is not sufficient. They are saying an insistent client basis transfer in is fine, but a FA needs to be supporting/ authorising (albeit against advice) the paperwork side. It's a question of liability.    

Do you have the form that says you have taken full advice that is part of your CETV signed by your IFA?

Malthusian

DaveT55 said:

I went down the Standard life route on this today, but they won't accept the transfer without the support/ signature of a financial advisor on the transfer forms, to present confirmation that you have received the necessary advice is not sufficient. They are saying an insistent client basis transfer in is fine, but a FA needs to be supporting/ authorising (albeit against advice) the paperwork side. It's a question of liability.    

If it's a Standard Life Stakeholder Pension you can make a formal complaint that if they refuse to accept the transfer they are failing to meet their legal obligations under The Stakeholder Pension Schemes Regulations 2000, section 1(6).

If they don't change their minds within eight weeks you can go to the Financial Ombudsman and see what they say.

This assumes you already have a Stakeholder Pension open. If not they are quite at liberty to refuse your business, the transfer is irrelevant.

xylophone said: What in the name of heaven does this mean?

I suspect it means they want an adviser to act as servicing agent (which they almost certainly won't as otherwise they will open themselves up to a complaint).

There is no exemption in The Stakeholder Pension Schemes Regulations 2000 for clients who do not have a servicing intermediary.

Pablo7474

arty688 said:

Interesting so Standard Life accept insistent clients.

I don’t think this means anything, try and find an adviser willing to sign the forms when they have advised against!! 

RoadToRiches

Pablo7474 said:

arty688 said:

Interesting so Standard Life accept insistent clients.

I don’t think this means anything, try and find an adviser willing to sign the forms when they have advised against!! 

IFA is obligated to sign the form to say you have taken full regulated advice by their regulator, the FCA.

jamesd

dunstonh said:

A guaranteed annually increasing income for life is highly valuable.   A decade of above long term average stockmarket performance has brought complacency.   A decade of below long term average performance (such as a lost decade or a one-in-one-hundred-year event could wipe out a DC fund before the person dies.

A lot of people with six digit CETVs have never invested before in their lives.  Suddenly they are exposed to volatility.   A 25% drop on a £600,000 fund is a drop of £150,000.   You should not underestimate the bad decisions that a new investor can and often make when events like that happen.

The typical safe withdrawal rates at 100% success rate level require something worse than the once in a hundred year case, having been found to work for at least the last 120 years. The flexible rules like Guyton-Klinger could withstand far worse while reducing income to what it takes to make it, and generally not reducing down as far as the db level at current private sector CETVs. 4% rule is more vulnerable but the average historic performance of constant inflation-adjusted income in the US was 7% so 4% has a LOT of margin below likely outcomes built in. UK deduct 0.3 from US for this rule. And unlike DB or annuity purchase you can restart the calculation at any time and in the case of some rules are expected to, notably 4% rule.

A lost decade or high inflation are threats but the 100% success rate levels survive a lost decade and quite a bit of inflation (usually with uncapped inflation increases, unlike private sector DB). But a lost decade is one case where reviewing would be wise - as would be five years just to be wise even though nno change is the likely result.

Bad decisions by novice investors with more money than they have ever handled are a way bigger risk than the range of investment outcomes, IMO. I know now that I'm not inclined to be profligate with say 600k of capital and not inclined to worry unduly about downturns but that doesn't apply to everyone, particularly not novices.