Transfer DB pension

Marcon

There is quite a lot of detail here that won't apply to you, but parts of this are likely to be extremely relevant/potentially helpful: https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

There don't seem to be any page numbers on the article, but if you look for the following main headings it could help you plough through (I appreciate that reading pages of turgid pensions prose isn't going to be high on your agenda with so much else on your mind):

Abridged Advice

Defined Benefit to Defined Contribution transfer

Charging

Albermarle

TransferDB said:

MallyGirl said:

Contingent charging means a client only pays for the advice if they go ahead with a transfer

In October 2020, a ban on contingent charging came into effect with a view to remove the conflicts of interest which arise when an adviser only gets paid if a transfer goes ahead.

Only consumers with certain identifiable circumstances, such as those suffering from serious ill-health or experiencing serious financial hardship, are exempt.

Thank you, that probably means someone like me with cancer - is it worth me bringing this to the IFA's notice or might it sour things - I guess he would just say no or refuse to take it on? 

I am not sure of the exact details but there is a so called 'Triage ' available from some advisors . Like in medicine they Triage the case , so assess it first before going ahead to the next stage of a full assessment /expensive transfer advice , or not .
It still costs money though ( £1000 ?) .

TransferDB

Diplodicus said:

MallyGirl said:

Contingent charging means a client only pays for the advice if they go ahead with a transfer

In October 2020, a ban on contingent charging came into effect with a view to remove the conflicts of interest which arise when an adviser only gets paid if a transfer goes ahead.

Only consumers with certain identifiable circumstances, such as those suffering from serious ill-health or experiencing serious financial hardship, are exempt.

I don't get it MallyGirl; please help me out: 

If clients are bound to consult a financial adviser, and their financial advisers are bound to give advice in the best interest of the client; why would contingent charging make any difference to the advice?

Diplodicus said:

MallyGirl said:

Contingent charging means a client only pays for the advice if they go ahead with a transfer

In October 2020, a ban on contingent charging came into effect with a view to remove the conflicts of interest which arise when an adviser only gets paid if a transfer goes ahead.

Only consumers with certain identifiable circumstances, such as those suffering from serious ill-health or experiencing serious financial hardship, are exempt.

I don't get it MallyGirl; please help me out: 

If clients are bound to consult a financial adviser, and their financial advisers are bound to give advice in the best interest of the client; why would contingent charging make any difference to the advice?

As someone with cancer seeking advice and having to transfer a DB pension because of bad death benefits (the absurdity of the phrase "death benefits"!) plus the worry and pressure of having to get advice and being told "that if the advice fails to result in a transfer you still have to pay £7000 charges" along with trying to cope with the diagnosis implications and the treatment ahead...I can tell you it does matter that no transfer = no cost.

Albermarle

having to transfer a DB pension because of bad death benefits

Normally a DB pension will pay a surviving spouse around 50% of the pension ( sometimes 66% ) and if you die within 5 years of first taking the pension , there is usually some other payback. Is yours worse than this ?

Each scheme has its own rules so it is difficult to judge what is bad, and what is normal, without the details .

TransferDB

Albermarle said:

having to transfer a DB pension because of bad death benefits

Normally a DB pension will pay a surviving spouse around 50% of the pension ( sometimes 66% ) and if you die within 5 years of first taking the pension , there is usually some other payback. Is yours worse than this ?

Each scheme has its own rules so it is difficult to judge what is bad, and what is normal, without the details .

Yes I asked the provider helpline and they "may" pay out 5 years of my pension but this isn't confirmed and a reduced pension to a partner (if in civil married or proof of co habiting) BUT my partner has an NHS pension that is so good she wouldn't want or need mine and her life expectancy having a heart attack then a stroke is not high TBH. The helpline guy told me I'd be best to transfer out 

hyubh

TransferDB said:

Albermarle said:

having to transfer a DB pension because of bad death benefits

Normally a DB pension will pay a surviving spouse around 50% of the pension ( sometimes 66% ) and if you die within 5 years of first taking the pension , there is usually some other payback. Is yours worse than this ?

Each scheme has its own rules so it is difficult to judge what is bad, and what is normal, without the details .

Yes I asked the provider helpline and they "may" pay out 5 years of my pension but this isn't confirmed

Worth getting clarification? Even if there is some sort of trustee discretion here (not saying there is...), would be useful to know on what sort of grounds they would grant it.

a reduced pension to a partner (if in civil married or proof of co habiting)

Sounds relatively modern then. Overall doesn't seem 'bad' - at worst not optimal for your personal situation...?

The helpline guy told me I'd be best to transfer out 

Well then, if the helpline guy who wasn't sure about the guarantee period said that, must be true

TransferDB

hyubh said:

TransferDB said:

Albermarle said:

having to transfer a DB pension because of bad death benefits

Normally a DB pension will pay a surviving spouse around 50% of the pension ( sometimes 66% ) and if you die within 5 years of first taking the pension , there is usually some other payback. Is yours worse than this ?

Each scheme has its own rules so it is difficult to judge what is bad, and what is normal, without the details .

Yes I asked the provider helpline and they "may" pay out 5 years of my pension but this isn't confirmed

Worth getting clarification? Even if there is some sort of trustee discretion here (not saying there is...), would be useful to know on what sort of grounds they would grant it.

a reduced pension to a partner (if in civil married or proof of co habiting)

Sounds relatively modern then. Overall doesn't seem 'bad' - at worst not optimal for your personal situation...?

The helpline guy told me I'd be best to transfer out 

Well then, if the helpline guy who wasn't sure about the guarantee period said that, must be true

No not at all what I want...

Marcon

TransferDB said:

Yes I asked the provider helpline and they "may" pay out 5 years of my pension but this isn't confirmed and a reduced pension to a partner (if in civil married or proof of co habiting) BUT my partner has an NHS pension that is so good she wouldn't want or need mine and her life expectancy having a heart attack then a stroke is not high TBH. The helpline guy told me I'd be best to transfer out 

Details of the five year guarantee will be set out in the Rules of your pension scheme. It is likely that the discretion applies to the recipient(s), not whether such a payment is made. The trustees choose who receives any payment to ensure that, under current rules, it can be normally be paid free of any tax. Ask the pension provider for confirmation - preferably a copy of the page in the Rules specifying the exact details.

You might also want to check the maximum amount of tax free cash you could take if you keep your pension where it is and start to draw it.

Anyone who tells a member 'you'd be best to transfer out', based on limited knowledge of their overall situation, has been very poorly trained. Quite apart from the observation being potentially misleading, it is a criminal offence for someone who isn't a regulated individual to purport to give regulated advice (which is what a pension transfer is). Sorry to get so heavy duty on the point, but you really can't rely on that sort of passing remark as having any sort of validity.

Horrible as this looks in print (and in reality), you might also check what your options would be if your diagnosis turns out to be very poor (highly unlikely given the excellent survival rates for prostate cancer, but on the basis that being properly informed is always a good option...). If you've not yet started to draw your pension, you may be able to take the lot as cash, tax free, if you have a medically-confirmed prognosis that your life expectancy is no more than 12 months.

TransferDB

TransferDB said:

MallyGirl said:

Contingent charging means a client only pays for the advice if they go ahead with a transfer

In October 2020, a ban on contingent charging came into effect with a view to remove the conflicts of interest which arise when an adviser only gets paid if a transfer goes ahead.

Only consumers with certain identifiable circumstances, such as those suffering from serious ill-health or experiencing serious financial hardship, are exempt.

Thank you, that probably means someone like me with cancer - is it worth me bringing this to the IFA's notice or might it sour things - I guess he would just say no or refuse to take it on? 

I did email the IFA and he sent this snippet at the bottom of his email;

'The Financial Conduct Authority has today outlawed contingent charging on defined benefit transfers but there are two exemptions.

The regulator has agreed with the pensions industry there are certain circumstances where a DB transfer is in an individual's best interest and will result in the best outcome for them.

In particular, individuals suffering from serious ill-health or those experiencing serious financial hardship might benefit from a pension transfer, it said in its policy statement this morning (June 5).

But the FCA warned any adviser who wants to rely on a carve-out for a client must ensure the client meets the requirements as set out by the rules.

The FCA said: "We identified that there are a small number of vulnerable consumers who may benefit from a pension transfer, but cannot afford to pay for advice.

"To ensure that our proposed ban on contingent charging does not disadvantage these groups of consumers, we proposed that they may continue to be charged on a contingent basis."

For those in serious ill-health the FCA will allow clients to self-evidence their condition. For example, evidence could be existing documentation from a registered medical practitioner, including details of treatment.

This comes after the regulator recognises it is impractical to expect clients to get evidence of limited life expectancy from a medical practitioner.'

And in the email he stated this; quote below -

 "I do plan to discuss all of this with you when I see you next week hence another reason why I am keeping my response brief. Whilst an exception under carve out is a possibility it is not a given, which means that our internal compliance procedures may still prevent us from making a recommendation to you to transfer if this is not deemed to be in your best interests longer term, as best advice is all about what is best for the client in both the short, medium and longer term as previously mentioned so at this stage I still cannot guarantee that you would be able to transfer I’m afraid."

dunstonh

 "I do plan to discuss all of this with you when I see you next week hence another reason why I am keeping my response brief. Whilst an exception under carve out is a possibility it is not a given, which means that our internal compliance procedures may still prevent us from making a recommendation to you to transfer if this is not deemed to be in your best interests longer term, as best advice is all about what is best for the client in both the short, medium and longer term as previously mentioned so at this stage I still cannot guarantee that you would be able to transfer I’m afraid."

That is the sort of response I would expect as it is not straightforward.  Especially if a) your current medical status is serious but future unknown and b) cancer suffers would be considered vulnerable to poor decision making and the FOS virtually auto-upholds complaints about new investing when the person is suffering cancer.   

These can be very much judgement call decisions but unfortunately, the regulator and ombudsman often live in a hindsight world.  It is possible that you could be told to defer the advice outcome for a period.  i.e. get as much info as you can now but wait until your health position is more certain (as much as it can be).  If the news is not good, then proceed but if you get a recovery then do not proceed.