Transferring out of a defined benefit pension to an annuity. Getting charged £13000!

Jerry_Mander

I want to transfer out of my defined benefit pension to an annuity because for my personal circumstances none of the supposed benefits actually benefit me. So I'm trying to find an IFA to do this and one IFA that has so far replied will charge 3% of the pension transfer value or about £12000 and £1000 for their advice. I can't help thinking this is excessive but I'm struggling to find an IFA that will take on transferring a DB pension to an annuity. Going through one of the online advice services suggests a "normal" price for this service would be more like £4000. Can anyone offer advice and in particular recommend an IFA who does fixed fee?

dunstonh

 So I'm trying to find an IFA to do this and one IFA that has so far replied will charge 3% of the pension transfer value or about £12000 and £1000 for their advice. I can't help thinking this is excessive but I'm struggling to find an IFA that will take on transferring a DB pension to an annuity.

The fee should be closer to £3500-5000 ideally.  However, a firm charging circa £12k is basically doing it as a passive blocker.  When its that high, it really means they dont want to do it and they price it high to put you off.   

 Can anyone offer advice and in particular recommend an IFA who does fixed fee?

Why an annuity?   Annuity rates are poor and most scheme pensions match the most popular annuity bought (back in the days when buying an annuity was the norm - its not the norm any more).

Albermarle

Are you aware that when you do find a suitable IFA and if they give a negative recommendation to transfer , that you are a bit stuck and will have probably wasted your money . See numerous long threads on this topic on the forum . 

However of all the threads on DB transfer , I do not remember one that wanted to transfer to an annuity.
Normally the desire to transfer out of a DB pension , is to gain more control over the money, not lock it up in a worse deal.

For example  a DB pension of say £2Kpa would normally have a CETV of say £60K/£65K.
This would only buy you an annuity on the same terms of the DB pension of about £1,400 pa .

Albermarle

To answer your original question 
1% with minimum £4K 
Fidelity Pension Advice | Retirement Services | Fidelity

xylophone

Why an annuity?

Jerry_Mander

As to why I want an annuity ... the so called benefits in no way benefit me because I have no dependents and because I can get a substantially larger tax free amount from my pot via an annuity. I know it doesn't benefit everyone but for me an annuity would be the best option.

Also I'm very risk averse so I'm going for a level payment over 25 years, I'll happily take less payout for the assurance of a guaranteed payout.

I've done a spreadsheet of all the options and the annuity is overall the better option, particularly if I die before the 25 years is up.
And I just got another quote, this time around £10000 so it's getting better! haven't tried Fidelity Pension yet so they'll be next. Edit I think Fidelity is drawdown only which i wouldn't want because it's too risky

MX5huggy

But your DB is basically going to pay an annuity (in all but name). 

I could understand if you wanted to have access to the whole lot but to go through the pain of a transfer then buy an annuity is just a bit bonkers. 

theoretica

Have you investigated whether any loans or equity release would be open to you?  Borrowing the lump sum you want and then paying it back/ paying the interest from the DB pension might give the same effect of less income to spend, but a lump sum.  Seems worth looking into in theory.

Jerry_Mander

MX5huggy said:

But your DB is basically going to pay an annuity (in all but name). 

I could understand if you wanted to have access to the whole lot but to go through the pain of a transfer then buy an annuity is just a bit bonkers. 

Ok let me give you some figures. If i take my company db pension I can get £7000 a year and £45000 tax free. If I take a 25 year level payment I get £16200 a year and £100,000 tax free. Now of course the level payment is eaten away by inflation but I've factored all that in and I'm still better off (unless I live to 90+ or inflation goes and stays very high)

AnnieB2018

Those numbers are very unbelievable, somebody musta input the numbers wrong in the calculator..

xylophone

Have you yet reached state pension age? If not, how long until you do?

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension