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

sheslookinhot

A general question. What is the advantage of transferring out of a DB type pension and buying an Annuity ? 

I’m struggling understanding why that would be an option one takes.

eskbanker

sheslookinhot said:

A general question. What is the advantage of transferring out of a DB type pension and buying an Annuity ? 

I’m struggling understanding why that would be an option one takes.

That was (unsurprisingly) the question asked of OP early on, and he went on to explain his rationale in the first page or two of the thread....

jimi_man

sheslookinhot said:

A general question. What is the advantage of transferring out of a DB type pension and buying an Annuity ? 

I’m struggling understanding why that would be an option one takes.

As I understand it. The OP is highly risk averse and wants the security of a guaranteed income. However he also wants a lump sum of around £100k to fund the purchase of a house and whilst the DB pension will give him the former, it won't give him the latter. So then it's a case of transferring to a DC pension as the quoted CETV offers around £100k as the 25% lump sum. But obviously now the DC pension won't fit his risk profile, so he wants to convert it to an annuity, which will.

It seems that the £100k needed for the house is the driving force behind it all.

Malthusian

Jerry_Mander said:

So what what sort of things can I do to give myself the best chance of being able to do a transfer?

Nothing. Your circumstances are what they are and the same applies to your objectives and risk profile.

It is extremely unlikely that any adviser would recommend your plan, as the cost of giving up DB guarantees in order to convert the CETV into a level annuity is so high.

If the DB pension isn't enough to live on, therefore you feel the need to convert it into a level annuity to boost the income and hope that inflation doesn't happen, then no reputable adviser is going to recommend transferring out of the DB pension as you won't have nearly enough income to live on without it ("secure income underpin" as the jargon goes).

Any suggestions that you should try to blag the adviser into providing a positive recommendation by telling them what they want to hear should be ignored. Most people are rubbish at lying and as soon as the adviser realises you're leading them up the garden path, that will be the end of any prospect of getting any advice either way. And they might bill you for the work done to date.

There is a good chance that the most value you would get out of seeing an adviser would be to consider more realistic ways to achieve your aim, e.g. retirement mortgages.

Dazza1902

Having read countless dB transfer threads that have lead to a negative recommendation, this one seems to have the least going for it. Good luck.

ian16527

I was pushed by my then IFA to explore the cashing in of my 2 DB pensions. This was free at the time. 

The response was not to transfer, and one of the main criteria on the response paperwork was the cost of a personal annuity providing the same benefits as the DB scheme, which was approx. double the CETV at the time.

I think on this basis alone it would be unlikely to be a positive recommendation

I have transferred the smaller one, as it was under £30K and not payable for 10 years at a very modest £35/month

greyscot

In certain circumstances, as my own, below, it is about time they changed the law on requiring a FA to transfer out a DB scheme. It is scandalous what a FA will charge, for, basically, what is just a form filling exercise. I am looking to transfer my DB scheme to purchase a Lifetime Annuity. An Annuity with Standard Life, for example, will give me over £3,000 more, annually, than what the current DB scheme is offering. This is due to the DB scheme being for dual life and RPI linked. This combination, significantly, reduces the annual amount you receive, compared to a Lifetime, Single Life, Enhanced Annuity with Value Protection. This is based on Cash Equivalent Transfer value (CETV), I have just received from my DB provider. The benefit for purchasing an Annuity can't be any simpler, as the above demonstrates. I am not about to do anything mad. I am simply changing one pension for another, that very, obviously, will be in my best interests.  By the way, I am an ex Accountant, so don't really need any advice from a FA and I am quite confident in my own sums. If there are any FAs reading this, I am inviting you to justify why you feel you have to charge so much, especially, how many actual hours will be spent on a transfer. In my case, there is no risk. I am giving a specific instruction, so the excuse of requiring a high fee to match the long term risk, does not cut it with me, unfortunately. What's that saying about "having someone over a barrell"!!!

Marcon

Duplicate post.