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

dunstonh

Jerry_Mander said:

Just to show what a con this game is, I went through a website to try to find an IFA and the the website only has sort of tick boxes for how much your pension pot is, so I had to tick £250k+ as mine is £420k. An IFA got back to me and quoted about £6k for the work based on what he saw from the website which was £250k. But then I told him my actual pension pot is £420k and so he recalculated and came back with around £10k costs!  So, he'll be doing exactly the same job for £10k that he was going to do for £6k before he knew the real size of my pension pot. Bloody infuriating.

However, he would be taking on far more liability and the larger the pot, the greater impact on the PI insurance and ability to trade if you were you to complain.

£6k is too much, as is £10k.    However, that is what happens when firms dont have tiering or caps and collars.        It's no different to any other walk of life though.  I've had jobs priced where one was just over £1k and another was £20k.

p00hsticks

dunstonh said:

Jerry_Mander said:

Just to show what a con this game is, I went through a website to try to find an IFA and the the website only has sort of tick boxes for how much your pension pot is, so I had to tick £250k+ as mine is £420k. An IFA got back to me and quoted about £6k for the work based on what he saw from the website which was £250k. But then I told him my actual pension pot is £420k and so he recalculated and came back with around £10k costs!  So, he'll be doing exactly the same job for £10k that he was going to do for £6k before he knew the real size of my pension pot. Bloody infuriating.

However, he would be taking on far more liability and the larger the pot, the greater impact on the PI insurance and ability to trade if you were you to complain.

£6k is too much, as is £10k.    However, that is what happens when firms dont have tiering or caps and collars.        It's no different to any other walk of life though.  I've had jobs priced where one was just over £1k and another was £20k.

Being quoted a high price can also be an indication that someone isn't particularly keen on having your business....

Jerry_Mander

Pablo7474 said:

Is that a con really? Would an estate agent sell a £250k house for the same fee as a £1m house? 

Do you think they'll do four times the work to sell the more expensive house? It might sell instantly and the cheaper one might, for whatever reasons, take weeks or months to find a buyer requiring more work and cost to the agent. This isn't a good example to try to convince me it isn't a con, it just demonstrates what a con-game the real estate market is.

Jerry_Mander

Linton said:

For the IFA the situation is worse.  The greater value of the pension the greater the liability.

Yes, I'd forgotten the insurance that the IFA will have to take will be substantial, so there is that. But does it really scale on a straight 2.5% - 3% (or so) of the pension pot value?

Thrugelmir

Jerry_Mander said:

Just to show what a con this game is, I went through a website to try to find an IFA and the the website only has sort of tick boxes for how much your pension pot is, so I had to tick £250k+ as mine is £420k. An IFA got back to me and quoted about £6k for the work based on what he saw from the website which was £250k. But then I told him my actual pension pot is £420k and so he recalculated and came back with around £10k costs!  So, he'll be doing exactly the same job for £10k that he was going to do for £6k before he knew the real size of my pension pot. Bloody infuriating.

Premiums for professional indemnity insurance are calculated on actual exposure. The higher the potential liability the greater the cost. Nothing to do with the time spent by the adviser.  

Jerry_Mander

dunstonh said:

£6k is too much, as is £10k.    However, that is what happens when firms dont have tiering or caps and collars.

I have to say though that I talked to another firm of IFAs and they told me they don't do DB pension transfer to annuity any more because of the insurance cost, and they had nothing to gain from me because they weren't going to take on the work. And they said before they stopped doing this type of work about a year ago they would have charged about 10k for the work. So maybe the quotes of between 10 and 12k I'm getting aren't all that outrageous. Nonetheless I'm still outraged! lol.

Albermarle

Jerry_Mander said:

dunstonh said:

£6k is too much, as is £10k.    However, that is what happens when firms dont have tiering or caps and collars.

I have to say though that I talked to another firm of IFAs and they told me they don't do DB pension transfer to annuity any more because of the insurance cost, and they had nothing to gain from me because they weren't going to take on the work. And they said before they stopped doing this type of work about a year ago they would have charged about 10k for the work. So maybe the quotes of between 10 and 12k I'm getting aren't all that outrageous. Nonetheless I'm still outraged! lol.

As I understand it only a small % of IFA's ( or FA's) have the necessary qualifications to be a 'Pensions Transfer Specialist '
Other IFA's will sometimes farm out the work to one of these, which I guess means you have an extra layer of cost .
Hopefully if you keep trying you will find one with a more 'reasonable ' price.
In any case whatever the cost , if they give a negative recommendation ( ie not to transfer ) you are pretty much snookered anyway .

dunstonh

I have to say though that I talked to another firm of IFAs and they told me they don't do DB pension transfer to annuity any more because of the insurance cost, and they had nothing to gain from me because they weren't going to take on the work

Only around 1 in 10 IFA firms do DB transfers.    Many adviser firms prefer not to take on high risk transactions.     Those that have recently given up their permissions tend to have done so because the cost is too high relative to the number of pension transfer advice cases they got involved with.  e.g.  if they only did 1-2 DB transfer cases a year, their PI insurance could be £10k-£20k a year more than if they didnt do it.   It isn't just the PI insurance either.   Third party checking costs of a lot of money too and DB pension transfers are nearly always checked.     So, the business either has the choice to give up permissions or charge the few they do more to cover the costs.

And they said before they stopped doing this type of work about a year ago they would have charged about 10k for the work. So maybe the quotes of between 10 and 12k I'm getting aren't all that outrageous. Nonetheless I'm still outraged! lol.

They will be plenty charging £10k.  There will be plenty charging far more and there will be plenty charging less.

Jerry_Mander

Albermarle said:

As I understand it only a small % of IFA's ( or FA's) have the necessary qualifications to be a 'Pensions Transfer Specialist '
Other IFA's will sometimes farm out the work to one of these, which I guess means you have an extra layer of cost .
Hopefully if you keep trying you will find one with a more 'reasonable ' price.
In any case whatever the cost , if they give a negative recommendation ( ie not to transfer ) you are pretty much snookered anyway .

Well I've only managed to get two who will even entertain taking it on so far and as you say they are farming out the work to other firms.
As far as the negative recommendation goes, if I properly understand what they're telling me, then they will get my quote from the third party and decide whether it is suitable for me before I have to pay anything.

Audaxer

Jerry_Mander said:

dunstonh said:

£6k is too much, as is £10k.    However, that is what happens when firms dont have tiering or caps and collars.

I have to say though that I talked to another firm of IFAs and they told me they don't do DB pension transfer to annuity any more because of the insurance cost, and they had nothing to gain from me because they weren't going to take on the work. And they said before they stopped doing this type of work about a year ago they would have charged about 10k for the work. So maybe the quotes of between 10 and 12k I'm getting aren't all that outrageous. Nonetheless I'm still outraged! lol.

Maybe the fact that you are asking for a DB transfer to an annuity, rather than the more common straightforward DB transfer, is pushing up costs being quoted? As mentioned earlier, I would have thought a DB transfer to a DC pension should allow you to cover the house cost from the tax free lump sum?