Transfer final salary pension to new DC scheme

Albermarle

DaveT55 said:

Albermarle said:

' Murky' would make me nervous .

Yes, it's squeaky bum time, but for IC's this is the way it is.  

As long as the actual investments within the SIPP are mainstream, regulated etc , then hopefully will not be a problem.

DaveT55

[Quoted posts removed by Forum Team]

Does this mean that the DB administrators can now just refuse a transfer when they feel like it with very little explanation. Maybe because
1. They don't agree with the new scheme provider.
2. It's not in the best interest of the DB scheme i.e several hundred £K being removed from a pension pot that already has a significant deficit

I assume positive or negative IFA advice wouldn't come in to their decision making, as I don't believe this information is shared with the DB scheme providers, only that advice has been taken?
 

dunstonh

I assume positive or negative IFA advice wouldn't come in to their decision making, as I don't believe this information is shared with the DB scheme providers, only that advice has been taken?

The ceding scheme only has to verify that advice has been sought.  Not the outcome.

However, pension scheme administrators and providers do have their own lists of both potentially dodgy receiving schemes AND potentially dodgy advising firms.    When I reported a scheme previously for doing dodgy pension transfers into unregulated investments and was trying to put a stop to it before the transfer actually happened, the ceding scheme informed me that they had put a block on the transfer already because the advising firm was known to them for potential pension scams.

Albermarle

 It's not in the best interest of the DB scheme i.e several hundred £K being removed from a pension pot that already has a significant deficit

As I understand it , apart from what is being discussed here , most DB schemes are keen to offload as much liability/members as possible . For sure mine was even prepared to pay for the financial advice ( although I did not accept the offer )

Malthusian

hyubh said:

The DB administrator issued the 'Scorpion' stuff, the signed declaration on the discharge form was clear and unambiguous, and in handling the IDRP, emphasised the statutory right to transfer meant it ultimately couldn't refuse the transfer request. Yet still it was found against.

If I am reading the Pensions Ombudsman's judgment correctly, the DB administrator could have refused the transfer request. That was the rub.

I can't copy and paste from the PDF but see points 45-48 in particular.

In short:

• The ruse was that this was a transfer from one occupational scheme to another
• This could only be done if Mrs H was to acquire "transfer credits" in the new arrangement
• This was impossible because Mrs H had no earnings so could not acquire "transfer credits"
• Therefore she had no statutory right to transfer.

If the DB administrator had understood the legal position correctly they would at least have made further enquiries and there is a good chance that the transfer would not have proceeded.

If you handle hundreds of millions or billions of pounds on behalf of other people, make a fundamental error about how the law works, and as a direct consequence one of those people loses a lot of money, expect to have to pony up.

hyubh

Malthusian said:

hyubh said:

The DB administrator issued the 'Scorpion' stuff, the signed declaration on the discharge form was clear and unambiguous, and in handling the IDRP, emphasised the statutory right to transfer meant it ultimately couldn't refuse the transfer request. Yet still it was found against.

If I am reading the Pensions Ombudsman's judgment correctly, the DB administrator could have refused the transfer request. That was the rub.

I can't copy and paste from the PDF but see points 45-48 in particular.

In short:

• The ruse was that this was a transfer from one occupational scheme to another
• This could only be done if Mrs H was to acquire "transfer credits" in the new arrangement
• This was impossible because Mrs H had no earnings so could not acquire "transfer credits"
• Therefore she had no statutory right to transfer.

If the DB administrator had understood the legal position correctly they would at least have made further enquiries and there is a good chance that the transfer would not have proceeded.

Are you familiar with the Hughes/Royal London case a few years before...?

https://www.moneymarketing.co.uk/news/high-court-overturns-ombudsman-in-landmark-pension-liberation-ruling/
https://www.ft.com/content/d3866176-d985-11e5-a72f-1e7744c66818

The Pensions Ombudsman has a history of pushing a paternalistic interpretation of the law regarding a DB administrator's duties for potential transfers out.

If you handle hundreds of millions or billions of pounds on behalf of other people, make a fundamental error about how the law works, and as a direct consequence one of those people loses a lot of money, expect to have to pony up.

The complainant's open gambit was that she was far too stupid to make her own decisions. Which the Ombudsman appeared to accept with the comment about her having previously opted out...?

If the DB administrator had understood the legal position correctly they would at least have made further enquiries and there is a good chance that the transfer would not have proceeded.

Your 'there is' is highly debatable. The previous opt out showed this person was fundamentally minded not to value an LGPS pension.

Malthusian

Are you familiar with the Hughes/Royal London case a few years before...?

Yes, and so was the Ombuddy. They addressed that argument specifically in the decision.

The Pensions Ombudsman has a history of pushing a paternalistic interpretation of the law regarding a DB administrator's duties for potential transfers out.

It is a trustee's job to be paternalistic. That is the nature of the relationship between trustee and beneficiary. In the absence of an absolute right to the money, "the beneficiary asked me to" is not justification for a trustee doing anything, including transferring the beneficiary's money to a blatant scam.

If you fail to carry out your duty to be paternalistic because you have made a fundamental error of law, Daddy better get his wallet out.

Your 'there is' is highly debatable. The previous opt out showed this person was fundamentally minded not to value an LGPS pension.

It's only debatable if you enjoy debating philisophical what-ifs where both possible scenarios have the exact same result. The DB administrator didn't bother making enquiries because they thought their hands were tied. Their hands weren't tied. If the DB administrator had been aware that she had no statutory right to transfer, but had still let the scammer help themselves, then they would be idiots, and would still have failed in their duty as trustee.

If she didn't value an LGPS pension at all she would never have joined it. Better late than never.

"She wasn't very bright so she deserves to lose her money" isn't a justification for a trustee doing anything either.

Silvertabby

Malthusian said:

Are you familiar with the Hughes/Royal London case a few years before...?

Yes, and so was the Ombuddy. They addressed that argument specifically in the decision.

The Pensions Ombudsman has a history of pushing a paternalistic interpretation of the law regarding a DB administrator's duties for potential transfers out.

It is a trustee's job to be paternalistic. That is the nature of the relationship between trustee and beneficiary. In the absence of an absolute right to the money, "the beneficiary asked me to" is not justification for a trustee doing anything, including transferring the beneficiary's money to a blatant scam.

If you fail to carry out your duty to be paternalistic because you have made a fundamental error of law, Daddy better get his wallet out.

Your 'there is' is highly debatable. The previous opt out showed this person was fundamentally minded not to value an LGPS pension.

It's only debatable if you enjoy debating philisophical what-ifs where both possible scenarios have the exact same result. The DB administrator didn't bother making enquiries because they thought their hands were tied. Their hands weren't tied. If the DB administrator had been aware that she had no statutory right to transfer, but had still let the scammer help themselves, then they would be idiots, and would still have failed in their duty as trustee.

If she didn't value an LGPS pension at all she would never have joined it. Better late than never.

"She wasn't very bright so she deserves to lose her money" isn't a justification for a trustee doing anything either.

The Hughes case makes interesting reading.

I remember requests to transfer LGPS benefits into 'dodgy' schemes.  At one point we were printing off a whole heap of the 'Scorpion' documents every day!

Did they all progress?  No they did not.  We too had a request to transfer benefits into a new employer's scheme from a lady in her 60s.  My manager (straight talking old school) rang her to congratulate her on getting a new job in the industrial sector at her age, and asked her how she had managed it... After a short conversation, she agreed that if her proposed pension scheme could lie about that, then they weren't to be trusted. 

Others were simply rejected on the grounds that they didn't comply with LGPS regulations.  Most accepted that, although the demand to transfer into a South American hardwood plantation dragged on for a bit until the member transferred into an interim personal pension.

Some may say that he exceeded his authority, but I keep checking the Ombudsman's website for complaints against my old LGPS - and so far there have been none.