Transfer of DB Pension Pot to a SIPP via a Stakeholder Pension

DaveT55

xylophone said:

Another poster tried another route but didn't come back to say what happened in the end.

https://forums.moneysavingexpert.com/discussion/comment/78679082/#Comment_78679082 and following posts.

I can confirm this is accurate. IPensions facilitated a transfer for us very recently. I didn't want to name them on this forum, but since it's been posted there is no harm in confirming.

I won't get involved in the Pro's and Con's of whether its the correct decision for you to transfer, but just a little bit to add on the process. 
 
I investigated the Stakeholder and SSAS route in some detail when looking at a transfer last year. I haven't seen any evidence on this forum that either of these routes have been successful (In my view Stakeholder may be an option in principle, but i just see you wasting your time - others will disagree with me on this, but I haven't seen anything posted to make me think otherwise). 

I found 1 company that I felt confident could have setup a suitable SSAS scheme for me that would then have allowed me to push through the DB transfer (an unadministered SSAS - most want to assign trustees that would stop any DB transfer happening). From my research a bit of a faff, but it would have been a route we would have gone down if we hadn't managed to push through an Insistent Client transfer. Recent changes to DB pensions where the DWP removed the statutory right for individuals to transfer a DB pension may also impact the SSAS as a feasible option.  

There are still some IFA's out there doing Insistent Client transfers (I know this because we completed last month). It's getting very expensive though. 4k advice fee and 2% fee for an IFA to facilitate the transfer. 

Malthusian

There are two main obstacles to the stakeholder pension route:

1) You have to open a new stakeholder pension on a direct-to-consumer basis, and these seem to be rarer than hen's teeth. A number of the stakeholder pensions on the market seem to be sold only via intermediaries which puts an insistent client back at square 1.

2) Having opened it with a token £20 contribution, you may find the stakeholder pension provider tries to defy pension legislation and refuse the transfer.

There are anecdotal reports in the pre-2015 era of people trying to transfer to stakeholders and finding that the insurer initially refused but then caved in when their legal obligation was pointed out to them.

There is however no guarantee that your hypothetical stakeholder provider would cave in the same way. In the extreme you might have to take them to the FOS. In the worst case scenario (worst from the perspective of an insistent client, not objectively worst) the FOS might side with the insurer by re-interpreting pension legislation to suit its own worldview.

As other posters have said, faced with these obstacles, the stories of people who investigated this route seem to always peter out into silence.

What probably happens is that either they give it up as not worth the faff and stay in the DB scheme, or they find it is easier to find one of the handful of advisers still desperate enough for cash to do insistent client transfers than to go the stakeholder route. For all we know, by the time you've posted about trying the stakeholder route a few times on a popular finance forum, some helpful person has PMed you with the name of an adviser who will still take your business. We have no way of knowing.

The other thing that seems to happen when people try to go down the stakeholder pension route is that they find an insurer still offering stakeholder pensions, ring them up, and instead of saying "Can I open a stakeholder pension with you and put in £20" they say "Can I transfer a DB scheme into your stakeholder pension". To which the insurer says no, and now that route is closed off to them because the insurer now knows what they want to do and is at liberty to refuse their business.

There is a legal obligation for stakeholder pensions to accept any transfer, there is no legal obligation for any company to do business with you (including those offering stakeholder pensions).

Albermarle

I have a question regarding the problematic issue of getting acces to the benefits accrued in a DB pension pot.

I am sure you will have no problem accessing the benefits accrued in the scheme, which will be a guaranteed income for life based on your years of service and salary .

The problem is that you want to transfer out of the scheme, which is a different issue altogether .

2nd_time_buyer

Sounds like it could be an expensive hassle. Could you remortgage to release equity? Most lenders allow the term to go beyond state retirement age.

Silvertabby

rjmachin said:

I am presuming JustRetiring means a 5% annual growth, and drawing down that annually, but split into monthly chunks

So, hoping for £20,000 growth per year (on £400k pot), taking £1666 per month?

And if the market dips, and you lose 10% or even 20% overnight, you'll be happy to just shrug your shoulders and say "that's life"?

dunstonh

Silvertabby said:

rjmachin said:

I am presuming JustRetiring means a 5% annual growth, and drawing down that annually, but split into monthly chunks

So, hoping for £20,000 growth per year (on £400k pot), taking £1666 per month?

And if the market dips, and you lose 10% or even 20% overnight, you'll be happy to just shrug your shoulders and say "that's life"?

The last decade with its above-average returns has distorted newer investors to the reality of investing.    2000-2010 is a good one to show people using drawdown just how it can go wrong.  The three negative years in a row at the start and negatives at the end unlike 2010-2020 (and by extension, 2021/22) which has been an extended growth period with very little volatility.

xylophone

Another poster tried another route but didn't come back to say what happened in the end.

By an odd coincidence, DeadlyD has now confirmed that her transfer is going ahead.

https://forums.moneysavingexpert.com/discussion/comment/78900328/#Comment_78900328

Just to update/ my transfer of the ICL DB is going ahead. More details to follow upon final completion. I wanted to thank all the contributions here to the thread particularly Xylophone, Diplodicus, Dunstonh thanks for sharing your experience, knowledge and advise🙏 DeadlyD