DB final salary pension transfer

Dillsue

After reading chat here a year ago transferring out of a former employers DB pension scheme, I thought Id share some tips to help anyone avoid the mistakes Ive made! 

If you want to transfer out of a DB scheme with a CETV of more than £30k the default advice youll get is not to transfer out. If want to go against that advice as an insistent client it seems that XYZ is the only company that will now accept a DB transfer against advice. That may have changed since I approached them last July.

Before you start a transfer read up on the process and understand the timescales, I didnt.

Unless youre in bad health or have some fairly special circumstances youre likely to be advised against a transfer so before you do anything find a company that will accept a transfer against advice, likely XYZ, maybe others?

Once youve got somewhere to put the transfer chose an FA with the necessary accreditation for DB transfers. Get all the engagement paperwork and personal info/assessment completed before you request a CETV.  Once you request a CETV the clock starts ticking to pretty inflexible FCA timescales. No allowance is made for covid and people remote working.

Im just about to have a second CETV expire and my former employers pension scheme now want me to take fresh advice at a cost of £1000s more. The company that I was going to transfer to, XYZ, take an age to do anything and as I cant rely on them to process things to FCA timescales, Ive pulled the plug on the transfer and taking the pension!!

Youll have do your own research to find XYZ but it shouldnt be too hard.

eskbanker

Dillsue said:

If want to go against that advice as an insistent client it seems that XYZ is the only company that will now accept a DB transfer against advice. That may have changed since I approached them last July.

If you returned to the other threads on this, you can't fail to notice that things have changed frequently in recent times, so it's entirely plausible that your company no longer accepts insistent clients.

Dillsue said:

The company that I was going to transfer to, XYZ, take an age to do anything and as I cant rely on them to process things to FCA timescales, Ive pulled the plug on the transfer and taking the pension!!

Youll have do your own research to find XYZ but it shouldnt be too hard.

If you're unhappy with their performance and no longer dealing with them, then your post would be somewhat more constructive and helpful if you named them, as there's no obvious residual reason to leave them anonymised....

Pablo7474

I am fairly sure xyz don’t do this anymore since July! 

Albermarle

Dillsue said:

After reading chat here a year ago transferring out of a former employers DB pension scheme, I thought Id share some tips to help anyone avoid the mistakes Ive made! 

If you want to transfer out of a DB scheme with a CETV of more than £30k the default advice youll get is not to transfer out. If want to go against that advice as an insistent client it seems that XYZ is the only company that will now accept a DB transfer against advice. That may have changed since I approached them last July.

Before you start a transfer read up on the process and understand the timescales, I didnt.

Unless youre in bad health or have some fairly special circumstances youre likely to be advised against a transfer so before you do anything find a company that will accept a transfer against advice, likely XYZ, maybe others?

Once youve got somewhere to put the transfer chose an FA with the necessary accreditation for DB transfers. Get all the engagement paperwork and personal info/assessment completed before you request a CETV.  Once you request a CETV the clock starts ticking to pretty inflexible FCA timescales. No allowance is made for covid and people remote working.

Im just about to have a second CETV expire and my former employers pension scheme now want me to take fresh advice at a cost of £1000s more. The company that I was going to transfer to, XYZ, take an age to do anything and as I cant rely on them to process things to FCA timescales, Ive pulled the plug on the transfer and taking the pension!!

Youll have do your own research to find XYZ but it shouldnt be too hard.

A good summary of what other posters thinking about transferring are usually warned about .

Unless youre in bad health or have some fairly special circumstances youre likely to be advised against a transfer 

I do not think that is strictly true though. If you have a good level of income apart from the pension you want to transfer , that can help. Such as another DB pension , or maybe a stable unmortgaged property portfolio ?

Mason

I just want to add my experience having nearly completed the transfer process.  I am transferring out of a very good DB scheme in which I thought I was offered a very impressive transfer value. 

When carrying out a transfer comparator my FA surprised me by saying my transfer was short by about 100k.  "How could that be", I asked, "after all, if I took the £400k offered I could buy an annuity that is better than what I would receive from my DB scheme".  His response was that the DB scheme had many other benefits such as the lump sum and spouse payments on my death. 

Anyway, after answering many many questions on my circumstances he finally concluded that the transfer would be beneficial.  I'm in great health, as is my wife, but we have a clear plan for the years up to our personal and state retirement ages (we are in mid-50s now) and carried out a lot of research including our attitude to risk and the impact a catastrophic event on our investments would have.

I think the FA did a really thorough job and gave me a right grilling but I do think because he recognised how much planning I'd done and why I concluded it was a good deal coupled, I'm sure, with his view that it was not a bad deal swung the transfer option.

One other thing I would recommend.  Keep on and on at the administrators to process the transfer.  There were weeks when I heard nothing and when I contacted the admin they realised that they hadn't followed things up.  I'm not sure if this is typical but without me, after that, harrying them to progress my application I'm sure I would have missed the generous 6 month deadline.

Hope this helps.

Albermarle

When carrying out a transfer comparator my FA surprised me by saying my transfer was short by about 100k.  "How could that be", I asked, "after all, if I took the £400k offered I could buy an annuity that is better than what I would receive from my DB scheme".  His response was that the DB scheme had many other benefits such as the lump sum and spouse payments on my death.

I saw on your other thread it is a CETV of £400K for a pension of estimated £10kpa ( with no lump sum ) .

To buy an annuity in your mid 50's , linked to inflation and 50% for Spouse for £10 Kpa would cost well in excess of £500K .

 Keep on and on at the administrators to process the transfer.  There were weeks when I heard nothing and when I contacted the admin they realised that they hadn't followed things up. 

Many pension administrators are very poor at responding quickly to any issues, not just DB transfers.

Marcon

Mason said:

One other thing I would recommend.  Keep on and on at the administrators to process the transfer.  There were weeks when I heard nothing and when I contacted the admin they realised that they hadn't followed things up.  I'm not sure if this is typical but without me, after that, harrying them to progress my application I'm sure I would have missed the generous 6 month deadline.

If you insist on 'keeping on and on' at the administrators, you'll delay things even more. They have a shedload of work to complete and bombarding them with 'reminders' as you seem to think is a good idea will often have the opposite effect! You wouldn't have missed the 6 month deadline - they would, which would mean the transfer payment would still be made, possibly with some extra added to reflect a delay which was not of the member's making.

Thrugelmir

In the years ahead. There'll be threads on here aplenty of those who regretted their haste to exit a guaranteed secure DB scheme. 

"I'm sure I'll take you with pleasure!" the Queen said. "Two pence a week, and jam every other day."
Alice couldn't help laughing, as she said, "I don't want you to hire me – and I don't care for jam."
"It's very good jam," said the Queen.
"Well, I don't want any to-day, at any rate."
"You couldn't have it if you did want it," the Queen said. "The rule is, jam to-morrow and jam yesterday – but never jam to-day."
"It must come sometimes to 'jam to-day'," Alice objected.
"No, it can't," said the Queen. "It's jam every other day: to-day isn't any other day, you know."
"I don't understand you," said Alice. "It's dreadfully confusing!"

Silvertabby

Thrugelmir said:

In the years ahead. There'll be threads on here aplenty of those who regretted their haste to exit a guaranteed secure DB scheme. 

"I'm sure I'll take you with pleasure!" the Queen said. "Two pence a week, and jam every other day."
Alice couldn't help laughing, as she said, "I don't want you to hire me – and I don't care for jam."
"It's very good jam," said the Queen.
"Well, I don't want any to-day, at any rate."
"You couldn't have it if you did want it," the Queen said. "The rule is, jam to-morrow and jam yesterday – but never jam to-day."
"It must come sometimes to 'jam to-day'," Alice objected.
"No, it can't," said the Queen. "It's jam every other day: to-day isn't any other day, you know."
"I don't understand you," said Alice. "It's dreadfully confusing!"

When the pension freedoms were announced, and the LGPS was flooded with demands to transfer to 'cash now' schemes, my colleagues and I gave it 10 years before the brown stuff hit the fan.  The clock is ticking....

sheslookinhot

Mason said:

I just want to add my experience having nearly completed the transfer process.  I am transferring out of a very good DB scheme in which I thought I was offered a very impressive transfer value. 

When carrying out a transfer comparator my FA surprised me by saying my transfer was short by about 100k.  "How could that be", I asked, "after all, if I took the £400k offered I could buy an annuity that is better than what I would receive from my DB scheme".  His response was that the DB scheme had many other benefits such as the lump sum and spouse payments on my death. 

Anyway, after answering many many questions on my circumstances he finally concluded that the transfer would be beneficial.  I'm in great health, as is my wife, but we have a clear plan for the years up to our personal and state retirement ages (we are in mid-50s now) and carried out a lot of research including our attitude to risk and the impact a catastrophic event on our investments would have.

I think the FA did a really thorough job and gave me a right grilling but I do think because he recognised how much planning I'd done and why I concluded it was a good deal coupled, I'm sure, with his view that it was not a bad deal swung the transfer option.

One other thing I would recommend.  Keep on and on at the administrators to process the transfer.  There were weeks when I heard nothing and when I contacted the admin they realised that they hadn't followed things up.  I'm not sure if this is typical but without me, after that, harrying them to progress my application I'm sure I would have missed the generous 6 month deadline.

Hope this helps.

What do you think were they key issues that enabled the IFA to agree a transfer was in your best interests ? (If you don’t mind me asking)

Dansmam

Silvertabby said:

Thrugelmir said:

In the years ahead. There'll be threads on here aplenty of those who regretted their haste to exit a guaranteed secure DB scheme. 

"I'm sure I'll take you with pleasure!" the Queen said. "Two pence a week, and jam every other day."
Alice couldn't help laughing, as she said, "I don't want you to hire me – and I don't care for jam."
"It's very good jam," said the Queen.
"Well, I don't want any to-day, at any rate."
"You couldn't have it if you did want it," the Queen said. "The rule is, jam to-morrow and jam yesterday – but never jam to-day."
"It must come sometimes to 'jam to-day'," Alice objected.
"No, it can't," said the Queen. "It's jam every other day: to-day isn't any other day, you know."
"I don't understand you," said Alice. "It's dreadfully confusing!"

When the pension freedoms were announced, and the LGPS was flooded with demands to transfer to 'cash now' schemes, my colleagues and I gave it 10 years before the brown stuff hit the fan.  The clock is ticking....

When I was still working paying into lgps and the income was showing up every month I was thinking about avc, early retirement, moving abroad etc. Had a chat with a finance colleague, top of her tree so understood a lot. Until then I had no idea transfer out was an option. Got cetv, looked at what I could do with it, wise people here explained why I would  be daft to take it, realised I could risk the lot (I do like a gamble) or take different but smaller risks knowing the bills can be paid whatever. Turns out I only like calculated gambles. Thankfully and thank you, though I'll always live with what ifs 🤨