Pension transfer on death

shedboy52

My brother had a terminal illness and last summer got a financial advisor to arrange a transfer of his pension fund to a flexible drawdown product. At that time he withdrew 25% tax free. A few months later he died. He paid £4k for the advice
We are now trying to get the fund transferred to my sister in law. The pension company is insisting she takes financial advice for this and the advisor from last year is saying he wants another full fee as he is saying she needs full advice again.
This sounds scandalous, but is it a regulatory requirement? And if so where can I find the relevant regulations

MallyGirl

I am sorry for your loss.

Had he named her as the beneficiary? Who is the draw down with now - is it a SIPP or is it through and advisor?

shedboy52

She is the beneficiary and Quilter have eventually accepted his expression of wishes.

xylophone

The pension company is insisting she takes financial advice for this and the advisor from last year is saying he wants another full fee as he is saying she needs full advice again.

With which provider did your late brother in law hold his drawdown pension?

Was a letter of nomination completed in favour of his widow?

Does your sister in law have a letter from the provider explaining the "advice requirement"?

What exactly does it say?

Even were there  any need for advice, I fail to see how the widow would be bound in any way to engage her late husband's financial adviser.

https://techzone.abrdn.com/public/pensions/Tech-guide-DC-death

Marcon

shedboy52 said:

My brother had a terminal illness and last summer got a financial advisor to arrange a transfer of his pension fund to a flexible drawdown product. At that time he withdrew 25% tax free. A few months later he died. He paid £4k for the advice
We are now trying to get the fund transferred to my sister in law. The pension company is insisting she takes financial advice for this and the advisor from last year is saying he wants another full fee as he is saying she needs full advice again.
This sounds scandalous, but is it a regulatory requirement? And if so where can I find the relevant regulations

I'm afraid this is a bit messier than it sounds at first. If a pension is transferred in the knowledge that the pension scheme member is very ill, and they die within two years of the transfer, HMRC has a curious take on the situation. Good explanation here: https://techzone.abrdn.com/public/pensions/Tech-guide-pensions-IHT#anchor_4

I imagine that link will be as clear as mud to most people, but if you should give the gist of things (i.e. 'not straightforward'). There's free, impartial help readily available: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems

i can't see why financial advice is required, based on what your post says, but there may be aspects of this that are not apparent from your post. Maybe ask Quilter and the adviser to cite chapter and verse on what advice is required and why?

Malthusian

Presumably this is his wife. I think she is within her rights to be miffed. Unless they kept their finances completely separate and she hasn't had any dealings with the advisor before, normally most of the initial fact-finding work would already have been done.

The adviser is right to say that opening a new drawdown plan in her name, even with the same provider, is new business for regulatory / insurance purposes and he is required to give her a full recommendation in her own right. But I would still expect a reduced initial fee under the circumstances if not nil.

But ultimately it is a commercial decision, and she doesn't have to take advice if she doesn't want it. (We can discount the possibility that there are safeguarded rights worth more than £30k.)

If she is eligible for flexi-access drawdown, then the pension company has no grounds to stop her using that option or force her to take financial advice. If they don't want to service her on a non-advised basis, they should allow her to inherit the pension as a nominee drawdown product that she can transfer away to a provider of her choice.

dunstonh

We are now trying to get the fund transferred to my sister in law. The pension company is insisting she takes financial advice for this and the advisor from last year is saying he wants another full fee as he is saying she needs full advice again.

If the pension provider is one that only transacts via advisers then they can insist on that.    If your sister-in-law wishes to DIY then she should pick a DIY provider and use them.

Basically, distribution is split between those that use advisers and those that don't.   Most providers cater for only one side. Not many cater for both.

This sounds scandalous, but is it a regulatory requirement? And if so where can I find the relevant regulations

It is almost certainly a retail requirement.     However, there is a regulatory part in that a new product would be required to meet regulatory standards for advice for setting up a new pension under advice.

She is the beneficiary and Quilter have eventually accepted his expression of wishes.

Quilter is a provider that requires an intermediary for the setting up of new pensions.  So, that would explain their position.

and the advisor from last year is saying he wants another full fee as he is saying she needs full advice again.

If your brother was paying for ongoing servicing with the adviser, I would find that charge difficult to accept.    In my experience, when a family member dies and the beneficiary wants the same adviser to continue offering ongoing services, then I would expect them to sort the admin out without new initial charges.

However, if your brother was not paying for ongoing servicing but only on a transactional basis, then I can understand it. 

Do you know if the adviser was operating on an ongoing advice basis or transactional (one off/ad-hoc) basis?

Marcon

dunstonh said:

We are now trying to get the fund transferred to my sister in law. The pension company is insisting she takes financial advice for this and the advisor from last year is saying he wants another full fee as he is saying she needs full advice again.

If the pension provider is one that only transacts via advisers then they can insist on that.    If your sister-in-law wishes to DIY then she should pick a DIY provider and use them.

Basically, distribution is split between those that use advisers and those that don't.   Most providers cater for only one side. Not many cater for both.

This sounds scandalous, but is it a regulatory requirement? And if so where can I find the relevant regulations

It is almost certainly a retail requirement.     However, there is a regulatory part in that a new product would be required to meet regulatory standards for advice for setting up a new pension under advice.

She is the beneficiary and Quilter have eventually accepted his expression of wishes.

Quilter is a provider that requires an intermediary for the setting up of new pensions.  So, that would explain their position.

But OP hasn't said she wants to open a pension with Quilter. Paying out the proceeds on the death of the policyholder to another provider shouldn't need an intermediary if the receiving scheme doesn't need one.

shedboy52

Thanks for all your comments. We will contact Quilter to ask them to provide the regulatory requirements for each of the options available to my sister in law. We know what option she is taking, we don't need an advisor for that!

Then we will discuss with the financial advisor the role, if any, they can provide and the fee. 

I would have expected that the FA would have advised a pension provider that wouldn't require another £4k of advice..... unless they were not aware of that.

xylophone

Does your sister in law wish to remain with Quilter?

Does she wish to retain the same financial adviser?

dunstonh

But OP hasn't said she wants to open a pension with Quilter. Paying out the proceeds on the death of the policyholder to another provider shouldn't need an intermediary if the receiving scheme doesn't need one.

Quilter do not need an adviser to pay out on the pension. So, it wont be that.   But they do need an adviser if the person has selected beneficiary drawdown and asked quilter to do it.

We will contact Quilter to ask them to provide the regulatory requirements for each of the options available to my sister in law. We know what option she is taking, we don't need an advisor for that!

You don't need to ask for regulatory requirements.  This is not a regulatory issue.  It is a retail distribution issue.

I would have expected that the FA would have advised a pension provider that wouldn't require another £4k of advice..... unless they were not aware of that.

The problem is that if you use a quilter FA then they can only recommend the Quilter product.   If your siter-in-law wants to use quilter then she has to pay for an adviser.  either a quilter FA or an IFA.

If she knows what she wants and doesn't want to use an adviser then she needs to pick a provider that is not quilter or any other that only deals with advisers.