Transferring out of DB pension scheme

tightwadapprentice

Any advice will be really appreciated. I was advised to transfer out of a DB scheme a while back by a financial advisor. A while after I left my scheme the FA said I couldn’t transfer my pot. My money is still in my pension scheme but not accruing any benefits nor are my company or I contributing to it. I complained to the FA, they upheld it but we couldn’t agree compensation. I went to the ombudsman and they have just found in my favour. However I have to accept or reject the decision without knowing the compensation I am owed. So I either accept and wait to find out the figure, which I then can’t appeal or take legal action myself. The ombudsman have been pretty useless other than upholding my complaint. It would cost me several thousand pounds to get the figure calculated. This would take longer than I have to make the decision and I wouldn’t get the money back. Any thoughts/advice please?

Dazed_and_C0nfused

Any thoughts/advice please?

Stop using financial advisors.

Stick with independent financial advisors (or DIY)

Are you sure about this?  Most deferred DB pensions will have an element of inflation proofing.  Have you read the scheme rules?

My money is still in my pension scheme but not accruing any benefits nor are my company or I contributing to it

tightwadapprentice

It maybe inflation linked, but the company aren’t contributing the 22% anymore. The amount I have accrued and eligible to get at 65 isn’t accruing anymore, like it used to. 

dunstonh

However I have to accept or reject the decision without knowing the compensation I am owed. 

The calculations are defined.  So, it's not a case of haggling.  The firm will supply the workings of its offer to the FOS.  Although this is a rather strange complaint scenario as you are not likely to receive any compensation for remaining in the DB scheme.  it will likely only look at the fact you opted out and how long your period to retirement is and what the financial cost would have been.

The ombudsman have been pretty useless other than upholding my complaint. 

It doesn't sound like they have been useless.  You got your upheld decision.   Their job is to adjudicate, and they have.

 So I either accept and wait to find out the figure, which I then can’t appeal or take legal action myself. 

As the complaint has been upheld there is nothing to appeal.   However, if you feel the calculation is wrong then you can ask the FOS to look at it.  You will be given info on how it was worked out.

xylophone

I can't quite follow the story.

Is it the case that you were an active member of a Defined Benefit Pension Scheme and while you were an active member, you consulted a Financial Adviser who said that you should leave the Scheme?  If so, why?

You didn't leave the Scheme but subsequently left the sponsoring employer so that your pension became deferred?

The same Financial Adviser when consulted again said that you could not transfer your deferred pension to another Scheme? If so, why not? Was the Scheme unfunded public service?

Or did he say that he would not give a positive recommendation to transfer your deferred pension?

What was the basis of your complaint to the Financial Adviser?

You say that he agreed that you were misadvised (in what way exactly?) but you wanted more in compensation than he was prepared to offer?

How did you calculate what you were prepared to accept?

You complained to the ombudsman who has upheld your complaint  (about the Financial Adviser's failure to deal with your case properly?) but will not say how much you should receive nor the basis of calculation?

grumiofoundation

tightwadapprentice said:

It maybe inflation linked, but the company aren’t contributing the 22% anymore. The amount I have accrued and eligible to get at 65 isn’t accruing anymore, like it used to. 

You have left the scheme so why would they?

Why have you left the scheme? Are you contributing to a different scheme?


Edit: As above are you sure the amount you will paid at retirement has no inflation adjustment. 

daveyjp

Another anecdote with more holes than a Swiss cheese.

Marcon

tightwadapprentice said:

Any advice will be really appreciated. I was advised to transfer out of a DB scheme a while back by a financial advisor. A while after I left my scheme the FA said I couldn’t transfer my pot. My money is still in my pension scheme but not accruing any benefits nor are my company or I contributing to it. 

The pension will be revaluing in line with statutory requirements from the time you left 'active' (contributing) membership until you access your scheme benefits. The company will be pumping in whatever money is needed to ensure the scheme can pay benefits when they fall due. So your grasp of what's going on is wholly mistaken.

tightwadapprentice said:

I complained to the FA, they upheld it but we couldn’t agree compensation. I went to the ombudsman and they have just found in my favour. However I have to accept or reject the decision without knowing the compensation I am owed. So I either accept and wait to find out the figure, which I then can’t appeal or take legal action myself. 

As already mentioned above, it's a standard calculation.

tightwadapprentice said:

The ombudsman have been pretty useless other than upholding my complaint. It would cost me several thousand pounds to get the figure calculated. 

They've examined and upheld your complaint and ordered industry standard compensation to be paid. 

tightwadapprentice said:

Any thoughts/advice please?

If you're not currently saving into a pension scheme, sort that out pronto. If you are still in employment, your employer should have auto enrolled you. If you opted out of their DB scheme (and not clear from your question if you are still in the same employment) they may well refuse to re-admit you to that, but will have to offer an alternative if that's the case, although you may have to wait up to a year depending on the exact timing/circumstances of your opting out and then asking to be enrolled again.

xylophone

If you're not currently saving into a pension scheme, sort that out pronto. If you are still in employment, your employer should have auto enrolled you. If you opted out of their DB scheme (and not clear from your question if you are still in the same employment) t

As I said previously, I am finding it difficult to follow the story.

Is it then the case that he is still employed by the  company sponsoring the DB Scheme?

He opted out of this scheme on the FA's advice and the pension is now deferred?

The FA then would not give a positive recommendation to transfer?

Or could not because transfers out are not permitted?

If he is still employed by the company, does it not have to offer him a pension scheme?

If the DB Scheme is all that is offered must he not be reinstated?

Is the compensation offered the amount required to reinstate him?

Mystified!

phillw

I am not sure the transferring out would be the thing I'd be complaining about. It's fixed now for the number of years and your salary level when you deferred (hopefully linked to inflation, but there might be a cap).

Assuming you didn't just tell your employer that it's ok, you don't want a pension anymore and they can now just keep the money they have been contributing, then your main loss would be if you remained in employment and received a huge pay rise.

There is so much missing in the explanation of what happened, that I don't see how anyone can help you figure out what to do.

tightwadapprentice

Sorry folks. Hopefully this makes more sense. 

In order to get a final figure for transferring out of my pension I had to leave the scheme. Pension rules apparently. 

As the transfer never happened I am no longer contributing to this scheme, but have joined a scheme not as attractive in terms of company contributions. 

I still have funds sat in the original scheme but this has deteriorated by roughly £140k, I believe due to the 15yr bond market rates rising from an all time low to a ten year high. These rates are increasing further and this will probably reduce my figures further to nearer £160k down from the time of my original pot valuation. 

The original scheme is still open to those who have been in it long enough and the company are still contributing 22%. 

The ombudsman states not enough was done by the FA to ensure I didn’t leave the scheme. The FA also did not state a third party would make the final decision. Regardless the ombudsman found in my favour. 

In doing so I have the option of accepting/rejecting the offer without knowing a figure. Apparently there is a standard but difficult calculation to get to this figure, however I have to accept before knowing.

I cannot understand how I can be asked to make a decision without knowing the possible outcome. 

Having spoken to a specialist involved in such calculations he stated the compensation will be substantial. 

My pot at transfer with a very modest return should have been in the region of £940k by 2025. As I see it my current pot is £614k, so I will be significantly down. 

If I accept the offer the FA needs to ask if I can get back in the scheme. I am not sure if this happens what the outcome would be as I haven’t been in that scheme for 3 years now. 

I am still employed at the same company. 

Hopefully this helps. If not don’t worry and thanks for taking the time to read and respond.