Tips on how to ensure your Financial Advisor gives the green light to transfer DB pension to SIPP.

Marcon

Brie said:

This was on the leaving statement from 1996, the company was subsequently taken over.

Does this mean you haven't had any updates since then?  First thing to do is to get a request in to both pensions to ask what your pension would be if you started taking it on X date.  (1st Oct 2022 maybe?)  Then you can see what the reductions would be for taking thing early and they will likely give you a transfer value as well.

Transfer values are rarely volunteered; members need to make a specific request for them.

Brie said:

The only reason a good IFA will say yes is if you can make them believe your time on this earth is so short that you need the money now as you won't be able to spend it in a year or two.

No; there are other scenarios where a good IFA will say yes, having done their job thoroughly. You are also wrong about serious ill health - if you are that ill and the scheme offers full ill health commutation, that's a far better option, not least because (a) the whole amount is tax free and (b) spouse's and children's pensions are still payable. You are also overlooking the punitive tax treatment where a member transfers knowing they are very ill, and then dies within 2 years of the transfer.

Neilb1969

QrizB said:

Neilb1969 said:

Good luck with getting a positive recommendation. By my recent experience I suspect it's practically impossible now.

Did the nice people at LV not give you the answer you wanted, after all?

No unfortunately not. Can't fault them for their approach in terms of information gathering, systems and response times, but just totally disagree with their conclusions!

Neilb1969

ANotInUseName said:

Neil, thanks for sharing your experience - this sounds so familiar, likewise I'm mortgage free, other investments that I don't want to touch at the moment, another DB pension and 15 years working in trading so you have my sentiments exactly regarding not being able to take control of your own money.

Did you actually take the plunge and pay a financial advisor only to be told - computer says 'No', or are you in the same position as myself i.e. in a state of flux - will understand if you don't wish to answer.

With reference 'inflation linked', I've actually written back to the company managing this particular DB pension as it doesn't appear to be as inflation proof as I was originally led to believe which is giving me cause for concern.

I was totally committed to the transfer so paid for the advice - just didn't get the answer I was expecting!

Terron

ANotInUseName said:

I have to confess Malthusian, the only information received on this pension was an email from the administrators which says and quote:
If you retire before age 65 your pension will have increases at the discretion of 'the company' (the last time they gave one was 1% in 2008) up until age 65.  From age 65, or if you retire at age 65, part of your pension (the GMP, Guaranteed Minimum Pension, which is the contracted-out part of your pension) will have CPI increases capped at 3% p.a. and the other part will have increases at the discretion of 'the company'.

I have a pension with similar rules, and lack of increases (until this year when they gave a 3% rise). But those rules apply only to pensions in payment, i.e. after you retire. Before then different rules will apply. For mine it was 7% pa, based on a choice made by the scheme when I left in 1994. AIUI they chose a fixed rate for predictability.
I thought the law was such that deferred DB pensions had to increase each year. I they estimate they gave you decreased I would ask for an explanation.

When I started with the company I thought that increases once in payment would be in line with inflation, but I didn't read the fine print. Others have taken this to court and lost. Increases were in line with inflation until after the second takeover.

ANotInUseName

Hi Cus, sure the reason for not looking at this earlier was 2 fold, first of all the over 55 element, secondly our current holiday cottage business we’ve been running since 2019 is doing really well and the opportunity to expand and use the funds to acquire good hard assets such as land seems rather tempting, also the opportunity to purchase land only came up recently. Like so many people went through the small print of my pension when I first started work, made AVC’s and the pension looked sound, so hadn’t really concerned myself regarding the pension until this other opportunity came up. 

Re: your comment dunstonh, it was a flippant comment granted, however with the odds stacked against the client in getting a positive outcome even before starting the process, it was born out of frustration of the situation.

I guess it’s more the realisation Xylophone that depending on your views on inflation and where it’s going to go in the future, I’ve since written again to the pension administrators such that I may put everything into context and ensure my understanding of how the future value is calculated is correct.

Sounds like your pension s similar to mine then Terron, the GMP is 7% from the time I left reverting to CPI up to a max of 3% after which it’s capped. Initially when I was told the GMP was limited to 3% by someone within the pension administration team, on a subsequent email exchange one of their colleagues clarified the situation by saying that the capped 3% was after retirement.

So just for arguments sake, if the situation was that there was a transfer value of say £200k, with a pension say of £11k pa at 65, if I had a compelling business case that would return £15k pa if the transfer value was to be invested with the business to be transferred over to my nearest and dearest so they can either keep it going or to sell as a going concern, would this make a case for a positive outcome? What sort of figures would a FA come back in this scenario to say, ‘actually that makes sense, would be worth transferring’.

sheslookinhot

I’m watching my wife go through this process at present. I cannot imagine a financial advisor would provide a positive recommendation to transfer a db pension to support a business venture. It’s all about whether a transfer is a better option to meet your retirement.

dunstonh

Re: your comment dunstonh, it was a flippant comment granted, however with the odds stacked against the client in getting a positive outcome even before starting the process, it was born out of frustration of the situation.

I can understand the frustration.  Advisers themselves are also frustrated somewhat as it is a heck of a lot of work and the FCA is overly onerous on its expectations.   DB transfers are probably the transaction with the highest risk for an advisory firm.   No genuine firm is taking it lightly, and its far more the computer decision.     It's a great big hot potato and firms doing DB transfers are waving that red flag to the FCA saying come and get me.

Ibrahim5

IFAs become IFAs because it's easy money for not much work. When they get together they will be ROFL at how easy it is to get £5K for saying "No". "NO £5K please", "I charge £5K for saying NO" ROFL.

ANotInUseName

See where your coming from SLH, I'm expecting it to be one of those businesses that will carry on beyond my pension age, as such I may well be in a position not to retire, if health allows I would be quite active in the venture, if not so active, then take a back seat and we would have more staff. Alternatively we could just sell up and take the retirement proceeds. I guess this is what makes the option more interesting is that it provides flexibility in the future. I can really appreciate now how the this may appear from the IFA's perspective - as per the last comment made by DunstonH, my retirement journey may take any number of routes some of which I may not be able to predict, even less so by an IFA. Same applies to keeping it in the the current DB scheme to a certain degree, what will it be worth when I'm 65 (in relative terms to what it can buy me now), will it even be available to me at 65? Just a shame we can't go for a disclaimer to say I'm happy with the risks I'm about to take, as current values of my other assets and other pensions will be more than sufficient for a comfortable retirement, so if the venture didn't go as planned I'm still provided for.
I think from the comment of DunstonH Ibrahim, the IFA's appear to have their hands tied in this matter with the ever present spectre of the FCA circling above. The good thing is that we have such forums for such issues to be aired so hopefully folks can review these forums in order to be better informed.
And just for the record, appreciate the time taken and contributions made by both IFA's and those that have experienced the process.

hyubh

ANotInUseName said:

Same applies to keeping it in the the current DB scheme to a certain degree, what will it be worth when I'm 65 (in relative terms to what it can buy me now), will it even be available to me at 65?

I'd recommend firming up your knowledge of these topics, as part of your drive to transfer out, as they aren't really rhetorical questions. From your previous posts in this thread it isn't clear if your scheme normal pension age is 60 or 65 (that will matter), and how your excess revalues - what you quoted about '1%' before can't be right, that sounds more like discretionary increases on the (pre-97) excess once in payment. Also worth coming to a reasoned view on whether the sponsoring employer is likely to collapse or not before NPA - if it is, then work out what your PPF compensation would be like as a 'floor' (which will not, as you insinuate, be nil). If it isn't, then perhaps the scheme is actually heading to buyout instead? Not ridiculous, many DB schemes have actually improved their financial standing over the past few years, helped by the pandemic...