Poor pension advice

Malthusian

 I suppose the main point of it is that due to all the historical issues around DB transfers it is evident to me, that IFAs now just default on the side of advising against a transfer whether it is in the clients best interest or not.

The regulator requires advisers to start from the assumption that transferring out of a DB scheme is unsuitable. If transferring is in a client's best interests an adviser will recommend that they transfer.

Giving regulated advice that someone should stay in their DB scheme is just as high a business risk for the adviser as advising them to transfer out, as this thread illustrates. You haven't even made a loss and your first thought when you saw "number go down" was to make a claim for compo.

Nothing in this thread suggests that the adviser was wrong to recommend against transferring. There is also nothing to suggest that he would have recommended transferring out a few months later, even if the CETV was higher.

At the time I was being offered 40x my pensionable salary which by anyone's opinion is a pretty good deal,

Impossible to say whether it was a good deal or not without full knowledge of exactly what the terms of the pension were, as well as your circumstances. 

No adviser would recommend staying in a DB scheme in order to pay to take advice on transferring all over again at some future point on the grounds that the CETV would be even higher than what was already a record level. Unless they were completely gaga. (To win from this bet, the CETV would not only have to go up, but go up by more than the proposed alternative DC pension.) 

What he almost certainly meant was that the guaranteed pension was guaranteed to increase over time. 

coopsy0

No adviser would recommend staying in a DB scheme in order to pay to take advice on transferring all over again at some future point on the grounds that the CETV would be even higher than what was already a record level. Unless they were completely gaga. (To win from this bet, the CETV would not only have to go up, but go up by more than the proposed alternative DC pension.) 

But that in effect is what he did.  His advice was to stay put at the minute as I was not planning to retire as at that time.  If I had told him that I was going to retire within the next few months his advice would have been different (his words) and I should re contact him again in the future when I was ready to retire.

Giving regulated advice that someone should stay in their DB scheme is just as high a business risk for the adviser as advising them to transfer out, as this thread illustrates. You haven't even made a loss and your first thought when you saw "number go down" was to make a claim for compo.

How is this just as much a risk to the IFA if you say that I have no claim????  I'm actually not even after a claim against the IFA.  What I believe there should be, is a change so that people have the option to transfer out if they feel it is the right thing for them. It is so difficult now with DB pensions, I must get advice from an IFA, I must get a positive recommendation but as you state the default position is to remain.  It seems to me as though there is no choice available any more 

AlanP_2

I sympathise with your point of view but don't agree.

The desire to leave a legacy is a fairly low ranked aspect of the IFAs decision process I would think.

The focus of any pension is the retirement years not what happens afterwards. The IFA will be looking at your / spouse needs not inheritance.

If you do didn't want a DB pension for life that ends when you die (no spouse?) why did you join it?

As regards your "impossible to transfer" viewpoint. I obtained a positive recommendation last year and transferred a deferred DB. The reason was that we had other DB schemes that will cover our retirement needs and the transferred one provided no index linking once in payment. So, you can get a positive recc but only if your personal situation makes it sensible.

dunstonh

 I suppose the main point of it is that due to all the historical issues around DB transfers it is evident to me, that IFAs now just default on the side of advising against a transfer whether it is in the clients best interest or not.

Not correct.  The number of recommendations to transfer is broadly where it was 10 years ago and higher than 15 years ago.

What was never made clear to me that there was a potential for the CETV to reduce by what is over 25%. 

It could, and possibly will, go down by a lot more than that.   

coopsy0

If you do didn't want a DB pension for life that ends when you die (no spouse?) why did you join it?

Because it was a non-contributory scheme based on service.  Who wouldn't join?  

I agree with your legacy view about being low on priority and I totally agree its about the retirement years.  But as it stands, if I remain in the scheme and live a long life, I am going to have to be pretty frugal in my early years, certainly a big drop in income from working life and then in later years, have much more of an income than is required.  My 'plan' was to live a comfortable life early on in retirement whilst I am still active and then reduce as I aged.  I am more than willing to accept the risks to my fund by taking it out but given the size of the pot, I had no need in investing in High risk funds. 

Although I do not know if I will be able to get it out given regulation, my intent is to try.  As it stands I will have more than £260K less to invest than I did when I got the advice.  Were there no such thing as IFAs and I had made the decision totally myself, I would be sat here thinking I had made an error.  I am pretty sure most of the people on here saying I received 'sound advice' would feel the same given the same circumstances.

Albermarle

The focus of any pension is the retirement years not what happens afterwards. The IFA will be looking at your / spouse needs not inheritance.

Yes we see in many threads, that although using a DC pension pot as an inheritance vehicle is quite understandable, and can work well, people should not lose sight of the fact that the primary function of a pension, is to actually pay a pension to its owner in retirement.

artyboy

I'm beginning to understand why there are so few advisors that want to get involved with DB transfer advice (and why it's so expensive...).

FWIW, I got a CETV some years ago on my admittedly smaller DB pension. I can certainly understand why it's tempting versus the apparently small annual pension you get. But I'm happy with the safety net which means that, even if everything else goes totally belly up, my DB and state pension will prevent me from starving or freezing (though probably not both)

Prism

coopsy0 said:

The value of your pension is increasing the closer you get to 60. 

So let me get this right.  My intent is to remove my fund from the DB at some point to allow me to retire early. I dont want a high pension when I'm in my 80s and I want to leave whatever is left to my family when I pass, the DB fund does not allow that.   6 months ago the CETV was 960K and now 6 months I'm closer to 60, the CETV is 690K and that's increasing?????  

If you wanted to retire early then did you not build up another pot in the form of a SIPP or ISA? That is what many if us have had to do.

HappyHarry

coopsy0 said:

 I suppose the main point of it is that due to all the historical issues around DB transfers it is evident to me, that IFAs now just default on the side of advising against a transfer whether it is in the clients best interest or not. 

No, that does not happen, despite rumours from many posters on this site. Any such advisers would have been weeded out a long time ago, and would have lost their permissions to conduct pension transfer business.

The IFA will have looked at the CETV you were being offered, the details of the DB scheme, your current circumstances, your future objectives and your investment experience before concluding whether or not a transfer of the DB scheme was in your best interest. 

I fully understood the risks in taking the money out of the DB scheme and the IFA was under no illusion that I would at some point wish to take it out to allow for early retirement and provide a legacy for my family in the event of my death, my DB scheme dies with me.  Although I was made aware of the benefits of a DB scheme and the risks in transferring it, I was clear to the IFA my reasons for doing it.  His advice at the time was to stay put "where is it safeguarded" as I was not intending to use it at that time.  What was never made clear to me that there was a potential for the CETV to reduce by what is over 25%. 

If your adviser has told you that the CETV would rise over time, or that there was no chance of a 25% drop in CETV value, or if the adviser recommended that you  keep your DB scheme until closer to retirement and then transfer it, then you may have a cause for complaint. I would be surprised if any of these happened.

I have seen all the comments about how could he foresee what would happen to affect the CETV but the same could be said for how is he expected to foresee what could happen top the market if the fund was invested.  At the time I was being offered 40x my pensionable salary which by anyone's opinion is a pretty good deal, now I am being offered 27x and most people seem to believe this was good advice.

Nobody is saying that it was good advice to accept a drop of 40xCETV to 27xCETV, and this is not what the advice provided for. The advice you were given referred to whether you should transfer at 40xCETV or retain the DB pension, and the conclusion was that you should retain the DB pension. The subsequent drop in CETV is neither here nor there.

From what I can see, it is now virtually impossible to get advice on a DB pension transfer as the IFA is going to default on the side of caution whereby he has no accountability.  That to me is not advice!

You are wrong.

I recognise you are disappointed, and that the drop in CETV has scuppered your future plans, but there was never any guarantee that you would receive a positive transfer recommendation in the future, even without the drop in CETV.

It is probably time to start reassessing your future plans, and counting on keeping the DB pension as part of those plans.

[Deleted User]

I do agree that the person giving the “advice” shouldn’t have the right of veto. In the latter case he shouldn’t be called an “advisor” as he is really a “decision-maker”.  People should be able to make wrong decisions about their money.  

The other side of the coin is that “spending more early” is a great strategy for leaving the taxpayer on the hook for nursing care, so one can see why the government might want to make it difficult.  Incidentally, this objective appears to clash with the desire to leave a legacy.

But that’s a philosophical discussion about regulations rather than anything specific to this particular IFA.