Defined Benefit Transfer

Bimbly

IJJoseph said:
I don't need advice per se so I'm seeking to get the compulsory advice at the lowest cost.

Perhaps just a thread asking - does anyone know of an IFA which charges a low fee for DB transfer advice? I seem to remember someone some months ago claimed they had found a cheaper company. I can't remember who it was now, but you could try searching the board.

The ongoing advice fee you originally mentioned is for an IFA who will undertake the transfer for you, then run your portfolio. Therefore, they undertake the transfer work in order to generate ongoing business. As you don't want that, you would need to ask to pay for transfer advice only. That could reduce the number of IFAs open to you. Or you could let them run the portfolio for a limited time and then transfer out.

I still think you would be better saving your energies and sticking with the DB. But if you want to try the transfer route, you'll need to pay a fee to an IFA. I'd try searching for board for previous similar discussions (of which there have been many).

DeLaSole

Hi IJJoseph,

Where is it that will accept your transfer against IFA advice to transfer?

Best wishes.

Pat38493

IJJoseph said:

JoeCrystal said:

IJJoseph said:

dunstonh said:

I'm waiting on a CETV but I believe it will be around £90k which means I am FORCED to seek IFA input.

That CETV would probably have been around £200k 18 months ago.  CETVs are  now just over half what they were then.  Or perhaps if you had a quote from around 18 months ago that was circa £90k, it would now be around £40k.

I know exactly where I want to invest my CETV so I don't need an advisor but I have to have one. I fully understand the risks and I am happy with what I plan to do with the funds.

Are you sure?   Someone doing a DB transfer nowadays is rare.  Especially if the only reason is to invest it as its unlikely that the investments will do well enough.

The issue I have is that I have to go through the process of IFA and it's confusing what that involves. I'm also in a position where I have limited funds currently but am keen to move as I have no control or flexibility with the fund as it currently stands.

You dont need control or flexibility with a DB pension as its nicely defined with no risks.

The issue is that so many IFAs either don't advertise their charges or seem to have an annual fee. I don't understand the annual fee element as I know where I want to invest and i don't need an IFA managing my fund. I also don't have £900 - £5000 that I've been seeing as the fee.

The annual fee is optional. 

A fee for DB transfer is likely to be in the £5k to £10k range and pretty much going to result in advice that says it is unsuitable (the reasons you have given on this thread are not justified reasons)

In my mind, this is a simple consulation.

Its not

I get that I'm walking away from a guaranteed £2k annually. I get that my partner would get half that if I die. I have a choice, take the £2k annual or take £90k and invest it in the hope I can get a better position. I am 99.9% certain I can improve my position and 100% convinced that they cant so I'm confused why I would need to pay ongoing charges.

When was that £2k figure last updated?

What am I missing?

a) you don't have the CETV but you are confident you can make more.  Without the CETV that is impossible to say
b) you are extremely confident of your ability yet statistically, based on current CETVs, its more likely that you will fail to do better in 90% of cases.

Why can't I simply get a report that says we advise this and I absolve them of liability and say...I'm doing this. I don't see where £900 or up to £5k is getting spent. This surely is a £300-£500 report and my decision?!!

The law does not allow you to waive your rights.     People that do not know what they are doing are not in a position to waive taway protection that exists.

£300-£500 is laughable for such a high risk transaction.  That would bankrupt adviser firms very quickly.

WOW - clearly you're a fan of the industry.

Bit uncalled as Dunstonh clearly explained the industry's positions, and you are insulting about it. Especially when the FCA is more pro-customer; remember, we are in a friendly regulatory regime towards the customers. One case in mind is that even the execution-only service (Barclays) was found liable for extremely poor investing by one of their customers and had to pay out compensation to the customer even though no advice was involved. The customer understood the risk of investment performance. Still not good enough to protect Barclays from a customer filing a complaint about losing their money in stocks and shares. As I understood, it was Barclays' fault for offering the choice to buy shares in a specific company in question. 

And with the fact the professional indemnity insurance firms racked up the premiums on the DB transfers so high that it is no longer affordable to pay the insurance for the liability cover, so even more risk is involved. Indeed, over the last few years, the number of firms which got permission to do DB transfers has fallen heavily. Five years ago, most firms would have permission to do it. Now it is the minority and still falling ever since as the firms refused to have the permissions maintained or charge the fees so high that it acts as a blocker to avoid the work.

It would be best to do more research about the DB pension transfers, as you clearly showed in your first post that you haven't got the full details. For example, what is the current pension income in today's term? Do you have the scheme guide explaining how it is index-linked or works with GMPs and all other bells and whistles? So, it would help if you had up-to-date pension income in today's term and up-to-date CETV.

Your belief that the CETV will be £90k is already bringing alarm bells since it is far too high for £2k annual pension especially when you can get £4,671 index-linked income on the £100k annuity @ 65 so better to wait and see what you are going to get from the scheme and make a decision then rather than chewing out IFAs about it.

Remember, it is the Parliament that sets the rule in place. If you have a problem, write to your MP about it so you can change the laws and do whatever you like with your DB pension schemes.

Actually, I found the post condescending and presumptuous.

When I log into my DB account I can see what the annual pension is. I can click on the transfer value and see what the estimate is. So I know these two items. I can see the equivalent spouse pension too. I don't have the guaranteed transfer value and appreciate that it might be much lower when they finally provide it.

I came on to see if people knew of any advisors out there that had fees lower than the 1% - 2% or in some cases up to £5k that I've seen on the few IFA sites that advertise rates not for a lecture on how little I might or might not know.

Maybe I'm misunderstanding you, but I don't think you can get a CETV transfer value just by clicking in your pension website - as far as I understand, calculation of CETV transfer values has to be done manually.  Any figure displayed on the website is likely to be an (very) rough estimate and not a guaranteed CETV value.  Also several of the posters here who know about these things said that you probably won't get a value that high when you get the true CETV guaranteed number.

Also from what we've seen on many other threads, if the IFA advises you not to do it, the only way you can then go ahead is to set up a Stakeholder pension since they are obliged to accept transfers even after negative advice, and it seems like there is only one company that still allows you to open a stakeholder pension.  Also, nobody has posted here saying that they have successfully full transferred a DB pension in this way.

Lemon_dr1zzle

JoeCrystal said:

NannaH said:

My cetv on a small LGPS pension that would have paid around £700 a year was £8000.
So £2k would have extrapolated out to around £24k cetv.  

A £90k cetv /£2k income would have a multiple of 50x . 

Not very surprising since the LGPS is bound by the actuarial guidance by the Department for Levelling Up, Housing and Communities (GAD as well), which are much less generous than in the private DB schemes, which are based on bond yields or whatever the scheme decides to. Terrible value for transferring out but excellent value for transferring into the LGPS, though!

Interestingly the new transfer factors for LGPS have made transfers in more expensive and transfer out values much higher. 

tigerspill

IJJoseph said:

dunstonh said:

I'm waiting on a CETV but I believe it will be around £90k which means I am FORCED to seek IFA input.

That CETV would probably have been around £200k 18 months ago.  CETVs are  now just over half what they were then.  Or perhaps if you had a quote from around 18 months ago that was circa £90k, it would now be around £40k.

I know exactly where I want to invest my CETV so I don't need an advisor but I have to have one. I fully understand the risks and I am happy with what I plan to do with the funds.

Are you sure?   Someone doing a DB transfer nowadays is rare.  Especially if the only reason is to invest it as its unlikely that the investments will do well enough.

The issue I have is that I have to go through the process of IFA and it's confusing what that involves. I'm also in a position where I have limited funds currently but am keen to move as I have no control or flexibility with the fund as it currently stands.

You dont need control or flexibility with a DB pension as its nicely defined with no risks.

The issue is that so many IFAs either don't advertise their charges or seem to have an annual fee. I don't understand the annual fee element as I know where I want to invest and i don't need an IFA managing my fund. I also don't have £900 - £5000 that I've been seeing as the fee.

The annual fee is optional. 

A fee for DB transfer is likely to be in the £5k to £10k range and pretty much going to result in advice that says it is unsuitable (the reasons you have given on this thread are not justified reasons)

In my mind, this is a simple consulation.

Its not

I get that I'm walking away from a guaranteed £2k annually. I get that my partner would get half that if I die. I have a choice, take the £2k annual or take £90k and invest it in the hope I can get a better position. I am 99.9% certain I can improve my position and 100% convinced that they cant so I'm confused why I would need to pay ongoing charges.

When was that £2k figure last updated?

What am I missing?

a) you don't have the CETV but you are confident you can make more.  Without the CETV that is impossible to say
b) you are extremely confident of your ability yet statistically, based on current CETVs, its more likely that you will fail to do better in 90% of cases.

Why can't I simply get a report that says we advise this and I absolve them of liability and say...I'm doing this. I don't see where £900 or up to £5k is getting spent. This surely is a £300-£500 report and my decision?!!

The law does not allow you to waive your rights.     People that do not know what they are doing are not in a position to waive taway protection that exists.

£300-£500 is laughable for such a high risk transaction.  That would bankrupt adviser firms very quickly.

WOW - clearly you're a fan of the industry.

Or one of the most knowledgeable and helpful people on this board.

ian16527

IJJoseph said:

Dunky62 said:

You seem to be very confident about investing, so I am curious why you say you have limited funds available. I am surprised that you don't have some well performing Stocks and Shares ISAs that you could dip into. Just saying.

Operation on one of our dogs took a large chunk out of my emergency fund which I want to replace. Would rather not dip into my ISA funds but could if I must. As I know exactly what I want to do with the DB funds I don't need advice per se so I'm seeking to get the compulsory advice at the lowest cost.

i would give up as there is more chance of winning the Euromillions I am afraid as the pensions regulators do not want you to transfer out and now no one will take the transfer in. Search the existing posts.
Use your DB as a secure income in your portfolio and there will be a TFLS as well or can you take it now if you need the cash?

Marcon

ian16527 said:

IJJoseph said:

Dunky62 said:

You seem to be very confident about investing, so I am curious why you say you have limited funds available. I am surprised that you don't have some well performing Stocks and Shares ISAs that you could dip into. Just saying.

Operation on one of our dogs took a large chunk out of my emergency fund which I want to replace. Would rather not dip into my ISA funds but could if I must. As I know exactly what I want to do with the DB funds I don't need advice per se so I'm seeking to get the compulsory advice at the lowest cost.

i would give up as there is more chance of winning the Euromillions I am afraid as the pensions regulators do not want you to transfer out and now no one will take the transfer in. Search the existing posts.
Use your DB as a secure income in your portfolio and there will be a TFLS as well or can you take it now if you need the cash?

A stakeholder pension is required to accept any transfer from a UK registered pension scheme.

Pat38493 said:

Also from what we've seen on many other threads, if the IFA advises you not to do it, the only way you can then go ahead is to set up a Stakeholder pension since they are obliged to accept transfers even after negative advice, and it seems like there is only one company that still allows you to open a stakeholder pension.  Also, nobody has posted here saying that they have successfully full transferred a DB pension in this way.

I've seen it done more than once. It's the relevant legislation which matters, not what people do or don't post here! 

Pat38493

ian16527 said:

IJJoseph said:

Dunky62 said:

You seem to be very confident about investing, so I am curious why you say you have limited funds available. I am surprised that you don't have some well performing Stocks and Shares ISAs that you could dip into. Just saying.

Operation on one of our dogs took a large chunk out of my emergency fund which I want to replace. Would rather not dip into my ISA funds but could if I must. As I know exactly what I want to do with the DB funds I don't need advice per se so I'm seeking to get the compulsory advice at the lowest cost.

i would give up as there is more chance of winning the Euromillions I am afraid as the pensions regulators do not want you to transfer out and now no one will take the transfer in. Search the existing posts.
Use your DB as a secure income in your portfolio and there will be a TFLS as well or can you take it now if you need the cash?

There has been some claims on here that you could theoretically still transfer even after negative advice by opening a stakeholder pension, as described above.  That doesn’t mean it would be a good decision to do so, but theoretically it should be possible, although as I mention above nobody has completed the process as far as actually completing the transfer and posted here about it.  I think one person set up a stakeholder pension just to prove that it could be done, and then stated that since stakeholder pensions are not legally allowed to deny a transfer, they would be forced to accept the DB transfer in even after negative advice.  You could then transfer the money out of the stakeholder pension somewhere else.

Anyway - none of that changes the other point that the the OP is unlikely to be better off in the long term by doing this, especially after paying thousands in advice fees.

jimi_man

IJJoseph said:

Dunky62 said:

You seem to be very confident about investing, so I am curious why you say you have limited funds available. I am surprised that you don't have some well performing Stocks and Shares ISAs that you could dip into. Just saying.

Operation on one of our dogs took a large chunk out of my emergency fund which I want to replace. Would rather not dip into my ISA funds but could if I must. As I know exactly what I want to do with the DB funds I don't need advice per se so I'm seeking to get the compulsory advice at the lowest cost.

I’m getting the impression from what you’re saying that you need this Transfer to assist your day to day saving/running costs? I’d suggest that an advisor is going to look rather dimly at that. 

Maybe some more reading and knowledge first might help in this decision as it seems you’re not quite ‘in the right place’ to be doing this. 

IJJoseph

Looks like there is fixed fee advice and transfer arrangement with an IFA that the trustees have put in place should I wish to use them. Fees look much lower than i've been seeing elsewhere as they are familiar with the scheme details which reduces the work involved. Will see what they have to say. Thanks to those who have offered some constructive feedback.