Pension Advisor Fees

HERMANOPRIMERO

I’m in my mid-60s and looking to amalgamate a few pensions. They’re a mixture of personal, company and Executive PP. I was thinking of just combining them Into a low fee tracker PP eg Vanguard as an interim step. 

As I understand it I have to go through an advisor to administer pensions with a value over £30k. I can see how advice could help me with my general financial planning but if I ultimately decide to go ahead with my original plan I don’t see the benefit I’m getting for a potential fees of 1% or 2% (which I’ve seen quoted) for something I would do anyway. It just seems like a sort of mandatory tax on my pension.

Am I missing something here or do I just have to suck it up and pay whatever the fees are? 

TIA for any input!

Marcon

HERMANOPRIMERO said:

I’m in my mid-60s and looking to amalgamate a few pensions. They’re a mixture of personal, company and Executive PP. I was thinking of just combining them Into a low fee tracker PP eg Vanguard as an interim step. 

As I understand it I have to go through an advisor to administer pensions with a value over £30k. I can see how advice could help me with my general financial planning but if I ultimately decide to go ahead with my original plan I don’t see the benefit I’m getting for a potential fees of 1% or 2% (which I’ve seen quoted) for something I would do anyway. It just seems like a sort of mandatory tax on my pension.

Am I missing something here or do I just have to suck it up and pay whatever the fees are? 

TIA for any input!

Advice is only mandatory where you have a scheme with 'safeguarded benefits' (usually either a defined benefit scheme, or a defined contribution scheme with some sort of promise such as a guaranteed annuity rate) and the transfer value is £30K+.

First thing to do is check if any of your pensions fall into the above category. If not, you're free to do as you wish, assuming all your current pension arrangements enable you to deal direct with the provider (ie they don't require an intermediary such as an IFA).

HERMANOPRIMERO

Marcon said:

HERMANOPRIMERO said:

I’m in my mid-60s and looking to amalgamate a few pensions. They’re a mixture of personal, company and Executive PP. I was thinking of just combining them Into a low fee tracker PP eg Vanguard as an interim step. 

As I understand it I have to go through an advisor to administer pensions with a value over £30k. I can see how advice could help me with my general financial planning but if I ultimately decide to go ahead with my original plan I don’t see the benefit I’m getting for a potential fees of 1% or 2% (which I’ve seen quoted) for something I would do anyway. It just seems like a sort of mandatory tax on my pension.

Am I missing something here or do I just have to suck it up and pay whatever the fees are? 

TIA for any input!

Advice is only mandatory where you have a scheme with 'safeguarded benefits' (usually either a defined benefit scheme, or a defined contribution scheme with some sort of promise such as a guaranteed annuity rate) and the transfer value is £30K+.

First thing to do is check if any of your pensions fall into the above category. If not, you're free to do as you wish, assuming all your current pension arrangements enable you to deal direct with the provider (ie they don't require an intermediary such as an IFA).

Thanks! My schemes are all DC but there maybe something more complicated with my old EPP scheme so probably best to use an IFA in that case.

HERMANOPRIMERO

@Marcon Do you have a link to where the conditions are specified (presumably on the HMRC website)?

Secret2ndAccount

https://www.thepensionsregulator.gov.uk/en/document-library/scheme-management-detailed-guidance/administration-detailed-guidance/db-to-dc-transfers-and-conversions

dunstonh

As I understand it I have to go through an advisor to administer pensions with a value over £30k.

No.  Only if you have safeguarded benefits.

 I can see how advice could help me with my general financial planning but if I ultimately decide to go ahead with my original plan I don’t see the benefit I’m getting for a potential fees of 1% or 2% (which I’ve seen quoted) for something I would do anyway. It just seems like a sort of mandatory tax on my pension.

Most of the time, safeguarded benefits are valuable and the advice requirement is to prevent you from doing something silly.

Some may say that is a bit nanny state and you should be allowed to make a balls up but nowadays, in many areas of life, there are things to protect you from yourself.

What is the protected tax free cash entitlement on the EPP?

HERMANOPRIMERO

dunstonh said:

As I understand it I have to go through an advisor to administer pensions with a value over £30k.

No.  Only if you have safeguarded benefits.

 I can see how advice could help me with my general financial planning but if I ultimately decide to go ahead with my original plan I don’t see the benefit I’m getting for a potential fees of 1% or 2% (which I’ve seen quoted) for something I would do anyway. It just seems like a sort of mandatory tax on my pension.

Most of the time, safeguarded benefits are valuable and the advice requirement is to prevent you from doing something silly.

Some may say that is a bit nanny state and you should be allowed to make a balls up but nowadays, in many areas of life, there are things to protect you from yourself.

What is the protected tax free cash entitlement on the EPP?

Thanks for the clarification. My EPP is an old one (pre 6 April 2006) so thinking about it I'll definitely require advice before doing anything with it!

Linton

HERMANOPRIMERO said:

dunstonh said:

As I understand it I have to go through an advisor to administer pensions with a value over £30k.

No.  Only if you have safeguarded benefits.

 I can see how advice could help me with my general financial planning but if I ultimately decide to go ahead with my original plan I don’t see the benefit I’m getting for a potential fees of 1% or 2% (which I’ve seen quoted) for something I would do anyway. It just seems like a sort of mandatory tax on my pension.

Most of the time, safeguarded benefits are valuable and the advice requirement is to prevent you from doing something silly.

Some may say that is a bit nanny state and you should be allowed to make a balls up but nowadays, in many areas of life, there are things to protect you from yourself.

What is the protected tax free cash entitlement on the EPP?

Thanks for the clarification. My EPP is an old one (pre 6 April 2006) so thinking about it I'll definitely require advice before doing anything with it!

If it is an old employer pension it may have benefits such as a guaranteed annuity rate. Easiest first step is to ask the provider if there are any safeguarded benefits. If there are none advice is not required and you can simply ask your chosen platform to transfer-in the old pension.

Marcon

Linton said:

HERMANOPRIMERO said:

dunstonh said:

As I understand it I have to go through an advisor to administer pensions with a value over £30k.

No.  Only if you have safeguarded benefits.

 I can see how advice could help me with my general financial planning but if I ultimately decide to go ahead with my original plan I don’t see the benefit I’m getting for a potential fees of 1% or 2% (which I’ve seen quoted) for something I would do anyway. It just seems like a sort of mandatory tax on my pension.

Most of the time, safeguarded benefits are valuable and the advice requirement is to prevent you from doing something silly.

Some may say that is a bit nanny state and you should be allowed to make a balls up but nowadays, in many areas of life, there are things to protect you from yourself.

What is the protected tax free cash entitlement on the EPP?

Thanks for the clarification. My EPP is an old one (pre 6 April 2006) so thinking about it I'll definitely require advice before doing anything with it!

If it is an old employer pension it may have benefits such as a guaranteed annuity rate. Easiest first step is to ask the provider if there are any safeguarded benefits. If there are none advice is not required and you can simply ask your chosen platform to transfer-in the old pension.

There may be benefits other than safeguarded benefits, especially in an EPP of this vintage.  For example:

Scheme specific protected tax-free lump sums

Members who had a right to more than 25% tax-free cash on 6 April 2006 may still have their tax- free cash entitlement protected. However, as this relates to a lump sum rather than a secure retirement income, it does not constitute a safeguarded benefit, provided that there are no other safeguarded benefits attached to the policy.

Given OP's age, it's worth pointing out that a pension plan with a GAR expiring at a specific point in the future (eg when a member reaches an particular age, such as 60 or 65) is only a safeguarded benefit until the GAR expires.

Albermarle

When you find out what 'extra' benefits the EPP may have , it might be worth a look at the T's and C's of the pension provider you are thinking of moving to.

If I remember correctly my SIPP provider has a list of what they will not accept as a transfer, what they will accept only with a positive advisor recommendation, and what they will accept without advisor input.

Of course in common with other providers, they will accept any DC pension that do not have any extra benefits.

HERMANOPRIMERO

Thanks all for the input - very informative!