Being forced to use a Financial Advisor to transfer pension to pension.

scoobyjones1

My wife is trying to move a small, old work pension into her main SIPP. She has been told, both by the people holding the pension and also the SIPP provider that she has to, by law, find a registered financial advisor who will tick the box on the form! Insured advice is not needed, we have done this before, been advised before and any decisions re annuity and drawdown etc will be made down the road, from within the main SIPP. We can accept or defer advice then. It seems unfair to me.
Has anyone had this issue? Does anyone know of an IFA that does not charge the earth? No work is required except ticking the form...

Marcon

scoobyjones1 said:

My wife is trying to move a small, old work pension into her main SIPP. She has been told, both by the people holding the pension and also the SIPP provider that she has to, by law, find a registered financial advisor who will tick the box on the form! Insured advice is not needed, we have done this before, been advised before and any decisions re annuity and drawdown etc will be made down the road, from within the main SIPP. We can accept or defer advice then. It seems unfair to me.
Has anyone had this issue? Does anyone know of an IFA that does not charge the earth? No work is required except ticking the form...

If this 'old work pension' is a DB scheme, do you have any idea just how much work is involved in providing the advice - and just how high risk the transaction is for the adviser? Your happy assumption (shared by many) that it's a box ticking exercise couldn't be further from the truth - and certainly not in the eyes of the PI insurers for the hapless adviser giving the advice. Expect to pay upwards of £5K for the advice.

scoobyjones1

Yes, it is a Defined Benefit scheme. As I said we do not want or need the advice. We would happily sign a disclaimer but seems that's not an option. This is the 2nd time of doing this and the pension is merely being moved into another pension with all of the same retirement options remaining. We have made the decision and informed the pension holder. The transfer is in progress but will not progress because of this snag. We will not be paying upwards of £5K for a pension this size. That would be insane.

Brie

I've been looking to move my pensions to someplace that will provide an annuity and everyone so far has stated categorically that they will not consider accepting any DB scheme.  And that's even if you have advice.  It is just too big a risk for any SIPP provider that, in however many years, your wife might suddenly realise that she has lost some benefit the DB scheme would have given, whether it's an enhanced, guaranteed monthly payment or a survivor option or anything else.  

I have heard of people paying up to £10k to an IFA in an attempt to get a positive result only to be told there's no way the IFA will recommend it.  The very very few that do succeed are those with an extremely limited life expectancy.  I'm hoping that's not your wife's situation.

Albermarle

If it is a Defined Benefit ( sometimes called a final salary scheme) pension and that you want to move it to a SIPP, then you are moving from a pension with a guaranteed annual income, to an invested pot that may or may not produce the pension you want.
For most this is not a particularly good idea, and this is why you have to take advice. You might call it Nanny State, but there have been a lot of issues with these sort of transfers in the past.
Did you know that if the advisor also agrees it is not a good idea for your wife to do this transfer, the SIPP provider will not accept the transfer, even though the box has been ticked.

scoobyjones1

The SIPP gives you the same options. Invest or not, 25% tax free ...drawdown when required. If she wants to invest that's her risk. The annuity offered is of little use and is taxable.

QrizB

scoobyjones1 said:

The SIPP gives you the same options. Invest or not, 25% tax free ...drawdown when required. If she wants to invest that's her risk. The annuity offered is of little use and is taxable.

I think we need more details of the "old, work pension". You're describing it like a Defined Contribution scheme.

Is it a Defined Benefit pension? If so, what is the CETV?

Hoenir

For good reason such transfers are regulated. No amount of gnashing of teeth is going to change the basic requirement. The DB scheme isn't going to leave it self open to future claims of compensation . When the investment risk doesn't pay off. 

MTB1986

scoobyjones1 said:

The SIPP gives you the same options. Invest or not, 25% tax free ...drawdown when required. If she wants to invest that's her risk. The annuity offered is of little use and is taxable.

The SIPP doesn’t give the same options, there is no 25% tax free lump sum with a Defined Benefit pension, and you can’t drawdown as required - it’s a set amount paid each year for life. 

leosayer

scoobyjones1 said:

Yes, it is a Defined Benefit scheme. As I said we do not want or need the advice. We would happily sign a disclaimer but seems that's not an option. This is the 2nd time of doing this and the pension is merely being moved into another pension with all of the same retirement options remaining. We have made the decision and informed the pension holder. The transfer is in progress but will not progress because of this snag. We will not be paying upwards of £5K for a pension this size. That would be insane.

Why bother if that's the case?

Is the transfer value below £30k? There is no regulatory requirement to take advice if so.

xylophone

Your wife has seen information below?

https://www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement/pension-benefits-with-a-guarantee-and-the-advice-requirement

2.1 Circumstances in which advice is required

Section 48 of the Pension Schemes Act 2015 and regulations made under it require pension scheme members who have subsisting rights in respect of safeguarded benefits worth more than £30,000 under the scheme to take appropriate independent advice from an Financial Conduct Authority (FCA) authorised adviser before:

• converting safeguarded benefits into flexible benefits (or in the case of benefits which are both safeguarded and flexible, into different flexible benefits)

• using a transfer payment in respect of safeguarded benefits to acquire flexible benefits under another scheme

• being paid an “uncrystallised funds pension lump sum” (UFPLS) in respect of their safeguarded benefits

Presumably your wife's safeguarded benefits are valued in excess of £30,000?