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

MallyGirl

if the transfer value is greater than £30k then she has to take advice. There is basically no one that will accept a transfer without a positive recommendation but she will still pay the fee for the advice exercise (maybe £5k). It is not a box ticking exercise. Unless she has some very specific reasons that would make it positive - such as very reduced life expectancy - then this is basically a non-starter.

scoobyjones1

MTB1986 said:

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. 

I meant that the decision what to do with the money is yet to be made...she will have similar options when the money is in her SIPP...either to buy an annuity or invest the money and eventually go into drawdown. Sounds like she may not have an option and will have to accept the small, annual payments with some kind of lump sum. We would prefer to invest in stocks but if no-one will agree to give the advice then it's frustrating.

dunstonh

s I said we do not want or need the advice. We would happily sign a disclaimer but seems that's not an option.

You cannot waive your rights away because you are unlikely to be in a position to know what you are waiving away.

 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. 

That doesn't seem likely, as DB pension transfers have required mandatory advice for 30 years.  

We will not be paying upwards of £5K for a pension this size. That would be insane.

Only around 1 in 10 DB pensions can be justified to transfer.   In 9 out 10 cases, it would be insane to transfer them.

Why do you think you are in the 1 in 10?  

In the current environment, an IFA would be daft to charge as little as £5k to transfer the pension.

The SIPP gives you the same options.
. Invest or not, 25% tax free ...drawdown when required. 

No it doesn't. 
DB pensions do not have 25% TFC
DB pensions are not invested
DB pensions have a guaranteed scheme pension for life.

The annuity offered is of little use and is taxable.

DB pensions do not use an annuity.

 No work is required except ticking the form...

Surely you are just writing that to wind us up?    
It is one of the highest risk transactions an IFA can carry out and nowadays would require compliance checking (third party usually) and heading towards 30 hours work.

scoobyjones1

QrizB said:

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?

60k. We would prefer to have it all in one place and either invest or drawdown eventually. We do not want an annuity and with this amount it would not be much.

Brie

MTB1986 said:

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. 

I agree that a SIPP doesn't give the same options to a DB scheme but you can get a 25% TFLS with a DB pension.  I certainly got one with mine.  Of course it's possible that some won't have this as an option.  And mine is not a set amount as such.  It's set for this year and then there's an annual increase.  But certainly drawdown is definitely not allowed. 

Oh and drawdown amounts out of a SIPP are taxable I believe.

scoobyjones1

leosayer said:

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.

It's 60k so she has to do it. The old pension would either give her a partial lump sum and about £2k a year. Or a straight 2.5k per year. They have now set limits as to how much this will grow which is 5% I believe and this is why many, many people want to move out of these schemes. We certainly would like to!

xylophone

The SIPP gives you the same options. 

No, it doesn't.

A Defined Benefit Pension operates under the specific rules of the Scheme.

The Pension Commencement Lump Sum is not calculated in the same way.

https://www.theprivateoffice.com/pensions/lump-sums-explained#:~:text=If you have a defined benefit pension, you can also,scheme, is slightly more complex.

It offers the promise of a pension that will be paid at a defined rate and (where applicable) increase in payment at a defined rate and (usually) pay a pension to a surviving spouse etc.

With regard to tax, do you mean that your wife's DB pension, when added to her other  taxable income, will mean that she will be required to pay tax?

This could also be the case when taking income from her SIPP. 

Has your wife obtained a state pension forecast?

https://www.gov.uk/check-state-pension

MTB1986

Brie said:

MTB1986 said:

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. 

I agree that a SIPP doesn't give the same options to a DB scheme but you can get a 25% TFLS with a DB pension.  I certainly got one with mine.  Of course it's possible that some won't have this as an option.  And mine is not a set amount as such.  It's set for this year and then there's an annual increase.  But certainly drawdown is definitely not allowed. 

Oh and drawdown amounts out of a SIPP are taxable I believe.

It’s a Pension Commencement Lump Sum with a DB pension - not 25% of anything, as there is no “pot” to calculate 25% of with a DB pension, so not quite the same thing as a DC lump sum. 

Pat38493

Brie said:

MTB1986 said:

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. 

I agree that a SIPP doesn't give the same options to a DB scheme but you can get a 25% TFLS with a DB pension.  I certainly got one with mine.  Of course it's possible that some won't have this as an option.  And mine is not a set amount as such.  It's set for this year and then there's an annual increase.  But certainly drawdown is definitely not allowed. 

Oh and drawdown amounts out of a SIPP are taxable I believe.

You can get a tax free lump sum with a DB pension, if the scheme rules allow it, but it is not 25% of the CETV value of the pension - it's calculated in a different way and is also subject to the rules of the pension as well.  I think there is an HMRC formula to calculate the maximum tax free amount that could be done based on the annual pension entitlement, but it's also subject to whatever the trustees and rules decided.

Also - DB pensions are pretty heavily protected against inflation on a statutory level before they are put into payment, which is not the case with DC.

As an aside - I'm not sure how long the 30K cutoff point for requiring advice has been inplace, but if it's for several decades as mentioned above, the amount should have been substantially increased in the meantime as £30K is a pretty low limit for this topic.  However, the current rules can't be wished away so for the moment, that's just the way it is.

xylophone

Has your wife now reached Normal Retirement Age under the rules of the DB Scheme?