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

scoobyjones1

xylophone said:

Value for Money (VFM) 

Again, seems odd in the context of this DB Scheme!

https://www.thepensionsregulator.gov.uk/en/trustees/governing-the-scheme/value-for-members

https://www.gov.uk/government/consultations/value-for-money-a-framework-on-metrics-standards-and-disclosures/value-for-money-a-framework-on-metrics-standards-and-disclosures

However, that said, this information is important,

Pre 97 Excess £354.08
Pre 1988 GMP £2,015.52

Has the Administrator stated that once in payment, there will be no increase in payment on the pre 88 GMP?

They have stated that the £2300 or £2000 per year would go up by 5%,,,I want to clarify this but that's what they said,

LHW99

I suppose they might say that they have to be insured to the value of the liability (again, why... if they advise against?)

Not really helpful to you, but I believe there was a case (mentioned on here) where an IFA had advised not to transfer, but the customer did so as an "insistent client" anyway, lost money and complained. The regulator said the adviser should have advised against transfer more strongly, and upheld the complaint.

Hence the insurers see it as a potential lose whichever way the advice goes, and increase the costs accordingly.

scoobyjones1

LHW99 said:

I suppose they might say that they have to be insured to the value of the liability (again, why... if they advise against?)

Not really helpful to you, but I believe there was a case (mentioned on here) where an IFA had advised not to transfer, but the customer did so as an "insistent client" anyway, lost money and complained. The regulator said the adviser should have advised against transfer more strongly, and upheld the complaint.

Hence the insurers see it as a potential lose whichever way the advice goes, and increase the costs accordingly.

sounds like the regulators are causing more harm than good. Though surely advice is a simple yes or no? What are they supposed to say...a massive yes or a ginormous no? What a mad business. 

Hoenir

scoobyjones1 said:

MeteredOut said:

scoobyjones1 said:

First IFA / PTS quote received. They want 5% of the CETV, so £3000 in this case. That's for the advice/work as they called it and no idea if they would approve the transfer or not. So could be money wasted. At least that would satisfy the DB holder that she had taken the correct advice and maybe then she could transfer into a stakeholder pension. However she is pretty adamant that £3k is way too much to pay...and they also said they would need 40 days. We will keep looking.

Thanks for coming back with quotes - I'm sure this will be of interest to many others.

What I don't get (and if I was in your position, would probably preclude me from choosing this IFA) is why is the cost a % of CETV. Would the advice be any less time consuming/complex/risky/difficult if it was a £40K CETV?

Because they have got you over a barrel! 
We feel the same way, the amount of work can not be that much as we have all of the data, paperwork and SIPP forecasts ready and prepared. I suppose they might say that they have to be insured to the value of the liability (again, why... if they advise against?) and he did kindly say the 5% would be capped at a very reasonable £162,500 ! Merry Xmas!

Everything now is dumbed down to the raw bones. Few bits of paper job done. As your wife has managed large organisations. I'm surprised that she doesn't have a broad understanding of why the costs are high. As must have had to resort to using specialist outside professional advice during her working career. Time is expensive. Always has been. The more litigious the world becomes, the greater the cost of professional indemnity insurance. All being underwritten on the risk exposure. 

xylophone

They have stated that the £2300 or £2000 per year would go up by 5%,,,I want to clarify this but that's what they said,

I would definitely clarify this.  The important point is that there is no obligation on a scheme to pay increases in payment on pre 88 GMP but perhaps this one does?

And any increase would be CPI (RPI?) up to 5%?

There is an obligation on the Scheme to pay at least the GMP from age 60 for a female.

scoobyjones1

xylophone said:

They have stated that the £2300 or £2000 per year would go up by 5%,,,I want to clarify this but that's what they said,

I would definitely clarify this.  The important point is that there is no obligation on a scheme to pay increases in payment on pre 88 GMP but perhaps this one does?

And any increase would be CPI (RPI?) up to 5%?

There is an obligation on the Scheme to pay at least the GMP from age 60 for a female.

I thought it was CPI, capped at 5% but the Admin told my Wife that it would be a straight 5%. That may sound good but when you see where inflation can go then not really.

scoobyjones1

Hoenir said:

scoobyjones1 said:

MeteredOut said:

scoobyjones1 said:

First IFA / PTS quote received. They want 5% of the CETV, so £3000 in this case. That's for the advice/work as they called it and no idea if they would approve the transfer or not. So could be money wasted. At least that would satisfy the DB holder that she had taken the correct advice and maybe then she could transfer into a stakeholder pension. However she is pretty adamant that £3k is way too much to pay...and they also said they would need 40 days. We will keep looking.

Thanks for coming back with quotes - I'm sure this will be of interest to many others.

What I don't get (and if I was in your position, would probably preclude me from choosing this IFA) is why is the cost a % of CETV. Would the advice be any less time consuming/complex/risky/difficult if it was a £40K CETV?

Because they have got you over a barrel! 
We feel the same way, the amount of work can not be that much as we have all of the data, paperwork and SIPP forecasts ready and prepared. I suppose they might say that they have to be insured to the value of the liability (again, why... if they advise against?) and he did kindly say the 5% would be capped at a very reasonable £162,500 ! Merry Xmas!

Everything now is dumbed down to the raw bones. Few bits of paper job done. As your wife has managed large organisations. I'm surprised that she doesn't have a broad understanding of why the costs are high. As must have had to resort to using specialist outside professional advice during her working career. Time is expensive. Always has been. The more litigious the world becomes, the greater the cost of professional indemnity insurance. All being underwritten on the risk exposure. 

Yes of course we know that. IFAs though seem to be a law unto themselves. The fees and advice vary so much. Her previous advisers in her last job already worked for the firm on a contractual basis. Best.

xylophone

I thought it was CPI, capped at 5% but the Admin told my Wife that it would be a straight 5%. 

It is definite that the Scheme will pay her 

either £2300 a year (with no commutation)

or £2000 a year (commutation to give PCLS of £12,000)

and in either case, the whole of the pension in payment will increase at a fixed rate of 5% per annum (regardless of the rate of CPI)?

That is unusual (but possible if that is what the rules of the Scheme state).

I would still check and get it in black and white.

xylophone

If your wife chooses to continue to defer post Scheme NRA, how will the pension revalue in continued deferment?

In such circumstances Ii the member retires (takes benefits) more than seven weeks later than their 60th birthday (women) / 65th birthday (men), their accrued GMP must be increased by at least 1/7% for each complete week thereafter.

Have you checked with the administrator?

eskbanker

scoobyjones1 said:

I thought it was CPI, capped at 5% but the Admin told my Wife that it would be a straight 5%. That may sound good but when you see where inflation can go then not really.

But that's the recency bias kicking in again, given that, as posted earlier, the last two years are the only ones in the previous 30+ where CPI has exceeded 5% in any meaningful way, and hence, as per the BoE:

Between 1997, and 2021, CPI inflation was an average of 2%.

https://www.bankofengland.co.uk/explainers/will-inflation-in-the-uk-keep-rising