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

xylophone

How old are you now if you don't mind me asking?

That's a state secret!

If your wife does decide to take her pension and is concerned about "something to pass on", had she considered gifting the £12,000 to your children/grandchildren now?

Maybe a contribution to pension or  Junior Isas?

She might even gift the modest regular monthly income for this purpose?

scoobyjones1

xylophone said:

How old are you now if you don't mind me asking?

That's a state secret!

If your wife does decide to take her pension and is concerned about "something to pass on", had she considered gifting the £12,000 to your children/grandchildren now?

Maybe a contribution to pension or  Junior Isas?

She might even gift the modest regular monthly income for this purpose?

Now now...that's not fair, spill the beans! Over 60 or not?
Thanks for your suggestions but that's not the point here. She can give gifts now if she wants and she does. Totally irrelevant in this situation. She is trying to grow her pension and leave them some real money. 12k would not go far with our family anyway.

The point is what she would like to do with her DB Pension money. How can any IFA say this ancient pension is a good, safe and secure investment for the future if it is so small, fixed but tiny growth...if growth at all, in real terms.... AND dies with her? What if she had a heart attack? No time to phone her adviser for help then and all of that money would be gone for ever. She is not happy with that thought at all. I don't blame her.
Best wishes, ole timer ;-)

Prism

scoobyjones1 said:

The point is what she would like to do with her DB Pension money. How can any IFA say this ancient pension is a good, safe and secure investment for the future if it is so small, fixed but tiny growth...if growth at all, in real terms...

Well to be fair you don't seem willing to find out what an IFA might say since you so far don't want to pay for their services. So its a bit of a moot point what they do or don't advise. If the total amount isn't that important to you, I'm not sure why you wouldn't pay percentage to get that advice. Maybe they might even pursuade you better than we have that keeping the DB pension isn't such a bad idea after all.

Ksw3

I would consider the DB as part of your (wifes) diversification strategy.

Also, having worked in the industry I have seen examples of members signing waiver after waiver and still coming back after a few years for compensation because their investments underperformed. It's a strange area where the more you try to protect members the more they think you are scamming them.

DB transfers are currently taking 4 to 6 months so if the funds are required soon, you should consider that in your timing. 

NoMore

https://youtu.be/LWq9j8FFrF4?si=KJ6kPh9gr_18OBxF

Good video explaining the challenges of transferring DB pensions from a IFA's point of view.

Pretty sure the OP has me blocked so its unfortunate he won't see this.

leosayer

If ever there was a topic for a sticky on this forum, DB transfers is one.

QrizB

NoMore said:

https://youtu.be/LWq9j8FFrF4?si=KJ6kPh9gr_18OBxF
Good video explaining the challenges of transferring DB pensions from a IFA's point of view.
Pretty sure the OP has me blocked so its unfortunate he won't see this.

I haven't watched the video but don't those two guys in the title card just look shifty

MeteredOut

QrizB said:

NoMore said:

https://youtu.be/LWq9j8FFrF4?si=KJ6kPh9gr_18OBxF
Good video explaining the challenges of transferring DB pensions from a IFA's point of view.
Pretty sure the OP has me blocked so its unfortunate he won't see this.

I haven't watched the video but don't those two guys in the title card just look shifty

Is a "Senior IFA" (guy on left) more important that your run-of-the-mill IFA?

Linton

I am amazed (or perhaps not) that this thread is still running.  The rules are the rules and there seems little point in discussing their rightness or wrongness.  That is up to Parliament.

 Perhaps it would shed some light if I gave a quick history of how we got here. I think it shows that each step was reasonable under the circumstances.  Note this is from memory and my understanding andso  could well be wrong in detail......

1) Ancient history

There were no legal restrictions on transfrerring a DB pension but no right to transfer either - it was up to the trustees to agree.  However having transferred the only way you could access the money was to buy an annuity - drawdown was not available.  But DB pensions were generally higher than annuities so there was no point in transferring unless perhaps you had serious life-limiting health problems.

2) Early pension freedoms, John Major extended by Gordon Brown

John Major introduced a very limited drawdown option.  The annual amount you could drawdown was limited to something similar to what an annuity would pay and you had to switch to an annuity at 75.  So there was no advantage for most people.

Unlimited flexi-access drawdown was introduced by Gordon Brown whereby people could drawdown however much they wanted but only if they could prove that they had sufficient other guaranteed income.  So this was irrelevent to many DB pensioners and probably only really useful for flexible financial management by the relatively wealthy.

3) Introduction of pension freedom.

In 2015 "pension freedom" was introduced.  This gave the right to "cash in" a DB pension and removed any restrictions on drawdown.

The Select Committee scrutinising the proposed law was extremely concerned that naive people with minimal experience of handling large sums of money would cash-in the lot and spend it immediately on luxuries they would never previously have been able to afford (Lamborghinis were often used as an example). Apart from the long term effects on the well-being of the pensioners there was also concern at the cost of the extra benefits that could be required.

However the Government did not want to lose the principle of pension freedom.

After much discussion a compromise was reached whereby people wanting to cash in a DB pension had to receive advice before being permitted to do so.  Then if they did spend the lot in a year or two the Government would (perhaps!) be off the hook.  Pension trustees would not have the skills to advise and did not want the responsibility.  so it was passed to IFAs.

4) Regulation

However we then had the British Steel crsis.  The company collapsed making a large number of mainly elderly workers redundant holding large DB pots.  Dodgy advisors travelled to the steel works and "helped" the redundant workers cash-in their pensions often through dodgy techniques like transferring to off shore pensions, getting the cash there and returning it to the UK.

However some of the  off-shore pension companies were as dodgy as the advisors and many pensioners lost a lot of money.    So the FCA was charged with cleaning things up for the future.   Their solution was to bring in much stricter regulation of the advisors.

However this led to problems.  There was one case which demonstrates this.   A pensioner wanted to cash in their pension because they believed they could invest for higher income..  The advisor advised that this was a bad idea as it was too risky given the pensioner's level of experience. 

The pensioner went ahead anyway as the platforms had no restrictions other then that advice was received.  Needless to say the pensioner did not succeed in investing for higher income and lost serious money.  So they claimed damages from the advisor.  The Ombudsman agreed with the complaint on the grounds that the warnings aainst transferring the pension were not strong enough.The advisor was instructed to put the pensioner back in the position they would have been in had they not transferred.

5) Consequences

That this was possible worried IFA insurers and their charges increased accordingly  Many IFAs were not prepared to risk their whole business on a relatively small part of their market . It also scared the platforms since they could possibly be accused of mis-selling and also be liable for restitution.

So here we are.

xylophone

After much discussion a compromise was reached whereby people wanting to cash in a DB pension had to receive advice before being permitted to do so.

But  from 2015 tax year, those with pensions in unfunded Public Service  DB pension schemes were simply not permitted to transfer out to schemes offering "flexible benefits"

https://techzone.abrdn.com/public/pensions/tech-guide-db-to-dc-transfers

Public sector schemes

Even though a member may have a statutory transfer right, unfunded public sector pension schemes (for example, the NHS Pension Scheme) cannot transfer benefits to a DC scheme capable of providing flexible benefits, such as income drawdown.

But transfers are allowed to DC schemes that don't provide flexible benefits. This allows members to transfer to buy conventional annuities, which could help those who are unlikely to get good value for money from their DB promise - for example, those in poor health or single people who have no need for a survivor's pension on their death.