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

scoobyjones1

QrizB said:

scoobyjones1 said:

Marcon said:

scoobyjones1 said:

Thanks for that...so we could move it into a stakeholder type pension but again, only if we pay an adviser? Because the DB pension holder will not release it unless we do? Still feels like a stitch up!
We would be prepared to move it into another pension first if we could them transfer it to her SIPP eventually. Would that be an option? 

Yes, yes and yes - but if the transfer value has already been issued, and she's close to the scheme's retirement age, you would probably need to get on with it. The CETV is only valid for 3 months from the calculation date, and your wife may not be entitled to another once she reaches the scheme's retirement age (you'd need to check with the scheme).

But would the DB pension holder even release the pension to be transferred into a stakeholder type pension, which also have fees, without us paying an IFA to approve it?

No, because it would be illegal. Pension funds know what the law is regarding DB transfers. The DB fund wouldn't release it, and (if for some reason they did) the SIPP wouldn't accept it.

scoobyjones1 said:

xylophone said:

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

Well Xylophone, she is a month away from 60 which was the agreed retirement age according to the DB scheme.

Has the scheme said they'll start paying out in a month, or does your wife need to actively claim it? If the former, you're probably already too late to start a transfer.

eskbanker said:

scoobyjones1 said:
My wife is upset though as she would prefer to have the CETV in her own SIPP. What they have offered may be nice, and a small help to her, if she lives to a hundred.

What's the CETV as a multiple of the annual DB payment, and what indexation is there?  Did any advisor plant the idea in her head that transferring into a SIPP would be straightforward or was that just a misunderstanding?

OP has said £2.5k pa, CETV £60k. It's not yet clear whether £2.5k was the value when OP's wife left the scheme, or if it's what she's been quoted at NPA in a month.

so far it has taken 6 weeks just to get the CETV figure,,,after it took them months to contact her initially. This is why we want out of the scheme. They are overworked and under staffed (their words). Her payments will only grow 5% a year at best and she would have to live a long time to get the same value as the CETV...which I know we can grow as well as having the money available for emergencies or unforeseen circumstances. To me, the rule of "pay out for advice and protection from yourself" is a nonsense. They did mention a 2nd option of a partial cash sum (not 25% though) and a lower, annual payout of 2k. However we are still waiting on the paperwork from them as regards this. Hopefully THAT would not need advice to accept, from an IFA?!!

Dazed_and_C0nfused

scoobyjones1 said:

QrizB said:

scoobyjones1 said:

Marcon said:

scoobyjones1 said:

Thanks for that...so we could move it into a stakeholder type pension but again, only if we pay an adviser? Because the DB pension holder will not release it unless we do? Still feels like a stitch up!
We would be prepared to move it into another pension first if we could them transfer it to her SIPP eventually. Would that be an option? 

Yes, yes and yes - but if the transfer value has already been issued, and she's close to the scheme's retirement age, you would probably need to get on with it. The CETV is only valid for 3 months from the calculation date, and your wife may not be entitled to another once she reaches the scheme's retirement age (you'd need to check with the scheme).

But would the DB pension holder even release the pension to be transferred into a stakeholder type pension, which also have fees, without us paying an IFA to approve it?

No, because it would be illegal. Pension funds know what the law is regarding DB transfers. The DB fund wouldn't release it, and (if for some reason they did) the SIPP wouldn't accept it.

scoobyjones1 said:

xylophone said:

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

Well Xylophone, she is a month away from 60 which was the agreed retirement age according to the DB scheme.

Has the scheme said they'll start paying out in a month, or does your wife need to actively claim it? If the former, you're probably already too late to start a transfer.

eskbanker said:

scoobyjones1 said:
My wife is upset though as she would prefer to have the CETV in her own SIPP. What they have offered may be nice, and a small help to her, if she lives to a hundred.

What's the CETV as a multiple of the annual DB payment, and what indexation is there?  Did any advisor plant the idea in her head that transferring into a SIPP would be straightforward or was that just a misunderstanding?

OP has said £2.5k pa, CETV £60k. It's not yet clear whether £2.5k was the value when OP's wife left the scheme, or if it's what she's been quoted at NPA in a month.

so far it has taken 6 weeks just to get the CETV figure,,,after it took them months to contact her initially. This is why we want out of the scheme. They are overworked and under staffed (their words). Her payments will only grow 5% a year at best and she would have to live a long time to get the same value as the CETV...which I know we can grow as well as having the money available for emergencies or unforeseen circumstances. To me, the rule of "pay out for advice and protection from yourself" is a nonsense. They did mention a 2nd option of a partial cash sum (not 25% though) and a lower, annual payout of 2k. However we are still waiting on the paperwork from them as regards this. Hopefully THAT would not need advice to accept, from an IFA?!!

It seems like you don't fully understand how DB pensions work.

It is perfectly normal to have the choice of differing pension and PCLS amounts.

Some DB schemes start with no PCLS as the default whilst others might have 3x the pension as the default.

Your wife will have the options available under the scheme rules and there is no need for an IFA to be involved when deciding which of those options to take.

As there is no pot of money with a DB pension there is no 25% TFLS available to her but she will be able to take a PCLS in accordance with the scheme rules.

Marcon

scoobyjones1 said:

so far it has taken 6 weeks just to get the CETV figure,,,after it took them months to contact her initially. This is why we want out of the scheme. They are overworked and under staffed (their words). Her payments will only grow 5% a year at best and she would have to live a long time to get the same value as the CETV...which I know we can grow as well as having the money available for emergencies or unforeseen circumstances. To me, the rule of "pay out for advice and protection from yourself" is a nonsense. They did mention a 2nd option of a partial cash sum (not 25% though) and a lower, annual payout of 2k. However we are still waiting on the paperwork from them as regards this. Hopefully THAT would not need advice to accept, from an IFA?!!

The statutory timeframe for providing a CETV is 'within 3 months of the formal request being made' so they are well within that limit.

Poor admin (whether real, or simply unrealistic expectations on the part of members) isn't a good reason to transfer out. Members are still entitled to the benefits stipulated in the rules.

Have you any idea how bad some SIPP administrators are - and often with a considerable (albeit not actionable) detriment to the fund value?

Marcon

MallyGirl said:

Marcon said:

MallyGirl said:

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.

See my answer above...I thought this particular myth had been laid to rest long ago.

I haven't noticed anyone coming on here to say that this avenue has been successfully utilised. There has been discussion in the past on the limited number of stakeholder offerings out there that could be used but I see that Standard Life seem to do one. Maybe that is the answer but the advisor fee still has to be paid and that now sounds like it is rising

Happily I did a bit of bookmarking eg
 
https://forums.moneysavingexpert.com/discussion/6417848/insistent-client-pension-transfer#latest

and the link to Kelso's post: https://forums.moneysavingexpert.com/discussion/6429497/pension-value-halved/p2

scoobyjones1

Marcon said:

scoobyjones1 said:

so far it has taken 6 weeks just to get the CETV figure,,,after it took them months to contact her initially. This is why we want out of the scheme. They are overworked and under staffed (their words). Her payments will only grow 5% a year at best and she would have to live a long time to get the same value as the CETV...which I know we can grow as well as having the money available for emergencies or unforeseen circumstances. To me, the rule of "pay out for advice and protection from yourself" is a nonsense. They did mention a 2nd option of a partial cash sum (not 25% though) and a lower, annual payout of 2k. However we are still waiting on the paperwork from them as regards this. Hopefully THAT would not need advice to accept, from an IFA?!!

The statutory timeframe for providing a CETV is 'within 3 months of the formal request being made' so they are well within that limit.

Poor admin (whether real, or simply unrealistic expectations on the part of members) isn't a good reason to transfer out. Members are still entitled to the benefits stipulated in the rules.

Have you any idea how bad some SIPP administrators are - and often with a considerable (albeit not actionable) detriment to the fund value?

6 weeks is not great, they fobbed her off and downright lied to her over several phone calls, IF they answered any calls (it can take a week to get through) and they send letters which take weeks now. They won't use email. The admin is poor by any standard and the reason they gave is that hundreds of people are trying to leave at the moment.
Our SIPP admin is way better, private messages are usually answered same day and phone calls within seconds. Everything is on the screen in terms of fees, investments...your balance is in real time. No comparison.

wjr4

scoobyjones1 said:

QrizB said:

scoobyjones1 said:

Marcon said:

scoobyjones1 said:

Thanks for that...so we could move it into a stakeholder type pension but again, only if we pay an adviser? Because the DB pension holder will not release it unless we do? Still feels like a stitch up!
We would be prepared to move it into another pension first if we could them transfer it to her SIPP eventually. Would that be an option? 

Yes, yes and yes - but if the transfer value has already been issued, and she's close to the scheme's retirement age, you would probably need to get on with it. The CETV is only valid for 3 months from the calculation date, and your wife may not be entitled to another once she reaches the scheme's retirement age (you'd need to check with the scheme).

But would the DB pension holder even release the pension to be transferred into a stakeholder type pension, which also have fees, without us paying an IFA to approve it?

No, because it would be illegal. Pension funds know what the law is regarding DB transfers. The DB fund wouldn't release it, and (if for some reason they did) the SIPP wouldn't accept it.

scoobyjones1 said:

xylophone said:

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

Well Xylophone, she is a month away from 60 which was the agreed retirement age according to the DB scheme.

Has the scheme said they'll start paying out in a month, or does your wife need to actively claim it? If the former, you're probably already too late to start a transfer.

eskbanker said:

scoobyjones1 said:
My wife is upset though as she would prefer to have the CETV in her own SIPP. What they have offered may be nice, and a small help to her, if she lives to a hundred.

What's the CETV as a multiple of the annual DB payment, and what indexation is there?  Did any advisor plant the idea in her head that transferring into a SIPP would be straightforward or was that just a misunderstanding?

OP has said £2.5k pa, CETV £60k. It's not yet clear whether £2.5k was the value when OP's wife left the scheme, or if it's what she's been quoted at NPA in a month.

so far it has taken 6 weeks just to get the CETV figure,,,after it took them months to contact her initially. This is why we want out of the scheme. They are overworked and under staffed (their words). Her payments will only grow 5% a year at best and she would have to live a long time to get the same value as the CETV...which I know we can grow as well as having the money available for emergencies or unforeseen circumstances. To me, the rule of "pay out for advice and protection from yourself" is a nonsense. They did mention a 2nd option of a partial cash sum (not 25% though) and a lower, annual payout of 2k. However we are still waiting on the paperwork from them as regards this. Hopefully THAT would not need advice to accept, from an IFA?!!

Only 5% a year? What if you took it out the DB pension and it fell to 40k in the first year for example? 

scoobyjones1

Marcon said:

MallyGirl said:

Marcon said:

MallyGirl said:

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.

See my answer above...I thought this particular myth had been laid to rest long ago.

I haven't noticed anyone coming on here to say that this avenue has been successfully utilised. There has been discussion in the past on the limited number of stakeholder offerings out there that could be used but I see that Standard Life seem to do one. Maybe that is the answer but the advisor fee still has to be paid and that now sounds like it is rising

Happily I did a bit of bookmarking eg
 
https://forums.moneysavingexpert.com/discussion/6417848/insistent-client-pension-transfer#latest

and the link to Kelso's post: https://forums.moneysavingexpert.com/discussion/6429497/pension-value-halved/p2

Thanks for that, Marcon. very interesting...what a can of worms! You still have to pay an IFA though, just to have any chance of transferring out...then IF your IFA agrees and says yes then will the SIPP provider take it? Sounds as if not many do anymore.
As for a stake holder pension, they would be more likely to do the transfer...especially if the IFA says yes.
They may do it even if the IFA says no...but that is a risk and I am not prepared to pay an IFA on a maybe. 
Will have to mull this one over for now... Ridiculously complicated and expensive for what is basically a bonus little pension she was not even aware of, a few months ago.

QrizB

scoobyjones1 said:

Ridiculously complicated and expensive for what is basically a bonus little pension she was not even aware of, a few months ago.

She can take the pension without any complications or expense.
What is complicated and expensive is surrendering a guaranteed income for life in exchange for a sum of money whic, if carelessly invested, coud be worth nothing tomorrow.

scoobyjones1

wjr4 said:

scoobyjones1 said:

QrizB said:

scoobyjones1 said:

Marcon said:

scoobyjones1 said:

Thanks for that...so we could move it into a stakeholder type pension but again, only if we pay an adviser? Because the DB pension holder will not release it unless we do? Still feels like a stitch up!
We would be prepared to move it into another pension first if we could them transfer it to her SIPP eventually. Would that be an option? 

Yes, yes and yes - but if the transfer value has already been issued, and she's close to the scheme's retirement age, you would probably need to get on with it. The CETV is only valid for 3 months from the calculation date, and your wife may not be entitled to another once she reaches the scheme's retirement age (you'd need to check with the scheme).

But would the DB pension holder even release the pension to be transferred into a stakeholder type pension, which also have fees, without us paying an IFA to approve it?

No, because it would be illegal. Pension funds know what the law is regarding DB transfers. The DB fund wouldn't release it, and (if for some reason they did) the SIPP wouldn't accept it.

scoobyjones1 said:

xylophone said:

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

Well Xylophone, she is a month away from 60 which was the agreed retirement age according to the DB scheme.

Has the scheme said they'll start paying out in a month, or does your wife need to actively claim it? If the former, you're probably already too late to start a transfer.

eskbanker said:

scoobyjones1 said:
My wife is upset though as she would prefer to have the CETV in her own SIPP. What they have offered may be nice, and a small help to her, if she lives to a hundred.

What's the CETV as a multiple of the annual DB payment, and what indexation is there?  Did any advisor plant the idea in her head that transferring into a SIPP would be straightforward or was that just a misunderstanding?

OP has said £2.5k pa, CETV £60k. It's not yet clear whether £2.5k was the value when OP's wife left the scheme, or if it's what she's been quoted at NPA in a month.

so far it has taken 6 weeks just to get the CETV figure,,,after it took them months to contact her initially. This is why we want out of the scheme. They are overworked and under staffed (their words). Her payments will only grow 5% a year at best and she would have to live a long time to get the same value as the CETV...which I know we can grow as well as having the money available for emergencies or unforeseen circumstances. To me, the rule of "pay out for advice and protection from yourself" is a nonsense. They did mention a 2nd option of a partial cash sum (not 25% though) and a lower, annual payout of 2k. However we are still waiting on the paperwork from them as regards this. Hopefully THAT would not need advice to accept, from an IFA?!!

Only 5% a year? What if you took it out the DB pension and it fell to 40k in the first year for example? 

That's a massive IF. In her SIPP she can hold most of this 60k as cash, they pay interest... and some she could invest in fairly safe stocks such as Apple and Microsoft. For them to drop 33% in an instant would take a catastrophic event, which we have had, I grant you with Covid and Ukraine. But that risk would be ours and you can sell / buy within the SIPP at any time. She has other funds to fall back on in the worst case. Even if she held it all as cash then she would have all of that money available quickly...subject to tax of course...but the first 25% would be tax free, upon starting drawdown. We have managed to beat the S&P 500 by a good amount over the last 7/8 years. You learn as you go.

At the moment she / I would prefer that to a guaranteed 2 or 2.5k per year. How long do you have left of good health and full faculties in your 60s? We do not know... And another thing, if you were to add that to your state pension...if you ever get one...then they would start taxing you again as the allowance is now so small in real terms.

xylophone

Well Xylophone, she is a month away from 60 which was the agreed retirement age according to the DB scheme. 

Normal Scheme Retirement Age?

Presumably the Administrator  has confirmed  a "non - statutory right to transfer"?

See

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/transfer-pension-scheme#:~:text=Any scheme wishing to offer,flexible benefits (defined contributions).

There is no statutory right to transfer in relation to non-flexible benefits (for example Defined Benefit types schemes) if the member is within 12 months of normal pension age. Any scheme wishing to offer a member the right to take a transfer of their DB benefits within 12 months of normal retirement age will need to provide a non-statutory right to transfer.

If so, and your wife wishes to continue with the transfer process, there is no way round the advice requirement.

However, once the advice has been obtained, your wife has no obligation to follow it.

She does, however, need to find a scheme to accept a transfer against advice.

 No scheme, except  a stakeholder scheme, has to accept a transfer.

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/transfer-pension-scheme?utm_source=legacyurls&utm_medium=301&utm_campaign=/knowledge-literature/knowledge-library/transfer-pension-scheme/

A stakeholder pension scheme is currently the only type of scheme which must accept any transfer from another registered pension scheme.

It appears that Aviva still offers the direct to consumer option.

https://static.aviva.io/content/dam/document-library/adviser/pensions/sp01001c.pdf

https://static.aviva.io/content/dam/document-library/adviser/pensions/sp01006.pdf

Thus a person could open a stakeholder, obtain the required advice in respect of the DB transfer, and then request the stakeholder provider to organise the transfer in. 

Once in the stakeholder, the person could then request the SIPP provider to transfer the stakeholder into the SIPP.

If your non earning wife decided against proceeding with a transfer out of her DB scheme,  she could always pay the pension she receives (up to £2880) into her SIPP and receive tax relief of up to £720 - she can do this up to her 75th birthday.

It appears the the DB pension offers commutation of part of the pension (calculated as here) 

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

 to provide a PCLS?

And has she obtained a state pension forecast?