Transfer of a Defined Benefit Pension

geofft1968

I’m trying to transfer an old DB pension to my current DB scheme. I have been told different answers for this question, can anyone help me please?
“Do I have to seek financial advice if transferring a DB pension to my current DB pension scheme? The transfer value is around £51k only, I worked for the company between 1990-1994. I have spoken to my current pension providers, who say I don’t need to take advice as it’s transferring from one DB scheme to another DB scheme, I have also spoken to an independent advisor who also says I don’t need to seek advice, yet the company I want to transfer from says I do” I can’t find anything in writing to back this up, if anyone could help/advise I would be very grateful.
many thanks 

HappyHarry

geofft1968 said:

I’m trying to transfer an old DB pension to my current DB scheme. I have been told different answers for this question, can anyone help me please?
“Do I have to seek financial advice if transferring a DB pension to my current DB pension scheme? The transfer value is around £51k only, I worked for the company between 1990-1994. I have spoken to my current pension providers, who say I don’t need to take advice as it’s transferring from one DB scheme to another DB scheme, I have also spoken to an independent advisor who also says I don’t need to seek advice, yet the company I want to transfer from says I do” I can’t find anything in writing to back this up, if anyone could help/advise I would be very grateful.
many thanks 

You don't need advice as you are not moving safeguarded benefits to flexible benefits.

If you need to quote anything, use the FCA definition of a pension transfer requiring advice, from the glossary of the FCA handbook:
https://www.handbook.fca.org.uk/handbook/glossary/G855.html

pension transfer

(except in COBS 15 (Cancellation)) a transaction, resulting from the decision of a retail client who is an individual, to require a transfer payment in respect of any safeguarded benefits:
1. (a) from any pension scheme with a view to obtaining a right or entitlement to flexible benefits under another pension scheme; or
1. (b) from an occupational pension scheme with a view to obtaining a right or entitlement to safeguarded benefits under a non-occupational pension scheme; or
1. (c) from an individual pension contract providing fixed or guaranteed benefits that replaced similar safeguarded benefits under a pension scheme with a view to obtaining a right or entitlement to safeguarded benefits under a non-occupational pension scheme or under a defined contribution occupational pension scheme.
For the purposes of this definition of “pension transfer”:
1. (d) “pension scheme” means an occupational pension scheme or a non-occupational pension scheme; and
1. (e) “non-occupational pension scheme” means a stakeholder pension scheme, a personal pension scheme or a deferred annuity contract.

geofft1968

Thank you so much for your advice will go back to WTW and tell them to look at the rules! 

LHW99

Won't the transfer be dealt with by the new company pension directly with the trustees (management?) of the old pension?

xylophone

Won't the transfer be dealt with by the new company pension directly with the trustees (management?) of the old pension?

Yes, so I am not quite sure why the OP should be arguing the toss with WTW.

Presumably he has contacted the new Scheme's administrator in order to confirm that a transfer in would be acceptable and has

 completed the necessary formalities (signed forms of authorisation etc).

Example

https://www.civilservicepensionscheme.org.uk/joining-the-pension-scheme/transfer-an-old-pension-into-your-civil-service-pension/

He is transferring a pension with safeguarded benefits valued in excess of £30,000 to another scheme with safeguarded (not flexible)

benefits.

https://assets.publishing.service.gov.uk/media/5a80b577ed915d74e33fbf54/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

He is not required to seek advice (see above).

He might choose to seek advice and the bumf from the new DB scheme might point him in this direction

Example

https://www.peninsulapensions.org.uk/members/local-government/your-pension-scheme/joining-up-or-transferring-in/

•            Ask your previous pension provider for a Cash Equivalent Transfer Value (CETV) and associated discharge forms.

•            Send this information to us as soon as you receive it, including the discharge forms; we will not use them to transfer benefits without your permission. You can send us this by using the upload function on Member Self-Service

•            We will send you an estimate of the extra service or pension amount that your transfer will provide. When making your decision whether to go ahead with the transfer, we strongly recommend that you seek independent financial advice first.

Marcon

xylophone said:

Won't the transfer be dealt with by the new company pension directly with the trustees (management?) of the old pension?

Yes, so I am not quite sure why the OP should be arguing the toss with WTW.

The member still has to sign off various forms, including one relating to whether or not financial advice has been received. If the ceding scheme didn't contact the member with any queries on this aspect of things, it would simply serve to delay matters - so the administrators of the scheme are correctly flagging their concerns with the member, albeit those concerns are actually ill founded in this case!

The new DB scheme has no interest in whether or not the member has received advice, so they wouldn't be the relevant party with whom to raise the issue.

Albermarle

geofft1968 said:

Thank you so much for your advice will go back to WTW and tell them to look at the rules! 

You will appreciate that what that £51K will buy you in terms of pension entitlement with the new scheme, could be quite variable, depending on the rules of the scheme.

MarkCarnage

Have you confirmed with your current scheme that they are willing to accept the transfer and what the terms will be? Usually they will give you x years service entitlement, and you may find that the years offered isn't as good as you hope. Many years ago I got offered just over 2 years entitlement for a previous scheme where I had just over 5 years service (this was the immediately previous employer). They also refused to offer me a transfer for another prior scheme due to a fairly unusual situation relating to GMP. 
I ended up many years later getting pretty attractive transfer values for both of these into a SIPP (2017/18). Just before the hurdles for transfers became even higher than they already were....

ewaste

MarkCarnage said:

Have you confirmed with your current scheme that they are willing to accept the transfer and what the terms will be? Usually they will give you x years service entitlement, and you may find that the years offered isn't as good as you hope. Many years ago I got offered just over 2 years entitlement for a previous scheme where I had just over 5 years service (this was the immediately previous employer). They also refused to offer me a transfer for another prior scheme due to a fairly unusual situation relating to GMP. 
I ended up many years later getting pretty attractive transfer values for both of these into a SIPP (2017/18). Just before the hurdles for transfers became even higher than they already were....

The years are irrelevant unless a Public Sector Club transfer. You could transfer from one scheme with 5 years membership based on X Salary and to another and be offered 2 years at Y salary. That's just one example there could be many other differences e.g. normal retirement age, spousal benefits, revaluation etc etc. 

OP:- Many Private sector schemes don't offer additional service for transfers in. Therefore is this actually a DB to DB transfer or is the transfer DB to the DC AVCs of another DB scheme? 🤔

MarkCarnage

The years are irrelevant unless a Public Sector Club transfer. You could transfer from one scheme with 5 years membership based on X Salary and to another and be offered 2 years at Y salary. That's just one example there could be many other differences e.g. normal retirement age, spousal benefits, revaluation etc etc. 

Yes, I get that, and in my case the salary change was the key driver, but even accounting for it there was a difference, although retirement age and spouse benefits were the same. Just pointing out that the OP should be aware that the additional service entitlement might be quite a bit less than the years in the original scheme. 

hyubh

MarkCarnage said:

The years are irrelevant unless a Public Sector Club transfer. You could transfer from one scheme with 5 years membership based on X Salary and to another and be offered 2 years at Y salary. That's just one example there could be many other differences e.g. normal retirement age, spousal benefits, revaluation etc etc. 

Yes, I get that, and in my case the salary change was the key driver, but even accounting for it there was a difference, although retirement age and spouse benefits were the same. Just pointing out that the OP should be aware that the additional service entitlement might be quite a bit less than the years in the original scheme. 

Assuming the receiving scheme is a public sector one and (given WTW is the administrator) the old scheme is private sector, then the OP is looking at a non-Club transfer and so one earning additional pension, not additional service. This should actually make the comparison easier, as the OP isn't second guessing their future pay growth.

If I were a betting man: the TV in would get better revaluation going forward and probably pension increases once in payment, but come with a higher normal pension age; however the starting pension will likely be a lot better given private sector pensions are usually valued more prudently than SCAPE values public sector pensions (ergo transfers into a public sector scheme will appear generous but transfers out ungenerous).

That said, ewaste makes a good point that it's not 100% clear (given the OP hasn't confirmed what the receiving scheme is) that we are actually talking about a DB to DB transfer...