Pension transfer refused due to incentive

Pat38493

coyrls said:

Tommyjw said:

Pat38493 said:

Tommyjw said:

Not sure jumping straight to MoneyHelper helps in any way, that's a step designed for Amber flags that is required to have that further appointment, and serves absolutely no purpose in the designation of something being a red flag.

Red flags are just simply a straight no (unless the scheme decides to treat it with some subjectivity which has its own risks for them)

I am assuming this DB is worth less than £30K.  So are you saying that the DB provider can use this loophole to block the request completely and nothing can be done about it?

If the OP puts in a transfer request to a provider that isn't offering cashback - will they then say it's a red flag because the inbound provider is offering reduced or no charges for x months as most of them offer at least some kind of incentive like that?

You will probably struggle to find a DIY provider who isn't offering some kind of incentive to transfer in, even if it's just a few months of free platform fees.

(a)

includes an offer of one or more free pension reviews, access to some or all of the member’s pension savings before they attain normal minimum pension age, a savings advance or cashback from their pension savings;

I don't see how HL's incentive is caught by this definition.  HL's incentive payment is not "from their pension savings".  The pension savings are untouched by HL's incentive payment.

Good point,  I am wondering what OP declared about the cash back offer on the original transfer request.  Maybe if it was clear that the cash back is an additional cash paid directly and not paid out of the pension it would have been ok.  Did I not read somewhere that the HL cash back is actually paid straight out to the bank account of the member?  In any case it does not impact on their pension amount in any way as it would be awarded even if they did an in specie transfer.

CrockettnTubbs

I am wondering what OP declared about the cash back offer on the original transfer request.

It was not mentioned. I initiated the transfer from my existing HL account supplying provider name, account number, approximate value and that it should be transferred as cash since it can't be in specie.

The cashback goes into a separate 'loyalty account' and can be used to pay platform fees or transferred to a taxable trading account.

My existing provider must have inferred I was to get cash back because the destination was HL. It's a clever way of not losing assets to rivals with better offers.

jamesd

It's not such a clever idea.

As well as making a complaint to them about their abusive misuse of the process it's worth contacting the FCA and asking them to pass on to those supervising the firm the information that they seem to be abusing and misapplying this process to improperly block transfers and keep customers.

HL might be able to show that they block all attempts to transfer to the most used without advice UK SIPP provider.

Albermarle

It wasn't the intention but cashback incentives are rare.  Probably rarer than the scams that offer incentives they are trying to avoid.

It may well be that cashback incentives are rare taking into account the whole wide world of pensions.

However in the world of DIY SIPP's; ISA's, robo advisors etc they are very common.

HL, Fidelity and II have cash back schemes on offer for months at a time each year. Plus others less regularly, like Nutmeg.

As you say mainstream providers are being less sensitive about these rules. I just completed an ISA transfer from Fidelity to HL ( including a global index fund) and it took just less than a week. For which I effectively get free platform  fees for 20 years, until I probably move it again.

TransferFlag

Facing both the red flag, for a Transfer Incentive, and an Amber Flag for foreign investments. Not a transfer to HL, but to Fidelity, into a SIPP established 5 years ago that is 10x the value of the DC fund I am trying to transfer in. 

Was advised by Moneyhelper that the Moneyhelper call was only going to address the Amber flag, the red flag would have to be addressed by the trustees of the Pension (who are as responsive as a rock). 

The administrators refer to the Legislation, yet reading the Pension Regulator Guidance, it seems far more reasonable. By the administrators standards - every transfer to a SIPP must be an Amber flag. If however I choose to do the transfer when Fidelity are not offering an incentive there should be no red flag. Totally ridiculous position.   
Administrators got me to sign a disclaimer, absolving them of everything. This however as standard included absolving them from mis administration - before I know if they will complete the transfer. That was a step too far!

 They have known about the red flag for weeks, and I have provided the extract of the guidance, yet they are still giving no indication whether they will clear it. I have had the required Moneyhelper guidance call, so believe that is enough to clear  the amber flag.

One aspect that surprises me is that neither the administrator nor Moneyhelper checks the experience of the investor, nor seems to care that Fidelity - an large FCA regulated business is the receiving fund.

Basically the gap between Legislation, Regulator Guidance, and the application of Common Sense is substantial, and the whole process highly unproductive. .    If you haven't read the guidance , it is worth checking!

thepensionsregulator.gov.uk/

dunstonh

The administrators refer to the Legislation, yet reading the Pension Regulator Guidance, it seems far more reasonable.

It is far more reasonable and allows the administrators of the ceding scheme to apply discretion.  Many occupational scheme administrators will apply no discretion whatsoever.      This is in part because there wasnt much or any discretion initially but a later revision allowed it. 

By the administrators standards - every transfer to a SIPP must be an Amber flag. 

Yes.   By default, a SIPP would generate an amber flag.

One aspect that surprises me is that neither the administrator nor Moneyhelper checks the experience of the investor, nor seems to care that Fidelity - an large FCA regulated business is the receiving fund.

The retail pension providers mostly have a green list.   i.e. a list of providers that are low risk.  However, this is a discretionary list that they generate.   The majority of retail providers would have Fidelity on their green list and green list transfers would get waived through.

Its a well known issue and gets periodic coverage in the financial media.  Such as:

https://www.pensionsage.com/pa/Major-issues-continue-to-plague-pension-transfers.php