Direct Benefit Pension & Financial Advisor Fees.

family4tunes

Hi Guys & Gals,

I'm 66, unemployed on state pension. I am not married or have any living relatives. My health isn't that good, I'm a smoker, and currently I have small holding pension fund invested with Pensionbee.

The reason I write is that I have discovered an old direct benefit pension (final salary) that I had forgotten about. I have contacted the old employer for a transfer value and they have quoted £60k. 

Because of my health issues and there not being any beneficiaries other than me I can't see the point of claiming the DB as it works out roughly £200 a month. I don't see myself living to the point I actually receive all the fund in pension payments (90 yrs old), so I would like to transfer my DB to my Pensionbee account to make it more accessible. I need a few updates to my property (kitchen/bathroom) which the DB could fund for me to be more comfortable now.

As the amount is over £30k I have to seek advice from a IFA. I have had a fixed fee quote from a local IFA for the amount of £7,500 to look into the transfer. Most IFA's I found don't deal with DB pensions as they like to advise and manage funds. I don't know if the quote I received of £7.5k was OTT or an average of costs, so I ask your advice. I know you can opt for an hourly rate but I don't know if this would be cheaper.

Any ideals or knowledge on the matter would be very much appreciated.

MallyGirl

I have heard of amounts closer to the £5k mark but it is unlikely to be much less than that. An hourly rate is unlikely to be cheaper

AlanP_2

Do a search on here, hundreds of similar threads where DB transfers are discussed.

hyubh

family4tunes said:

I'm 66, unemployed on state pension. I am not married or have any living relatives. My health isn't that good, I'm a smoker, and currently I have small holding pension fund invested with Pensionbee.

The reason I write is that I have discovered an old direct benefit pension (final salary) that I had forgotten about. I have contacted the old employer for a transfer value and they have quoted £60k. 

Before spending more time thinking about this, double check you can actually have a CETV. Schemes only have to provide one up until a year before the scheme normal retirement age. Doesn't mean they can't do one later, but it's not uncommon to just do the statutory.

PS - what is the scheme's NRA? Later than 65 is relatively unusual for private sector DB. Is there any late retirement factor if it's already been passed...?

I don't see myself living to the point I actually receive all the fund in pension payments (90 yrs old)

What are the pension increases like...?

Marcon

family4tunes said:

Hi Guys & Gals,

I'm 66, unemployed on state pension. I am not married or have any living relatives. My health isn't that good, I'm a smoker, and currently I have small holding pension fund invested with Pensionbee.

The reason I write is that I have discovered an old direct benefit pension (final salary) that I had forgotten about. I have contacted the old employer for a transfer value and they have quoted £60k. 

How long ago did you get your transfer value? 

dunstonh

I don't see myself living to the point I actually receive all the fund in pension payments (90 yrs old),

It will be less than 90 based on the figures you have given.  You haven't included any indexation.

 so I would like to transfer my DB to my Pensionbee account to make it more accessible.

I don't believe Pensionbee do DB transfers.

 Most IFA's I found don't deal with DB pensions as they like to advise and manage funds. 

That is not correct.    Only around 1 in 10 advisers have the PTS qualifications and authorisations.   That is why 9 in 10 don't deal with them.   

 I don't know if the quote I received of £7.5k was OTT or an average of costs, so I ask your advice. I know you can opt for an hourly rate but I don't know if this would be cheaper.

You could probably get closer to £5k with a bit of shopping around but I don't see an IFA recommending pensionbee.  They are more expensive than what an IFA could arrange.  Plus, you cannot pay the adviser fee out of the pension pot if it goes there.

Asking for an hourly rate would likely increase the cost.   The work involved with a DB transfer is difficult to estimate in hours and involves third parties as well as the adviser.    So, the stacking up of those hours would likely exceed £5k-£7.5k.   Plus, it could well introduce VAT in the equation with some of the hours.

 they have quoted £60k. 

Current CETVs are around half what they were at their peak in 2021.   So, if that CETV is recent, then its likely to have fallen from £120k.   However, if that CETV is old, it could well be a lot lower.

xylophone

Before spending more time thinking about this, double check you can actually have a CETV. Schemes only have to provide one up until a year before the scheme normal retirement age. Doesn't mean they can't do one later, but it's not uncommon to just do the statutory.

From the OP's post, it seems that he has only very recently remembered his deferred Defined Benefit pension so presumably the CETV has been provided and is current?

Marcon

dunstonh said:

I don't see myself living to the point I actually receive all the fund in pension payments (90 yrs old),

It will be less than 90 based on the figures you have given.  You haven't included any indexation.

 so I would like to transfer my DB to my Pensionbee account to make it more accessible.

I don't believe Pensionbee do DB transfers.

OP could be correct. There may not be any increases to pensions in payment, depending on when OP left active membership of the scheme. He's old enough to have membership of a DB scheme which had no increases.

PensionBee will now accept DB transfers but only with a positive recommendation from the financial adviser.

xylophone

The reason I write is that I have discovered an old direct benefit pension

If the scheme was contracted out (almost certainly it was) were you a member between 1978 and 1997?

Was the scheme a company scheme or a  Public Service Scheme?

Have you looked into the benefits offered by the scheme if you were to take the pension rather than embark on the expensive  and protracted transfer out route?

What would be offered as a tax free pension commencement lump sum?

If you took the PCLS, how much would the monthly pension be?

What would be the increase in payment?

Which of your monthly bills could be covered by this pension, freeing up other money?

dunstonh

PensionBee will now accept DB transfers but only with a positive recommendation from the financial adviser.

Fair enough but in reality an adviser is unlikely to recommend pensionbee due to its higher charges.   The OP is better off letting the adviser recommend the provider.

Albermarle

Because of my health issues and there not being any beneficiaries other than me I can't see the point of claiming the DB as it works out roughly £200 a month

Due to all the complications of transferring it , and the possibility that you will have to shell out Thousands and still not be able to transfer it ( or with some difficulty) . Then £200 a month is better than a poke in the eye, and until recently you did not even know you were entitled to it. 
Normally there would be a possibility to get a tax free lump sum with a reduced pension. Is that the case here ?