Pension Advisor would want £21,000 for a failed transfer

michael1234

Hi All and many thanks for indeed taking a look.

As I understand I would have to use the entire 500K to by an annuity. I am not allowed to transfer out part of the scheme. Its all or nothing.

Xylophone has clearly done a fair amount of work looking at this for which I'm grateful although I didn't really understand his last comment - perhaps it was designed to be that way hence putting me as a 3rd party. Perhaps I'm wrong but I seem to recall reading about his own story (now I'm doing it....) unless I'm getting mixed up with someone else - it was quite an eye opening read.


Anyway, in a nutshell, it would seem to me that I have a pot worth about 500K. If that pot should ever fall below 148K then it would be topped up prior to the annuity being bought. That is what I have gleaned from this thread.

My laymen's thoughts are it would require the markets to crash to 30% of their current value which is possible but unlikely. However, this is a guarantee and I would lose it should I transfer out. Even if this guarantee value was £100 its better than nothing so why would any sane person recommend a transfer out? The fact that I don't want an annuity would seem irrelevant in this calculation?

I do have other income streams and I would not be relying soley on this pension but again why would anyway says "yeah...good idea to get rid of a cast iron, gold plated guarantee" ?

xylophone

Xylophone has clearly done a fair amount of work looking at this for which I'm grateful although I didn't really understand his last comment - perhaps it was designed to be that way hence putting me as a 3rd party. Perhaps I'm wrong but I seem to recall reading about his own story (now I'm doing it....) unless I'm getting mixed up with someone else - it was quite an eye opening read.

I personally have not transferred out a DB pension  but I have commented on a few posts about such transfers.

This is not because I am an expert but because I developed an interest in these pensions and GMP and so have done a fair bit of 

research.

Which of my comments is puzzling you?

michael1234

Just some of the anacronyms but I re-read and it makes more sense now thanks Xylophone.

So am I broadly right about the "benefits" I'd lose? The 30% Guarantee. But they will still likely advise against? That and some divorce-inducing "benefits" too.

However, the trick up my sleeve gained earlier in this post is that I have a Stakeholder pension so as long as I get the timings right then armed with my refusal Advice, I can transfer it myself OR maybe the same IFA (which is going to be Grove or PensionWorks) will do it as an "insistent client".)

AIUI if they do the move they can collect the fee from the Pot ?

So its starting to look like I'll pay £10K to get my pension moved. Bit of a shame I suppose but much, much better than the alternative.

And twice as good as the 21.5K that SJP wanted. Plus more flexible to boot as not forced to go into their scheme for 5 years.

xylophone

Could you show the rest of the notes (your post  here)

https://forums.moneysavingexpert.com/discussion/comment/81017239/#Comment_81017239

What is clear is that you have a GMP and RST benefits.

These are revaluing in deferment.

They are guaranteed.

What is not clear so far is exactly what your scheme rules have to say about what happens if the value of your fund at retirement is greater than the amount required to secure your guaranteed benefits.

What is the position concerning a Pension Commencement Lump Sum?

Are you saying that in this event the rules state that whole fund must be used (after any PCLS) to secure a joint index linked

annuity that would  pay at least the guaranteed benefits and escalation in payment?


Or that sufficient of the fund must be used to purchase a joint annuity that would secure the guaranteed benefits and escalation

while the balance must be used to purchase another type of annuity?


Is it possible now for the Trustees to secure a deferred annuity policy to guarantee your GMP/RST benefits with part of the fund

so far accrued, leaving the balance within the scheme?


See


https://www.financialadvice.net/s32_buy_out_plan/zone/1288




https://techzone.abrdn.com/public/pensions/Tech-guide-section-92b-rights


Or allowing you to transfer out the balance to another DC Scheme?

See 




Do the notes referred to above clarify?

michael1234

Hi Xylophone

Yes many thanks and substantial clarity.

I'll try and get the rest of those notes copied in due course but I'm certain there is nothing else there relating to the DB element.

On retirement the entire sum goes to a "market leading" annuity. So if it was now, the annuity would be bought for £518K or thereabouts.

Lump sum is allowed they say but not they also say it is unlikely I'd be able to obtain the pension at 55. I'm 53 now.

By the way, the scheme was for years in arrears (need to check if it still is now). If the Company went bust would I lose 10%?

AlanP_2

Not trying to be a killjoy but I'd be very surprised if you get your formal advice report and complete the transfer before that CETV expires based on my experience.

Mine was a straightforward DB scheme and the IFA used was subsidised by the trustees and had dealt with quite a few i.e. they knew the scheme details well hence limited questions back and forth with administrator.

They had also completed the fact finding forms and initial 3 hour meeting with me prior to requesting the CETV.

The transfer was completed at close of business the day before the CETV expired.

Yours is more complicated by the sounds of it and your IFA will no doubt have lot's of questions for Mercer.

Plus you can write off 2 weeks for Christmas & New Year.

To have any chance you need to be chasing your IFA along.

xylophone

If the Company went bust would I lose 10%?

Is below of interest?

https://www.ppf.co.uk/news/Weve-partnered-with-Aviva

xylophone

Just some of the anacronyms but I re-read and it makes more sense now thanks Xylophone.

Love it!

A portmanteau word? Anachronism?....  a thing belonging or appropriate to a period other than that in which it exists,

Acronym?........ A group of initial letters used as an abbreviation for a name or expression, each letter or part being pronounced separately; an initialism (such as ATM, TLS).

Anacronym ....? A hybrid pension scheme?

michael1234

AlanP_2 said:

Not trying to be a killjoy but I'd be very surprised if you get your formal advice report and complete the transfer before that CETV expires based on my experience.

Mine was a straightforward DB scheme and the IFA used was subsidised by the trustees and had dealt with quite a few i.e. they knew the scheme details well hence limited questions back and forth with administrator.

They had also completed the fact finding forms and initial 3 hour meeting with me prior to requesting the CETV.

The transfer was completed at close of business the day before the CETV expired.

Yours is more complicated by the sounds of it and your IFA will no doubt have lot's of questions for Mercer.

Plus you can write off 2 weeks for Christmas & New Year.

To have any chance you need to be chasing your IFA along.

Yeah. That's why I would want to pay the IFA for the transfer as well as the advice. I can't pay for contingent advice but I can pay them to just move it can't I? Probably not because everything is as difficult as possible...........
They know where its going, I lob £12,500 on the table, promise I won't spend the lot on a couple of Ferraris, and ask them to move it. They then know any kind of advice is ok but they can only charge if the pension gets moved as that is what we agreed.
And then I woke up......

I'm thinking about moving the pension exposure from its existing fund allocation to the safest possible gilt or cash-in-bank for the duration. That way if I need a second CETV at least the fund value wouldn't have moved much. No idea if that's a good idea or not.

By the way, why would my IFA have lots of questions for Mercer? You can see how wet behind the ears I am. How much of a risk is it for the IFA to issue "Don't transfer" advice ?

dunstonh

By the way, why would my IFA have lots of questions for Mercer? You can see how wet behind the ears I am. How much of a risk is it for the IFA to issue "Don't transfer" advice ?

Usually, the pension administrators supply a base level of detail but need prompting to provide the full details needed.     Often things like protected tax free cash, final salary underpins etc are not offered up as being present when they are.      So, if the administrator doesnt explicitly state "there are no blah blah" or "there is blah blah" then the adviser needs to get the administrator to confirm it.        

Professional pension administrators are notoriously slow with administration.  They are not captured by the same set of regulations that retail pension providers are.    If I send an LOA and request to Aviva today, I will probably have the response within 48 hours.  If I send it to a professional administrator, I will probably be waiting 4 weeks.   The professional administrators tend to want wet signatures where retail providers nearly all allow digital.

Advice to do something is advice even if it is to do nothing different.   If it turns out that transferring was suitable and you were advised not to then there is just as much liability on that advice.     

In reality, with 9 out of 10 transfer cases being unsuitable to transfer, the odds favour "do not transfer" as being best advice.  So, the chance of "do no transfer" being the wrong advice is statistically unlikely.   However, it cannot be an automatic default.   The FCA did examine "do not transfer" advice cases as well as those that did transfer and 6 month reporting to the FCA requires all pension transfer advice to be noted. Not just the ones that were advised to transfer.