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

michael1234

Cus said:

Skimmed the thread so apologies if said but to me the transfer value is not great. The dB value of 148k pays 7k a year, the other DC will buy an annuity of around 14k with benefits added so £21k for £510k pot, a x25 multi, might as well stick, a guaranteed SWR of 4% inflation linked 

Any chance you or someone else could explain that in plain english ? I think you're saying don't transfer but I'm not understanding why.

Particuarly not understanding why you are adding 14K to 7K? The 7K DB element, is a guarantee in case the DC loses value.

Cus

My assumption was that when you are able to access the dB pension, it will pay you £7k a year. I also assumed that at the same time there will be a DC pot where you are compelled to buy an annuity with. Is that the case?

michael1234

Cus said:

My assumption was that when you are able to access the dB pension, it will pay you £7k a year. I also assumed that at the same time there will be a DC pot where you are compelled to buy an annuity with. Is that the case?

No. The DC pot compelling me to buy an annuity is correct. However, the DB element will only pay out if the DC annuity would pay less than the 7K (I think a bit less) per year. i.e. it provides a guarantee that the DC element will not be less than that.

LHW99

michael1234 said:

Cus said:

My assumption was that when you are able to access the dB pension, it will pay you £7k a year. I also assumed that at the same time there will be a DC pot where you are compelled to buy an annuity with. Is that the case?

No. The DC pot compelling me to buy an annuity is correct. However, the DB element will only pay out if the DC annuity would pay less than the 7K (I think a bit less) per year. i.e. it provides a guarantee that the DC element will not be less than that.

So DC pension with DB underpin?

xylophone

 if the DC annuity would pay less than the 7K (I think a bit less) per year

From the information that you have already provided, the situation would appear to be that for +/- eighteen months  (to 5/4/97) you were a member of a contracted out defined benefit pension scheme.

You have a GMP in respect of this pension - it was valued at £54.60 pa at the date of leaving service. It revalues to GMP age (65 for a man) at 4.75% pa.

You have the right to receipt of this pension at age 65 - in payment it would be increased by the scheme by CPI up to 3% pa 

From 6/4/97, you were a member of a DC Scheme contracted out on the Reference Scheme Test basis.

At date of leaving service (2013), you were advised that the value of the RST benefit was £6,146 - this would revalue "broadly in 

line with inflation" to Scheme Pension Age (65) and be index linked up to 5% pa thereafter.

Therefore to keep mentioning app £7000 to be covered by the guarantee is incorrect -  it is much more than this because of the 

inflation linking.

The total transfer value covers your GMP/RST and your  DC benefit, 

The position appears to be that at age 65, you are guaranteed  an index linked pension of at least your revalued GMP/RST  benefits.

If your total fund value (what they refer to as  your pre and post 97 Main Accounts) were to prove insufficient to cover those 

benefits, the Trustees of the Scheme would augment the value by the sum necessary to fund them.

If the main accounts were more than sufficient, then the total of the accounts would be used to purchase an index linked  

annuity (presumably joint life if you were married at that point) to provide a guaranteed income for life for you/your widow as 

appropriate?

In order to "get you off the books" as it were, the Trustees offer a total transfer value of some £518,000.

Because of the value of the guaranteed benefits, you are required to pay for the advice of a PTS.

This may be positive or negative - if negative, your plan would be to request the provider of your stakeholder pension to accept 

the transfer.

You would subsequently transfer to your SIPP.

Is there a reason why you chose not to request a quote from the local CPP mentioned in one of your previous posts?

michael1234

xylophone said:

In order to "get you off the books" as it were, the Trustees offer a total transfer value of some £518,000.

Perhaps I'll respond in more detail to your post which you kindly took the time to make. In the meantime, I don't think this is correct.

Today's value is £522,742.75 and when the markets next open it will be different again. The value isn't "offered" by the Trustees. They have no choice in the matter. The DC pension is invested in certain public funds whose values are known and change daily (when the markets are open). Therefore it cannot be to encourage me to transfer.

xylophone

Therefore it cannot be to encourage me to transfer.

No one is suggesting that you are being encouraged to transfer - indeed any such encouragement by Trustees/Administrators couldlead 

to  close scrutiny - Google  The Pensions Regulator Inducement Offers.

That said, informing members of the options.... see Albemarle here

https://forums.moneysavingexpert.com/discussion/comment/81016230/#Comment_81016230

"Getting you off the books" is just an expression - used many times on the forum, including here in this thread

https://forums.moneysavingexpert.com/discussion/comment/81062143/#Comment_81062143

With regard to the Trustees, I am assuming that given the details so far provided of the Scheme/Plan, they do exist and that  Mercer

are  just the Administrators who act on their behalf? 

Thus far, all the action in respect of this deferred pension seems to have been instigated by you.

https://forums.moneysavingexpert.com/discussion/6556908/pension-advisor-would-want-21-000-for-a-failed-transfer

It would appear that you contacted Mercer and that  somebody there suggested that you contacted SJP in respect of your enquiry concerning a transfer out?

He is someone recommended by my complex company pension administrator (DC with DB underpin) because he has successfully transferred many pensions out of the scheme before whereas "other companies have had less success with some failures".

You seem to have had a preliminary discussion with SJP but did not proceed.  You did (albeit not with perfect understanding) go ahead with Grove in respect of a CETV

https://forums.moneysavingexpert.com/discussion/comment/81055028/#Comment_81055028

With regard to the transfer value, it was as set out here 

https://forums.moneysavingexpert.com/discussion/comment/81062021/#Comment_81062021

that is to say the total CETV back in October was £518, 330.76, of which the guaranteed value (in respect of the DB benefits) was £148,186.52.

Has anybody at Grove or Mercer  (or indeed does the scheme guide) come up with  precise answers regarding what you can expect if you do not transfer?

See

https://forums.moneysavingexpert.com/discussion/comment/81062190/#Comment_81062190

I may have missed it but I do not see any real clarification.

michael1234

Thanks. What you've written reads a bit like a summary of the thread which is probably much needed given its length.

You did ask a question at the end though and the answer to that is I do not know what "precise answers" means? If an amount that I would receive now if I "retired" now then no I have not received that information. In fact the "abridged review" is little more than a summary of the information I've provided to them so far and almost nothing about the existing scheme.

xylophone

In fact the "abridged review" is little more than a summary of the information I've provided to them so far and almost nothing about the existing scheme.

Presumably this was free? You haven't actually had even the "abridged advice" (for which you would have to pay) yet?

Surely before you  even contemplate a transfer out of the scheme, you need to understand exactly what is on offer if you stay in it?

Thus far, you have provided this limited information.

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

All that can be gleaned from this is that you have a MAIN ACCOUNT which relates both to pre 97 accrual  and post 97 accrual.

It is from this account that the safeguarded benefits (GMP/ RST S9(2B)) derive.

It is nearly invisible but it may be helpful to read the note 3 which appears to make it clear that this is a Trust based Plan.

"All benefits must be calculated and paid only in accordance with the trust deed.............."

If there is a Trust there must be Trustees.

You included a screen shot of the transfer value and components here

https://forums.moneysavingexpert.com/discussion/6556908/pension-advisor-would-want-21-000-for-a-failed-transfer/p9

but I'd have questions about this, notably figure at 1.7. This seems to indicate increases on the non guaranteed DC in deferment but you indicated that the value of the non guaranteed benefits was purely based on market value on the day?

Then what about the answers to the questions here?

https://forums.moneysavingexpert.com/discussion/6556908/pension-advisor-would-want-21-000-for-a-failed-transfer/p10

https://forums.moneysavingexpert.com/discussion/6556908/pension-advisor-would-want-21-000-for-a-failed-transfer/p11

You just have to accept that you will not be permitted to transfer out without full (not abridged) advice from a PTS  and that the 

cost will be several thousand pounds.

At least make sure that your adviser can answer the questions.

xylophone

In connection with finding an adviser who understands the scheme, see the comments here.

https://www.linkedin.com/pulse/dc-schemes-contracted-out-rst-basis-dave-king