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

ali_bear

Awful because it sounds like a trap. Like you're walking out of a club and you're required to have someone escort you out but they will definitely take a big wodge of your money even if you don't make it outside. 

GDB2222

Are you quite sure that you want to transfer at all?

ali_bear

If I was being cynical I might be tempted to think that the entire scheme has been set up from the start with the primary goal of enriching the advisors. 

Marcon

ali_bear said:

If I was being cynical I might be tempted to think that the entire scheme has been set up from the start with the primary goal of enriching the advisors. 

Why would an employer pay huge amounts of cash into a pension scheme so that a third party adviser could benefit? Pension schemes are there to attract and retain employees.

Highly unlikely that the scheme was set up post-2015, which was the point at which advice became mandatory.

ali_bear said:

Awful because it sounds like a trap. Like you're walking out of a club and you're required to have someone escort you out but they will definitely take a big wodge of your money even if you don't make it outside. 

Not really. You know the score beforehand, and as several of us have patiently pointed out, the requirement is to demonstrate that you've received advice; you are then able to transfer to a stakeholder pension, and then on to another personal pension of your choosing.

dunstonh

ali_bear said:

Awful because it sounds like a trap. Like you're walking out of a club and you're required to have someone escort you out but they will definitely take a big wodge of your money even if you don't make it outside. 

The product being bought is advice.    So, whether the advice is to transfer or to remain doesn't matter.  The OP can still transfer the pension even if the advice is to remain.

If I was being cynical I might be tempted to think that the entire scheme has been set up from the start with the primary goal of enriching the advisors. 

Yes, it is such a money maker that over 90% of advisers wouldn't touch it with a bargepole.

ali_bear

Perhaps I have misunderstood. But it does sound like a golden bargepole. 

As a cynic I could imagine a situation where a small company, very busy with its main like of business, is required to set up a pension scheme for its employees. Not knowing what to do and not having the time to invest in it properly, it goes to a commercial provider who see a huge opportunity in setting up a complex scheme to richly reward themselves and potentially any downstream providers of "advice". Hopefully I am wrong and I shouldn't be so cynical. 

Albermarle

tacpot12 said:

I think you are being ripped off. You are paying £21,000 for pension transfer advice and there is a risk that the advice might be not to transfer! I would put the chance that it is not to transfer at closer to 20% if the adviser is honest and 100% if they aren't.

You are also paying £20K+ over five years for the work to transfer the pension (which takes about a couple of hours at max), and to put your money into a pre-defined portfolio and 'manage' it, which you can do yourself. Your money will have to work much harder if this advisor invests it for you. (You only have to acheive 4% return to beat a professional that is acheiving a 6% return).  

I paid £1000 for transfer advice on two DB pensions six years ago, when admitedly the cost of liability insurance for pension was much lower. £5000 is the normal cost for this sort of pension transfer advice these days, for the transfer value your figures suggest. 

Don't assume that your pension scheme is doing you any favours by recommending him. The scheme trustees will probably be very happy to divest themselves of investment risk inherent in providing you with a pension, so they might well point you in the direction of someone who has the best success rate. They might even suspect that the advisor is prepared to recommend a transfers even when they are not in the best interests of the scheme member, but so long as they don't check the advisers advice too closely they can claim they weren't aware of any problems. 

The ex employer with whom I had a deferred DB scheme, organised two expensive rounds of presentations all over the UK, to promote the idea of transferring out of the scheme in liaison with a preferred company of financial advisors.
Plus plenty of correspondence on the matter. Clearly they were keen to offload as many deferred pensioners ( the scheme was closed to new members) as possible to reduce their long term liabilities.
I declined, although it was probably a 50:50 decision as it was when CETVs were high. I would not dream of transferring out with todays much lower CETV values.

Marcon

ali_bear said:

Perhaps I have misunderstood. But it does sound like a golden bargepole. 

As a cynic I could imagine a situation where a small company, very busy with its main like of business, is required to set up a pension scheme for its employees. Not knowing what to do and not having the time to invest in it properly, it goes to a commercial provider who see a huge opportunity in setting up a complex scheme to richly reward themselves and potentially any downstream providers of "advice". Hopefully I am wrong and I shouldn't be so cynical. 

'Commercial providers' these days are mainly the big insurance companies, or 'master trust' schemes. The days of an employer setting up a scheme purely for their own employees are long gone - and it was never a route followed by small companies, purely for cost reasons. They quite simply didn't offer pensions to their employees until forced to do so - and auto enrolment for the smallest companies only kicked in less than a decade ago.

dunstonh

Perhaps I have misunderstood. But it does sound like a golden bargepole. 

It is pretty much the highest risk transaction that an adviser firm can carry out.     Firms that do them have seen their PI premiums rise from £10k a year to £45k a year and that is just not one year.   You can get a reduction for stopping but those firms that have done DB transfers will be paying for it each and every year going forward.

On top of that, you have the FCA breathing down your neck looking at cases on the basis that it is missold unless proven otherwise.   Its like having waving a red flag at the FCA and shouting "come and get me".     

The fee is high in this thread because the figures sound very much like SJP.   If you go to what is one the most expensive distribution channels in the UK and one of only two that have tie-ins, then everything they do is expensive. 

michael1234

So firstly, thank you all very much indeed - you might have saved me a lot of money or at least risk.

Kudos to dunstonh (and others?) for guessing sjp - spot on!

Current hybrid pension rules mean I need to by "market leading" annuity on retirement which I don't want.

One question I asked the sjp chap was if theoretically speaking the DB element of the hybrid pension only paid out £1 per annum then presumably you wouldn't need a highly qualified (I)FA to determine that I wouldn't lose much by transferring out. He said it is rarely that clear cut and that is why having additional income streams is positive.

Now, if you look at the front page of my pensionA (attached) held at mercer you might forgive the lay person for thinking that one pension dominates the other. I realise its comparing apples with pears but still..... What I do know is that that pension was only hybrid for the first 2 years (when I was earning very little back in 1996) I believe from 1997 onwards, it was pure DC and so in terms of contributions probably 99% came after that date.

Also, I have two other pensions already - how do I find out if they are stakeholder? Nothing in the online platform tells me that. I've attached one as an example.

Given that the sjp person said everything would be free of charge until the 21K kicks in, I'm thinking to play along and get the preliminary advice which of course he said was extremely thorough and rigorous.... At least then I'll be able to see some numbers comparing the two pensions. Then at that point it wouldn't be difficult I hope to use the excuse of worrying about losing 21K if the advice is not to transfer. On the other hand if either my existing other pensions turn out to be Stakeholder or it turns out to be easy to open a new one then maybe it could be worth it as per the advice in this thread I could then get my pension out regardless.