DB transferred.

Lindlou

My OH had a DB pension with his employer which closed around 2016 when the company moved to a new provider. He has since built up a 2nd pension with this new provider which is a DC and stands at around £45K and is still paying in. About 4 years ago, a few of his colleagues took financial advice from an IFA and were advised they could transfer out the DB pension. My OH was told his DB would be worth around £9K PA at 65 but gave a transfer value of around £270K which the IFA duly transferred to an Aviva pension admittedly with his approval. The IFA actually stated there was nothing saying there was a survivor pension on the DB and it was a good reason to transfer if there was nothing in writing.  About 6 weeks ago, the IFA contacted him saying something about a review as the transfer may have missold. OH duly completed the form which included things like "was it explained you were giving up guaranteed lifetime income" which he stated it wasn't.  The IFA did the review themselves and have admitted in writing that the transfer was missold. However, they have included some calculations to show he is not worse off due to transferring and therefore no compensation is due. Since then I have read lots on here that you should never give up a DB. He has now been advised by the IFA that he is retiring,  his family are taking over but they have relinquished the licence as they are looking to merge with another company and if he wants to take any money he should contact Aviva direct. This all sounds a bit off to me. Any thoughts? 

Ibrahim5

Pretty standard behaviour for an IFA. Disgusting.

Dazed_and_C0nfused

Lindlou said:

My OH had a DB pension with his employer which closed around 2016 when the company moved to a new provider. He has since built up a 2nd pension with this new provider which is a DC and stands at around £45K and is still paying in. About 4 years ago, a few of his colleagues took financial advice from an IFA and were advised they could transfer out the DB pension. My OH was told his DB would be worth around £9K PA at 65 but gave a transfer value of around £270K which the IFA duly transferred to an Aviva pension admittedly with his approval. The IFA actually stated there was nothing saying there was a survivor pension on the DB and it was a good reason to transfer if there was nothing in writing.  About 6 weeks ago, the IFA contacted him saying something about a review as the transfer may have missold. OH duly completed the form which included things like "was it explained you were giving up guaranteed lifetime income" which he stated it wasn't.  The IFA did the review themselves and have admitted in writing that the transfer was missold. However, they have included some calculations to show he is not worse off due to transferring! Since then I have read lots on here that you should never give up a DB. He has now been advised by the IFA that he is retiring,  his family are taking over but they have relinquished the licence as they are looking to merge with another company and if he wants to take any money he should contact Aviva direct. This all sounds a bit off to me. Any thoughts? 

I tend to agree.

He wouldn't really have needed it explaining that he was giving up a guaranteed lifetime income as he would have known that anyway from being a scheme member.

Does your husband regret taking the £270k 🤔

Lindlou

Not especially, no. It's more the fact the IFA did his own review then stated he was no worse off which is difficult to know unless you know how long you will live for? Now he appears to be removing himself from the scene. Just wondered what the knowledgeable people on here thought 

Ibrahim5

IFAs often retire and then throw their customers under the bus. It's been happening for years.

QrizB

Lindlou said:

Not especially, no. It's more the fact the IFA did his own review then stated he was no worse off which is difficult to know unless you know how long you will live for?

It's impossible for any of us to say for certain without doing all the same fact-finding that the IFA did back when your husband transferred, but one way (not the only way) would be to look at what guaranteed income you could buy with £270k (less the 25% tax-free).

Today, for example, £202k (£270k - £68k TFLS) could but a 65-year-old an inflation-linked income of about £9800 (see third line of best-buy table here). That's more than the £9000 pa that he surrendered, so it's possible that your husband is better off with the DC pot than he would've been with the DB pension.

Lindlou

That's interesting - thank you 

LHW99

And if there was no spouse pension with the DB, he would have the option with a DC pot of choosing a joint annuity with eg 50% or 100% payable to spouse if he passed first.

Marcon

Lindlou said:

My OH had a DB pension with his employer which closed around 2016 when the company moved to a new provider. He has since built up a 2nd pension with this new provider which is a DC and stands at around £45K and is still paying in. About 4 years ago, a few of his colleagues took financial advice from an IFA and were advised they could transfer out the DB pension. My OH was told his DB would be worth around £9K PA at 65 but gave a transfer value of around £270K which the IFA duly transferred to an Aviva pension admittedly with his approval. The IFA actually stated there was nothing saying there was a survivor pension on the DB and it was a good reason to transfer if there was nothing in writing.  

The 'writing' the IFA should have looked at, if he was in doubt, is the DB scheme's Trust Deed! In fairness, he might have done so and found there was no guaranteed provision for a 'survivor' who was not a spouse or civil partner. You've referred to 'OH' which doesn't clarify if you are either of those, or just 'partners' in an everyday sense of the word?

Lindlou said:

About 6 weeks ago, the IFA contacted him saying something about a review as the transfer may have missold. OH duly completed the form which included things like "was it explained you were giving up guaranteed lifetime income" which he stated it wasn't.  

Didn't he read any of the scheme literature or benefit statements he would have been sent over the years? Sometimes I despair of members!!

Lindlou said:

The IFA did the review themselves and have admitted in writing that the transfer was missold. However, they have included some calculations to show he is not worse off due to transferring and therefore no compensation is due. 

Depending on where the transfer was invested (ie which funds within the Aviva pension scheme), and how well those investments performed, it's possible that is correct, but without seeing the paperwork nobody here can really comment meaningfully. In broad terms, I guess that the IFA has done something along the lines of taking the current value, extrapolated what that value might be when your OH reaches age 65, and looked at annuity rates to buy something comparable to the DB pension given up.

Lindlou said:

Since then I have read lots on here that you should never give up a DB. 

Transfer values at the time of the transfer (assuming it was about 2020/21) were roaring away, so it's entirely possible, especially if the pair of you weren't married/civil partnered at the time and your OH indicated that position was unlikely to change. Look at some of the hysterical posts on this forum dating from that time, as people shrieked in indignation that those dastardly financial advisers were stopping them from transferring (actually they never had any such power. People were required to show they had received advice, not that they'd followed it!).

Cobbler_tone

That would probably be worth £180k today so he got a good deal. As someone said, he could probably buy an annuity similar to the DB should
be wish to revert.

Lindlou

Thank you all for taking the time to reply. I'm aware transfer values have fallen dramatically but it's nice that some people think it's a decent deal. Makes me feel better at least.