DB Transfer 'extortion' ?!

WoodForTheTrees123

Well... We (my wife & I) have started on the road of withdrawing the full amount that is sat in her NatWest Group Pension from working there in the 1980's. Note: I have already done this process for 3 old pensions I tracked down and fully withdrew my funds in all 3 (they were under £30k so all good).
We went through the process of first finding this (!) and, having found it, have now got the Balance/Quote of around £50,000.
The fund it's currently sat in does not allow full withdrawal so we were looking at transferring to another fund that does...

...Anyways - We have discovered that:

• We are "legally obliged" to seek advice from an FCA Regulated Pension Advisor
• Many advisors simply won't 'take on' a Defined Benefits full withdrawal
• IF we find one that does, we have to start a potentially lengthy and costly process
• That process will 99.99% result in the Advisor advising NOT to fully wihdraw funds
• Some advisors (whittling this down again!) MAY offer a 'Customer Override' process whereby "if the customer (my wife) acknowledges that the advice is to not withdraw however the customer states that they understand this but still want to go ahead", they may be able to start a new process for that"

I am now very incredulous/frustrated (nay annoyed !) that the above is required !

We have been told over the 'phone that "the cost will be a minium of £4,000" (!!!!)

Is this not our money (well - her money but we are a team!) ?

I feel this is either extortion or theft or blackmail or indeed, all 3 !!!

We already know that we will override any advice - why should we have to go through this pain and expense to get to our own decision to get at our own monies !?

Any advice from anybody on this would be HUGELY appreciated...

Many thanks,

Jackie & Mark

Hoenir

What's the guaranteed annual pension and the annual uplift ? 

Unfortunately in this litigant world people want compensation for everything. Advice costs money for good reason.  

WoodForTheTrees123

Hi Hoenir - Not sure - I'll see if it's on the Pension Portal and/or the documents and will let you know ...

Marcon

MarkTorquay said:

Well... We (my wife & I) have started on the road of withdrawing the full amount that is sat in her NatWest Group Pension from working there in the 1980's. Note: I have already done this process for 3 old pensions I tracked down and fully withdrew my funds in all 3 (they were under £30k so all good).
We went through the process of first finding this (!) and, having found it, have now got the Balance/Quote of around £50,000.
The fund it's currently sat in does not allow full withdrawal so we were looking at transferring to another fund that does...

...Anyways - We have discovered that:

• We are "legally obliged" to seek advice from an FCA Regulated Pension Advisor
• Many advisors simply won't 'take on' a Defined Benefits full withdrawal
• IF we find one that does, we have to start a potentially lengthy and costly process
• That process will 99.99% result in the Advisor advising NOT to fully wihdraw funds
• Some advisors (whittling this down again!) MAY offer a 'Customer Override' process whereby "if the customer (my wife) acknowledges that the advice is to not withdraw however the customer states that they understand this but still want to go ahead", they may be able to start a new process for that"

I am now very incredulous/frustrated (nay annoyed !) that the above is required !

We have been told over the 'phone that "the cost will be a minium of £4,000" (!!!!)

Is this not our money (well - her money but we are a team!) ?

I feel this is either extortion or theft or blackmail or indeed, all 3 !!!

We already know that we will override any advice - why should we have to go through this pain and expense to get to our own decision to get at our own monies !?

Any advice from anybody on this would be HUGELY appreciated...

Many thanks,

Jackie & Mark

Endless threads on this forum on just this topic. Have a browse.

No good being frustrated or annoyed - it's a legal requirement and has been for the best part of a decade, which is why you have to 'go through it'.

Once your wife has confirmation that she has received the required advice (and the adviser must provide the required certificate if she has received the requisite 'full' advice), she can arrange her own transfer to a stakeholder pension (some still open for new retail business), which must accept a transfer from any UK registered pension scheme. She'll still need advice before the ceding (paying) scheme can pay over the transfer.

Marcon

MarkTorquay said:

Hi Hoenir - Not sure - I'll see if it's on the Pension Portal and/or the documents and will let you know ...

Which is precisely why advice is a requirement - to stop people making blind decisions based on little or no understanding of what they are giving up (and then trying to find someone to blame!).

Pat38493

As Marcon said there is no way to avoid paying the £4K for the advice, other than simply taking the pension benefits that you have in the existing scheme - if the adviser says that it's not in your interest to transfer, probably that's for a good reason.  If it truly is in your interest, the advice will be positive, but IFAs on these boards have stated that a high percentage (I think more than 80% if I remember correctly) are advised not to transfer.

Has your wife considered taking the pension with the maximum PCLS and then just taking the income each year?  Unless you actually need the whole £46 of tmoney desperately for a specific reason, or there are other unusual factors like limited life span, it's unlikely to be in your wife's long term financial interest to transfer out, especially when the advice charge will end up being a significant % of the total CETV.

Also is the £50K correct?  Do you have an up to date CETV because CETV values have gone down a lot since 2022?

The other problem you have is that the quotes of CETV are only valid for a certain time, and the advice process often takes up nearly all that time, so if there is any delay you are back to square one.

This is not extortion because the pension is almost certainly worth more in the long term by not transferring out, excepting in quite unusual circumstances.

WoodForTheTrees123

Marcon said:

MarkTorquay said:

Well... We (my wife & I) have started on the road of withdrawing the full amount that is sat in her NatWest Group Pension from working there in the 1980's. Note: I have already done this process for 3 old pensions I tracked down and fully withdrew my funds in all 3 (they were under £30k so all good).
We went through the process of first finding this (!) and, having found it, have now got the Balance/Quote of around £50,000.
The fund it's currently sat in does not allow full withdrawal so we were looking at transferring to another fund that does...

...Anyways - We have discovered that:

• We are "legally obliged" to seek advice from an FCA Regulated Pension Advisor
• Many advisors simply won't 'take on' a Defined Benefits full withdrawal
• IF we find one that does, we have to start a potentially lengthy and costly process
• That process will 99.99% result in the Advisor advising NOT to fully wihdraw funds
• Some advisors (whittling this down again!) MAY offer a 'Customer Override' process whereby "if the customer (my wife) acknowledges that the advice is to not withdraw however the customer states that they understand this but still want to go ahead", they may be able to start a new process for that"

I am now very incredulous/frustrated (nay annoyed !) that the above is required !

We have been told over the 'phone that "the cost will be a minium of £4,000" (!!!!)

Is this not our money (well - her money but we are a team!) ?

I feel this is either extortion or theft or blackmail or indeed, all 3 !!!

We already know that we will override any advice - why should we have to go through this pain and expense to get to our own decision to get at our own monies !?

Any advice from anybody on this would be HUGELY appreciated...

Many thanks,

Jackie & Mark

Endless threads on this forum on just this topic. Have a browse.

No good being frustrated or annoyed - it's a legal requirement, which is why you have to 'go through it'.

Once your wife has confirmation that she has received the required advice (and the adviser must provide the required certificate if she has received the requisite 'full' advice), she can arrange her own transfer to a stakeholder pension (some still open for new retail business), which must accept a transfer from any UK registered pension scheme. She'll still need advice before the ceding (paying) scheme can pay over the transfer.

Thanks Marcon - I suppose what I'm saying here is the whole point this being "a legal requirement" - I'm kinda challenging the law itself I suppose whereby, to be legally forced to fork out money/effort/time, to end up at our own 'grown up' decision is quite frankly unbelievable !? Again - it's our money - who's to judge or decide what we want to do with it ?

Cobbler_tone

Hi Mark,
I understand your frustration and TBH £4k doesn't sound bad compared to what I was quoted.
Without asking you to disclose personal financial details, do you understand the impact of doing this and you should find out the guaranteed pension (and associated protection) it is providing in the DB scheme? Could be anything from £2-4k a year for life. Appreciate that you may need as much cash as possible today. All of our circumstances are different.
If you do ultimately get it all out remember to consider other income and your tax position.

HappyHarry

MarkTorquay said:

Thanks Marcon - I suppose what I'm saying here is the whole point this being "a legal requirement" - I'm kinda challenging the law itself I suppose whereby, to be legally forced to fork out money/effort/time, to end up at our own 'grown up' decision is quite frankly unbelievable !? Again - it's our money - who's to judge or decide what we want to do with it ?

This is a common misunderstanding - it is not your money. It is part of a fund that the trustees administer in order to pay your wife the income that she has been promised upon retirement. Your wife has a guarantee of income from her pension, not a portion of the pot that the trustees have built up to provide that income.

To boil it down simply, the trustees know how much it is likely to cost to provide your wife with an income for the rest of her life. They have offered your wife a little less than this in the hope that she might take it and thus remove that liability from their books, making it easier for the trustees to provide the guaranteed income for the remaining members. 

It is no wonder the FCA start with the assumption that a transfer of a Defined Benefit scheme is unlikely to be in the individual's best interest. 

WoodForTheTrees123

Marcon said:

MarkTorquay said:

Hi Hoenir - Not sure - I'll see if it's on the Pension Portal and/or the documents and will let you know ...

Which is precisely why advice is a requirement - to stop people making blind decisions based on little or no understanding of what they are giving up (and then trying to find someone to blame!).

Wow "to stop people making blind decisions based on little or no understanding of what they are giving up" - I had not realised that anybody is aware of our personal circumstances - Just throw a blanket over "the right decision", bound to fit everybody.... And to go through the whole process to end up with our override, because we know and understand (only us to blame!) what we want to do and why - is that not farcical ?

DRS1

MarkTorquay said:

Marcon said:

MarkTorquay said:

Well... We (my wife & I) have started on the road of withdrawing the full amount that is sat in her NatWest Group Pension from working there in the 1980's. Note: I have already done this process for 3 old pensions I tracked down and fully withdrew my funds in all 3 (they were under £30k so all good).
We went through the process of first finding this (!) and, having found it, have now got the Balance/Quote of around £50,000.
The fund it's currently sat in does not allow full withdrawal so we were looking at transferring to another fund that does...

...Anyways - We have discovered that:

• We are "legally obliged" to seek advice from an FCA Regulated Pension Advisor
• Many advisors simply won't 'take on' a Defined Benefits full withdrawal
• IF we find one that does, we have to start a potentially lengthy and costly process
• That process will 99.99% result in the Advisor advising NOT to fully wihdraw funds
• Some advisors (whittling this down again!) MAY offer a 'Customer Override' process whereby "if the customer (my wife) acknowledges that the advice is to not withdraw however the customer states that they understand this but still want to go ahead", they may be able to start a new process for that"

I am now very incredulous/frustrated (nay annoyed !) that the above is required !

We have been told over the 'phone that "the cost will be a minium of £4,000" (!!!!)

Is this not our money (well - her money but we are a team!) ?

I feel this is either extortion or theft or blackmail or indeed, all 3 !!!

We already know that we will override any advice - why should we have to go through this pain and expense to get to our own decision to get at our own monies !?

Any advice from anybody on this would be HUGELY appreciated...

Many thanks,

Jackie & Mark

Endless threads on this forum on just this topic. Have a browse.

No good being frustrated or annoyed - it's a legal requirement, which is why you have to 'go through it'.

Once your wife has confirmation that she has received the required advice (and the adviser must provide the required certificate if she has received the requisite 'full' advice), she can arrange her own transfer to a stakeholder pension (some still open for new retail business), which must accept a transfer from any UK registered pension scheme. She'll still need advice before the ceding (paying) scheme can pay over the transfer.

Thanks Marcon - I suppose what I'm saying here is the whole point this being "a legal requirement" - I'm kinda challenging the law itself I suppose whereby, to be legally forced to fork out money/effort/time, to end up at our own 'grown up' decision is quite frankly unbelievable !? Again - it's our money - who's to judge or decide what we want to do with it ?

Part of the point is to stop you or your wife making a decision which most people on this board will tell you is not the best decision.  Some of us are quite jealous of someone with a DB pension and shake our heads at someone who wants to give it up.

Now obviously we don't know your wife's circumstances and maybe she is in the 20% (is it really that high?) for whom the decision will be OK.  But it is a valuable right she would be giving up and too often people don't understand how valuable.  So yes the nanny state tries to stop them doing something that is most probably not a good idea for them.

And do not forget that there have been scams - "pension liberation" rings a bell where people have tried to take their pensions out only to find themselves robbed of the pension by some "adviser" (who is not authorised or regulated) and then hit with a bill from the taxman for "taking their money out of the pension".