DB Transfer 'extortion' ?!

dunstonh

he didn’t tell us how much his company’s PI insurance premium was, but he indicated it was many thousands per year.

Think more like tens to hundreds of thousands

for example (and this were before the FCA review, firms were reporting:
One financial advice firm has seen its PI premiums leap from £3,700 in 2009 to £45,000 in 2019. Another adviser stated it went from a PI cost in 2017 of £22,736 to the best quote it could obtain for 2018 being £112,000.

Its not just that.  I was speaking with a barrister the other day who deals with DB pension complaints, and he said that it could cost tens of thousands to deal with a complaint from beginning to end, even if it gets rejected.  Claims companies are just putting in spurious complaints left right and centre.

artyboy

So for what it is worth, I have an old DB with a current CETV of just over £50k (to @dunstonh 's point, it was close to £100k a couple of years back). It's deferred but statutory revaluation tells me it's worth about £2700 a year from age 60, in today's money. With indexing and spousal benefits.

The only thing that annoys me about that is that they shut the scheme after 9 months of me being in it and that I couldn't accrue more benefit... it wasn't even a contributory scheme!

Point to the OP here... although I don't know your circumstances, this sort of thing is generally a gift horse not to be looked at too closely. I remember them offering me about £2k at the time (nearly 30 years ago) to buy me out. Very happy to say that the answer was no from me...

Triumph13

As others have suggested, if, once you have the details of what benefits your wife would actually be giving up, you share the details of why you think the transfer is still a good idea, the good people of this site will happily give their views on whether or not it really is one. 

I appreciate you may not like the idea of sharing personal circumstances with internet strangers, but if said strangers do convince you that it isn't a good idea - and there has to be a good chance of that given how rarely it is a good idea - then that's several thousand pounds of advisor fees you will have saved.

LHW99

Claims companies are just putting in spurious complaints left right and centre.

It might help if (at least for this area) only claims from individuals could be considered, with no right for any payments except to the individual.

Even if companies tried to hide behind an individual person, the knowledge that they had no come back if the money was sent to a personal bank account might reduce the number of false claims

AlanP_2

I transferred from an old DB scheme about 3 years ago.

The biggest, probably the only, factor that enabled me to get a "GOOD TO GO" result from the IFA was that between us we had c£70k of CPI linked other DBs and SPs to look forward to hence the amount per annum given up (c£8k) was relatively insignificant in the scheme of things.

If it had been our only DB income I'm sure it would have been a different answer.

Pat38493

Scrudgy said:

I must admit, what is wrong about this for me is that the over £30k value is simply way too low for this. The onerous hoops to be jumped through by the pension transfer company to ensure compliance are ridiculous for CETVs of £30k or similar lowish amounts.

When we transferred my wife’s pension we paid £5k, but the CETV was 39 times the annual annuity value, so was worth doing for us, but during the numerous recorded video meetings, the transfer specialist told us the process they went through to make sure they had full compliance and wouldn’t fall foul of the FCA in the event of a customer complaint. He had to employ a dedicated compliance manager to review every video meeting, audit every piece of information that we submitted and received, he didn’t tell us how much his company’s PI insurance premium was, but he indicated it was many thousands per year.  I asked why he bothered staying in DB transfer business, and he said it was ok as long as he completed at least 3 transfers per week to break even and make a few bob. Every transfer took about 6 weeks to go through the advising process, so was a lot of work to juggle.

To go through that entire process for small CETV values is just not right. If it was many hundreds of thousands of pounds, fair enough, but what could be only one or two years worth of living should have a lesser advisory method that should consist of stern warnings and disclaimers that leave you in no doubt of what happens if you blow it all, but it should be very simple to transfer modest values into a SIPP. Above £100k full advisory service, below £100k lesser service or something similar. It not right currently for sure.

There is some merit in this point and it was also mentioned on a similar thread a couple of months ago - the £30K value was put in place a long time ago and has never been increased at all, so it’s a lot less in real terms than it was when first introduced.  Meanwhile I suspect that advice fees have increased by more than inflation every year on average for this type of advice.

I would also wonder whether it would be possible to introduce a “no brainer” level of advice that would be much cheaper - there are probably lots of situations where it’s obvious with a 30 minute conversation that the advice will be negative, so there is no point going through the full process.  This would then still enable the person to go through the insistent client route if they were still determined to go ahead in spite of the experts saying they should not.

Cobbler_tone

Pat38493 said:

Scrudgy said:

I must admit, what is wrong about this for me is that the over £30k value is simply way too low for this. The onerous hoops to be jumped through by the pension transfer company to ensure compliance are ridiculous for CETVs of £30k or similar lowish amounts.

When we transferred my wife’s pension we paid £5k, but the CETV was 39 times the annual annuity value, so was worth doing for us, but during the numerous recorded video meetings, the transfer specialist told us the process they went through to make sure they had full compliance and wouldn’t fall foul of the FCA in the event of a customer complaint. He had to employ a dedicated compliance manager to review every video meeting, audit every piece of information that we submitted and received, he didn’t tell us how much his company’s PI insurance premium was, but he indicated it was many thousands per year.  I asked why he bothered staying in DB transfer business, and he said it was ok as long as he completed at least 3 transfers per week to break even and make a few bob. Every transfer took about 6 weeks to go through the advising process, so was a lot of work to juggle.

To go through that entire process for small CETV values is just not right. If it was many hundreds of thousands of pounds, fair enough, but what could be only one or two years worth of living should have a lesser advisory method that should consist of stern warnings and disclaimers that leave you in no doubt of what happens if you blow it all, but it should be very simple to transfer modest values into a SIPP. Above £100k full advisory service, below £100k lesser service or something similar. It not right currently for sure.

There is some merit in this point and it was also mentioned on a similar thread a couple of months ago - the £30K value was put in place a long time ago and has never been increased at all, so it’s a lot less in real terms than it was when first introduced.  Meanwhile I suspect that advice fees have increased by more than inflation every year on average for this type of advice.

I would also wonder whether it would be possible to introduce a “no brainer” level of advice that would be much cheaper - there are probably lots of situations where it’s obvious with a 30 minute conversation that the advice will be negative, so there is no point going through the full process.  This would then still enable the person to go through the insistent client route if they were still determined to go ahead in spite of the experts saying they should not.

That’s abridged advice, often free.

LHW99

I would also wonder whether it would be possible to introduce a “no brainer” level of advice that would be much cheaper - there are probably lots of situations where it’s obvious with a 30 minute conversation that the advice will be negative, so there is no point going through the full process.  This would then still enable the person to go through the insistent client route if they were still determined to go ahead in spite of the experts saying they should not.

Isn't that what "abridged advice" is supposed to do?

QrizB

Abridged advice, as I understand it from reading this forum, gives an answer of either "no" or "maybe". If you get a "maybe" you then have to pay for full advice that could still turn out "no" but might give you your "yes".

Albermarle

Cobbler_tone said:

Pat38493 said:

Scrudgy said:

I must admit, what is wrong about this for me is that the over £30k value is simply way too low for this. The onerous hoops to be jumped through by the pension transfer company to ensure compliance are ridiculous for CETVs of £30k or similar lowish amounts.

When we transferred my wife’s pension we paid £5k, but the CETV was 39 times the annual annuity value, so was worth doing for us, but during the numerous recorded video meetings, the transfer specialist told us the process they went through to make sure they had full compliance and wouldn’t fall foul of the FCA in the event of a customer complaint. He had to employ a dedicated compliance manager to review every video meeting, audit every piece of information that we submitted and received, he didn’t tell us how much his company’s PI insurance premium was, but he indicated it was many thousands per year.  I asked why he bothered staying in DB transfer business, and he said it was ok as long as he completed at least 3 transfers per week to break even and make a few bob. Every transfer took about 6 weeks to go through the advising process, so was a lot of work to juggle.

To go through that entire process for small CETV values is just not right. If it was many hundreds of thousands of pounds, fair enough, but what could be only one or two years worth of living should have a lesser advisory method that should consist of stern warnings and disclaimers that leave you in no doubt of what happens if you blow it all, but it should be very simple to transfer modest values into a SIPP. Above £100k full advisory service, below £100k lesser service or something similar. It not right currently for sure.

There is some merit in this point and it was also mentioned on a similar thread a couple of months ago - the £30K value was put in place a long time ago and has never been increased at all, so it’s a lot less in real terms than it was when first introduced.  Meanwhile I suspect that advice fees have increased by more than inflation every year on average for this type of advice.

I would also wonder whether it would be possible to introduce a “no brainer” level of advice that would be much cheaper - there are probably lots of situations where it’s obvious with a 30 minute conversation that the advice will be negative, so there is no point going through the full process.  This would then still enable the person to go through the insistent client route if they were still determined to go ahead in spite of the experts saying they should not.

That’s abridged advice, often free.

I have also seen it where there is a cost but not huge, maybe about £1000?