DB Transfer 'extortion' ?!

artyboy

WoodForTheTrees123 said:

WoodForTheTrees123 said:

Marcon said:

MarkTorquay said:

Marcon said:

MarkTorquay said:

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 ?

Your adviser is required to ensure they are, and give advice on that basis.

If your wife chooses to disregard it, so be it - but based on your first and second posts on this thread, you've already made your decision without understanding what the scheme offers, so might perhaps take note of any advice she receives before summarily dismissing it.

Thanks Marcon - I'm now actually swinging towards listening to what the advice will be ! (it's piqued my interest at least!)  I still believe we'd end up with our 'override' however perhaps I'm wrong pending said advice ! We shall see - I will pop back here to post what may happen ! If we do indeed end up overriding (god - sounds like that in itself may be a challenge to find somebody who may consider it !?!?!), I will then go back to my rant of having to go through the whole painful and costly process. If i'm proved wrong - I will eat humble pie and acquiesce...

I take my hat off to you. It's never easy to back down, even more so on a public forum! Forget the insistent client route being described above. There's nothing wrong with transferring to a stakeholder (Aviva and Standard Life remain open to retail business, meaning your wife can open one for herself with no adviser involvement or fee), especially those which now permit drawdown, although fund choices and online functionality are often limited. If that's the case, all your wife has to do is transfer into, and then out, of the stakeholder (there are no exit charges, and no advice required to transfer from a stakeholder - it's a defined contribution scheme) to her preferred choice of personal pension.

Copying from an answer I posted on another thread a few months ago:

Facts:

1. Advisers have never been the spoilsport 'gatekeepers' as they have often been portrayed, particularly on this site. They have been hamstrung by increasingly onerous FCA strictures and crippling PI insurance costs, which is why so many of them have relinquished their FCA permissions to advise on transfers from DB schemes.
2. When full advice has been given, the adviser must sign the necessary confirmation they have done so - known as a Section 48 certificate.
3. If someone has received full (as opposed to abridged) advice, and they have a statutory right to a transfer from a scheme with safeguarded benefits, the transfer can normally proceed whatever the advice says, provided the receiving scheme will accept the transfer. The exception is where the trustees of the ceding (paying) scheme identify certain risk factors in the proposed receiving scheme, in which case the transfer may be delayed or blocked to help protect members from falling victim to a scam.
4. Stakeholder pensions must accept any transfer from a UK registered pension scheme. That has been the position since stakeholders were introduced over 20 years ago, was confirmed in the 2015 Treasury consultation and remains the case still.
5. At the time of writing there are stakeholder providers open to new retail business. An individual can therefore apply direct to the provider to open one - easy to do by post, with a cheque for £16. They can then arrange their own transfer (with no adviser involvement beyond the provision of a Section 48 certificate, which enables the DB scheme to pay out the transfer - so no need for any 'insistent client' process). Given the tight timeframes involved with DB transfers, it makes sense to have the stakeholder pension set up before beginning the process.

None of the above is to suggest that transferring is necessarily a good idea...if you've paid for advice, it might make sense to pay heed to it!

Hi Marcon - It's still me however had an email saying change my UserName !

I've been mulling over what you said here and (forgive my ignorance!) am trying to establish if you are suggesting that my wife can 'circumvent' the 'painful route' ?

Do you mean she CAN, for instance, open a Stakeholder account herself, say with Avivia, and transfer FROM her current NatWest Group Pension (reading between the lines - this IS a 'Stakeholder Pension' ?), without seeking advice or sorta 'permission/signoff' from NatWest Group fund?

I did look at the Aviva website and it 'suggests' that one can 'draw down funds' at any time/amount (i think!).

Have I got that right or have I misundertood ?

Thanks in advance,

Mark

Ps - I'm gonna bite the bullet and put up here our personal circumstances as now really intrigued if it may sway opinion ?!

Watch this space...

Best of luck! As I previously mentioned that I have a deferred DB that I suspect is very similar to yours, I will also mention (if it wasn't already obvious) that I didn't pursue a transfer even when the CETV was close to £100k. It's frankly a tiny drop in the ocean compared to my other DC pots but I just saw it as an extra little insurance policy to add to my state pension, just in case I blew the rest on wine women and song.

Well, one woman in particular...

Nick_Dr1

AlanP_2 said:

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.

Same here. A slight twist was that my old employer actually paid for the advice, so didn't cost me anything. I'd practically forgotten I'd got the pension as I only worked for them for 18 months. I could have got a refund of the contributions at the time - so glad I didn't! 

Albermarle

Universidad said:

MarkTorquay said:

I know it's been said that it's not technically hers etc etc however, if/when she decides to "take the pot/sum/balance/monies", I do know what the value will be and that value will be paid to her. One could argue therefore that it sorta is hers (at that point) ?

One way that might help to look at it is that this is money that has already been spent.

Your wife earned money in her job at the time, and then - along with some contributions from her employer - she spent part of her salary buying an entitlement to an annual pension.

Now if this was a defined contribution scheme - a DC pension, which is what most people in the UK have these days, then it would truly be a pot. It wouldn't typically be a cash pot, usually it would be invested in stocks and bonds and suchlike. 

But whatever was the value of that pot, your wife would indeed own what was in it. The pension itself would be little more than a tax wrapper for what is inside. So while the pot would not belong to your wife without any conditions, it would genuinely belong to her. 

The conditions would include that she could not access it before a certain age, and that (most of) the withdrawals from it would be subject to income tax. And it's these conditions that form the tax wrapper that make a pension different to an ISA, for example. 

An ISA has conditions on what can be paid in, but unlike a pension no tax is due on the way out. 

Either way, within a pension or an ISA, there's just a pot of investments that you can manage to a greater or lesser extent depending on your provider.

A Defined Benefit (or DB) pension is a totally different beast. The pot that exists for a funded DB pension exists across the whole scheme, and is managed by trustees for the good of the scheme. You do not in any real sense own part of that pot. What you have is an entitlement - not to the pot, but to some pre-agreed benefits. The pot exists only to be able to continue to provide pre-agreed benefits to members.

In this sense the transfer value from a DB pension is not about access to your money, it's a payment to buy back the benefit entitlement that you have, so that the scheme can take your liabilities off their books.

It does not necessarily correlate strongly with the value of the benefits the scheme has promised to provide. For example, my own transfer value from USS was less than 100K, despite the benefits being worth nearly 10K per year, with a guaranteed lump sum of 25K+

If I live to roughly my life expectancy, I would expect to take significantly more than 200K out of that pension, and that would be (up to a point) adjusted for inflation over the next 40 years or so. For me, it would have been a terrible idea to take that ~100K.

But make no mistake, USS doesn't owe me 100K, or 200K. What they owe me is a 25K lump sum, and about 10K every year from when I retire until I die. That's what I've bought - and I honestly prefer it to the money, because what I've bought is a permanent salary in retirement, and I never need to worry about what I'll do when I reach retirement age again - no matter what happens to the stock markets. As long as the University sector exists, I'm getting paid.

Another point is that for most DB schemes the majority of the money has been paid by the employer, typically 20 30% of the employees salary, compared to single digit % for the employee.
In DC schemes it will typically be more evenly balanced.

AMagny

Has anyone managed to transfer a DB pot valued at more than £30k and not be ripped off by extortionate fees??

My CETV is £38k (frustrating is an understatement!). Have received quotes from £4k-£15k to approve the move. It’s such a simple request given I already have a SIPP and wasn’t required to get any permission for the £75k+ DC pots I moved over already. 

Surely there are some advisors out there not determined to rip people off!? 

Moonwolf

AMagny said:

Has anyone managed to transfer a DB pot valued at more than £30k and not be ripped off by extortionate fees??

My CETV is £38k (frustrating is an understatement!). Have received quotes from £4k-£15k to approve the move. It’s such a simple request given I already have a SIPP and wasn’t required to get any permission for the £75k+ DC pots I moved over already. 

Surely there are some advisors out there not determined to rip people off!? 

Every single incorrect point you have made is addressed in the thread that you are replying to.

AMagny

poseidon1 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.

In 2009 I was charged £400 by HL for a report to transfer £32k from a DB scheme projecting a £1900 p.a annual pension at age 65. I overrode their reccomendation to leave it in place and proceeded with the transfer to their SIPP.

Scroll forward 14 years, there is no way I would contemplate going through the same excercise at 10 times the fees for the cetv in question ( assuming I could find an IFA prepared to advise in the first place).

In 2009 I was charged £400 by HL for a report…

As in Hargreaves Lansdown?? 

AlanP_2

AMagny said:

Has anyone managed to transfer a DB pot valued at more than £30k and not be ripped off by extortionate fees??

My CETV is £38k (frustrating is an understatement!). Have received quotes from £4k-£15k to approve the move. It’s such a simple request given I already have a SIPP and wasn’t required to get any permission for the £75k+ DC pots I moved over already. 

Surely there are some advisors out there not determined to rip people off!? 

Have you done any research into DB transfers in terms of what is involved, the costs of PI insurance, the fact that a lot of IFAs have dropped their permissions to carry out this sort of work (as they make SO MUCH out of it) etc? 

Or, just decided to come on here and have a moan?

Comparing DB to DC transfers is pointless as one is a pot of money with your name on it (DC) and one is a "promise to pay" you an amount in retirement (DB). To achieve the desired outcome of paying you in retirement the  trustees invest the money available to them. They will offer a CETV value to buy that obligation to pay off you, whether you want to accept it or not is up to you.

If you don't like the fact that advice is needed before you can accept it complain to your MP and see if you can get the law changed.


In answer to your first question, yes I have.

cloud_dog

Marcon said:

WoodForTheTrees123 said:

Marcon said:

MarkTorquay said:

Marcon said:

MarkTorquay said:

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 ?

Your adviser is required to ensure they are, and give advice on that basis.

If your wife chooses to disregard it, so be it - but based on your first and second posts on this thread, you've already made your decision without understanding what the scheme offers, so might perhaps take note of any advice she receives before summarily dismissing it.

Thanks Marcon - I'm now actually swinging towards listening to what the advice will be ! (it's piqued my interest at least!)  I still believe we'd end up with our 'override' however perhaps I'm wrong pending said advice ! We shall see - I will pop back here to post what may happen ! If we do indeed end up overriding (god - sounds like that in itself may be a challenge to find somebody who may consider it !?!?!), I will then go back to my rant of having to go through the whole painful and costly process. If i'm proved wrong - I will eat humble pie and acquiesce...

I take my hat off to you. It's never easy to back down, even more so on a public forum! Forget the insistent client route being described above. There's nothing wrong with transferring to a stakeholder (Aviva and Standard Life remain open to retail business, meaning your wife can open one for herself with no adviser involvement or fee), especially those which now permit drawdown, although fund choices and online functionality are often limited. If that's the case, all your wife has to do is transfer into, and then out, of the stakeholder (there are no exit charges, and no advice required to transfer from a stakeholder - it's a defined contribution scheme) to her preferred choice of personal pension.

Copying from an answer I posted on another thread a few months ago:

Facts:

1. Advisers have never been the spoilsport 'gatekeepers' as they have often been portrayed, particularly on this site. They have been hamstrung by increasingly onerous FCA strictures and crippling PI insurance costs, which is why so many of them have relinquished their FCA permissions to advise on transfers from DB schemes.
2. When full advice has been given, the adviser must sign the necessary confirmation they have done so - known as a Section 48 certificate.
3. If someone has received full (as opposed to abridged) advice, and they have a statutory right to a transfer from a scheme with safeguarded benefits, the transfer can normally proceed whatever the advice says, provided the receiving scheme will accept the transfer. The exception is where the trustees of the ceding (paying) scheme identify certain risk factors in the proposed receiving scheme, in which case the transfer may be delayed or blocked to help protect members from falling victim to a scam.
4. Stakeholder pensions must accept any transfer from a UK registered pension scheme. That has been the position since stakeholders were introduced over 20 years ago, was confirmed in the 2015 Treasury consultation and remains the case still.
5. At the time of writing there are stakeholder providers open to new retail business. An individual can therefore apply direct to the provider to open one - easy to do by post, with a cheque for £16. They can then arrange their own transfer (with no adviser involvement beyond the provision of a Section 48 certificate, which enables the DB scheme to pay out the transfer - so no need for any 'insistent client' process). Given the tight timeframes involved with DB transfers, it makes sense to have the stakeholder pension set up before beginning the process.

None of the above is to suggest that transferring is necessarily a good idea...if you've paid for advice, it might make sense to pay heed to it!

Hi Marcon - It's still me however had an email saying change my UserName !

I've been mulling over what you said here and (forgive my ignorance!) am trying to establish if you are suggesting that my wife can 'circumvent' the 'painful route' ?

Do you mean she CAN, for instance, open a Stakeholder account herself, say with Avivia, and transfer FROM her current NatWest Group Pension (reading between the lines - this IS a 'Stakeholder Pension' ?), without seeking advice or sorta 'permission/signoff' from NatWest Group fund?

I did look at the Aviva website and it 'suggests' that one can 'draw down funds' at any time/amount (i think!).

Have I got that right or have I misundertood ?

Thanks in advance,

Mark

See point 3 - full advice is needed. If your wife is in a DB scheme, it can't pay out a transfer value until the scheme has confirmed she has received advice. She doesn't have to follow the advice, and neither the DB scheme nor the stakeholder scheme will need (or indeed want) to see what the advice says.

I don't know which lines you're reading between, but if your wife worked for NatWest in the 1980s, she certainly wouldn't have had a stakeholder scheme; they quite simply didn't exist until early this century. As the title of your thread says, she will have been in a DB scheme, because that was what NatWest offered at the time: the NatWest Group Pension Fund.

AlanP_2 said:

Do you mean she CAN, for instance, open a Stakeholder account herself, say with Avivia, and transfer FROM her current NatWest Group Pension (reading between the lines - this IS a 'Stakeholder Pension' ?), without seeking advice or sorta 'permission/signoff' from NatWest Group fund?

NO. 

The DB scheme will insist on you having had advice as it is a legal requirement. Whether the advice is Go or Stay they do not care and won't even want to see that part of the advice report.

Once you have the advice report you can go down the stakeholder route as suggested but personally, I would double check with my stakeholder provider before starting any process.

Marcon is no doubt correct but hearing it from the company in question rather than some person on the internet that you don't know anything about makes sense to me.

No offence Marcon, I would say Do Your Own Research about any potentially costly guidance given on here. 

I'm not remotely offended; I totally agree with you. When transfer hysteria was at its peak several years ago,  completely incorrect information about DB transfers to stakeholder pensions was repeated endlessly on this site. I was a lone voice in the wilderness, shot down every time I corrected it and pointed people towards the legislation confirming stakeholder providers had no choice but to accept them...

I don't think anyone did actually approach the stakeholder providers to check, but just took the majority view as being right. It wasn't, but some posters couldn't cope with being wrong, so just went on banging the same misleading drum, often on the basis that 'nobody on this forum had done it'. Not surprising really - if you were a novice in the field, and a whole heap of those professing to know what they're talking about tell you not to spend thousands of pounds on fees because you'll get the answer 'no' and will have wasted your money, would you have bothered to even start down the primrose path?

I thought the commentary / feedback back in the day (could be wrong) for the Stakeholder providers discussed was that they mandated an Adviser in order to open a new Stakeholder pension, and that then became, in essence the same stumbling block? 

Obviously if someone already had a Stakeholder pension from even further back in the day that constraint was moot.

HappyHarry

AMagny said:

Has anyone managed to transfer a DB pot valued at more than £30k and not be ripped off by extortionate fees??

My CETV is £38k (frustrating is an understatement!). Have received quotes from £4k-£15k to approve the move. It’s such a simple request given I already have a SIPP and wasn’t required to get any permission for the £75k+ DC pots I moved over already. 

Surely there are some advisors out there not determined to rip people off!? 

The advisers qualified enough to advise on this area and holding the necessary permissions and PI insurance to do so are not "determined to rip people off".

May I politely suggest that you read through this thread and others of a similar nature to understand why the costs are as they are, before you throw any more unfounded accusations about.

eskbanker

AMagny said:

It’s such a simple request given I already have a SIPP and wasn’t required to get any permission for the £75k+ DC pots I moved over already.

Believing that to be relevant is of course exactly why advice is necessary....