Pension Planning Handbrake - firmly pulled!

crispy3

Oooh, honestly, I thought this would be a little simpler, but I knew there would be a stop sign, let along a full-on Handbrake and screech to halt with my DB Pension.
Plan was simple - take 25% of my fancy DB Pension on my birthday (55) in a months time.
My financial advisor told me they can't do it—it has to be an FCA type deal, as it's too complicated.
10 min chat - turns into a bit of a horror story.
First of all the fee is £7,500 - ouch! - apparently that's the same for everyone - 3% up to £50k then 2.5% onwards - it's not even a big Pension 18 years final final pension payment.
Watched a load of videos trying to talk me out of it, and then have to take some tests, review some outcomes before they will even discuss it. and £7.5k
Told they FCA can say no!! You can't have it anyway - but can if I reaaaaly want to.
It will take 8 months to do the paperwork!! - 8 Months!
They never tell you this when you get the job lol.- The world is changing, and my job for life, like the old days, doesn't happen anymore - so I want and need my cash now, whether it's gold standard/plated or not - it's my cash and I need it now.
I have provisions for when I want to retire - like when in 67 or something silly - still working now and no plans to retire yet. Just seems such an odd situation - when you get all excited to access the magic 25% tax-free - you will be crushed with fees and a specialist outside a regular FA skill level.. Crazy - Have anyone else had a similar situation where you are told you pretty much can be advised by the FCA, you can't have your money, and if you do, there are some serious gears to go through and a possible full-on handbrake.

Brie

Yup - pretty standard reply to a request such as yours.  The only way you can get your tax free lump sum is to actually put your pension into payment.  And fyi - it's often not really a 25% lump but that's another discussion.  

So if you were insisting on getting your hands on your money it would have to be transferred out to another scheme of some sort.  This is where things get messy as any IFA will know that unless they advise in your best interest (in their and the industries opinion, not yours) they can be in a big pile of trouble.  So the best they can do is check out your pension benefits, see what underlying protections there are and ask you for a large amount of cash to do this work.  At which point they will issue a report to say it is not, in their opinion, in your best interest to do a transfer because of all the guarantees you would lose.  And frankly I agree with them.  

So that then raises the question of why you need this big lump of cash next month?  And also what are the alternatives??  That's what you will need to look for.

dunstonh

Plan was simple - take 25% of my fancy DB Pension on my birthday (55) in a months time.

Did you run that plan by anyone?

First of all the fee is £7,500 - ouch! - apparently that's the same for everyone - 3% up to £50k then 2.5% onwards - it's not even a big Pension 18 years final final pension payment.

Its in the ballpark and expected given its extremely high risk position.

Told they FCA can say no!! You can't have it anyway - but can if I reaaaaly want to.

The FCA are not involved in your pension transfer advice other than setting the rules.

They never tell you this when you get the job lol

Of course they don't.  So few people want to do what you want.    They cannot explain every option.  However, the scheme booklet would have given you accurate information for the time it was issued (and with each update).

- The world is changing, and my job for life, like the old days, doesn't happen anymore - so I want and need my cash now, whether it's gold standard/plated or not - it's my cash and I need it now.

Its not your cash.   You signed up for defined benefits.   You now want to exchange that for defined contribution scheme.  You also want to engage in a transaction that is likely financially disadvantageous to you.

I have provisions for when I want to retire - like when in 67 or something silly

Why not use those instead?

when you get all excited to access the magic 25% tax-free - you will be crushed with fees and a specialist outside a regular FA skill level.. 

Remember that your pension never had 25% TFC.  So, your excitement to access something you don't have was misplaced.

Have anyone else had a similar situation where you are told you pretty much can be advised by the FCA, you can't have your money, and if you do, there are some serious gears to go through and a possible full-on handbrake.

I very much doubt it as the FCA does not provide advice.

However, in respect of DB transfers, yes there are extra steps required because only around 1 in 10 people are best transferring out of a DB pension.    It did improve to around 6 in 10 for a period but CETVs are half what they were and we are back to the more typical ballpark of 1 in 10.

Ultimately, you can still go against the advice, even if it is to be the worst financial decision of your life.

greatkingrat

crispy3 said:

I have provisions for when I want to retire - like when in 67 or something silly - still working now and no plans to retire yet. 

If you have other provisions (eg savings, DC pensions) why not take the money from them now, and use the DB pension when you actually do retire?

Marcon

crispy3 said:

Oooh, honestly, I thought this would be a little simpler, but I knew there would be a stop sign, let along a full-on Handbrake and screech to halt with my DB Pension.
Plan was simple - take 25% of my fancy DB Pension on my birthday (55) in a months time.
My financial advisor told me they can't do it—it has to be an FCA type deal, as it's too complicated.
10 min chat - turns into a bit of a horror story.
First of all the fee is £7,500 - ouch! - apparently that's the same for everyone - 3% up to £50k then 2.5% onwards - it's not even a big Pension 18 years final final pension payment.
Watched a load of videos trying to talk me out of it, and then have to take some tests, review some outcomes before they will even discuss it. and £7.5k
Told they FCA can say no!! You can't have it anyway - but can if I reaaaaly want to.
It will take 8 months to do the paperwork!! - 8 Months!
They never tell you this when you get the job lol.- The world is changing, and my job for life, like the old days, doesn't happen anymore - so I want and need my cash now, whether it's gold standard/plated or not - it's my cash and I need it now.
I have provisions for when I want to retire - like when in 67 or something silly - still working now and no plans to retire yet. Just seems such an odd situation - when you get all excited to access the magic 25% tax-free - you will be crushed with fees and a specialist outside a regular FA skill level.. Crazy - Have anyone else had a similar situation where you are told you pretty much can be advised by the FCA, you can't have your money, and if you do, there are some serious gears to go through and a possible full-on handbrake.

OK, so like so many others, you've not understood the scheme you are in. Blaming everyone else isn't the answer. 

There are endless threads on this forum about transferring from a DB to a DC arrangement, so reading some of those might help you understand what's going on.

Pat38493

crispy3 said:

Oooh, honestly, I thought this would be a little simpler, but I knew there would be a stop sign, let along a full-on Handbrake and screech to halt with my DB Pension.
Plan was simple - take 25% of my fancy DB Pension on my birthday (55) in a months time.
My financial advisor told me they can't do it—it has to be an FCA type deal, as it's too complicated.
10 min chat - turns into a bit of a horror story.
First of all the fee is £7,500 - ouch! - apparently that's the same for everyone - 3% up to £50k then 2.5% onwards - it's not even a big Pension 18 years final final pension payment.
Watched a load of videos trying to talk me out of it, and then have to take some tests, review some outcomes before they will even discuss it. and £7.5k
Told they FCA can say no!! You can't have it anyway - but can if I reaaaaly want to.
It will take 8 months to do the paperwork!! - 8 Months!
They never tell you this when you get the job lol.- The world is changing, and my job for life, like the old days, doesn't happen anymore - so I want and need my cash now, whether it's gold standard/plated or not - it's my cash and I need it now.
I have provisions for when I want to retire - like when in 67 or something silly - still working now and no plans to retire yet. Just seems such an odd situation - when you get all excited to access the magic 25% tax-free - you will be crushed with fees and a specialist outside a regular FA skill level.. Crazy - Have anyone else had a similar situation where you are told you pretty much can be advised by the FCA, you can't have your money, and if you do, there are some serious gears to go through and a possible full-on handbrake.

It seems like you want to transfer the value of your DB pension out to a DC type pot, which will turn the entire amount into a pot that has to be invested, and then take your 25% tax free.  This requires financial advice to be taken to check whether it's in your interest to do so.

This is because you are giving up a future guaranteed inflation linked income stream for life in exchange for a fixed amount of money now - in the majority of cases this will not be in your long term financial interest.

You don't say which employer the pension is with, but if you are looking to get a lump sum in cash, the much easier option might be to put the DB pension into payment - with many schemes, you can opt to take a lump sum which very roughly equates to 25% of the theoretical value.  The catch is that you have now put your pension into payment so you will receive a monthly income for the rest of your life, reduced for the lump sum you have taken and also because you are presumably taking the income earlier than your normal retirement age.  This also means the monthly income stream is taxable, although there's nothing to stop you putting that monthly income straight back into a DC pension to defer the tax till later.

^^  The above may not apply if you are in an unusual scheme but from what I've seen most DB schemes have this.

Also - if you already have other pension provisions available for when you retire, you can leave the DB pension untouched and take 25% tax free cash from the other pensions that you have without taking any advice (although it sounds like you would certainly benefit from some more research).

Have you considered doing further research or getting some more generalized financial advice as it appears that you are requesting something very specific, when actually there might be better ways to achieve your real requirement.

Albermarle

Marcon said:

crispy3 said:

Oooh, honestly, I thought this would be a little simpler, but I knew there would be a stop sign, let along a full-on Handbrake and screech to halt with my DB Pension.
Plan was simple - take 25% of my fancy DB Pension on my birthday (55) in a months time.
My financial advisor told me they can't do it—it has to be an FCA type deal, as it's too complicated.
10 min chat - turns into a bit of a horror story.
First of all the fee is £7,500 - ouch! - apparently that's the same for everyone - 3% up to £50k then 2.5% onwards - it's not even a big Pension 18 years final final pension payment.
Watched a load of videos trying to talk me out of it, and then have to take some tests, review some outcomes before they will even discuss it. and £7.5k
Told they FCA can say no!! You can't have it anyway - but can if I reaaaaly want to.
It will take 8 months to do the paperwork!! - 8 Months!
They never tell you this when you get the job lol.- The world is changing, and my job for life, like the old days, doesn't happen anymore - so I want and need my cash now, whether it's gold standard/plated or not - it's my cash and I need it now.
I have provisions for when I want to retire - like when in 67 or something silly - still working now and no plans to retire yet. Just seems such an odd situation - when you get all excited to access the magic 25% tax-free - you will be crushed with fees and a specialist outside a regular FA skill level.. Crazy - Have anyone else had a similar situation where you are told you pretty much can be advised by the FCA, you can't have your money, and if you do, there are some serious gears to go through and a possible full-on handbrake.

OK, so like so many others, you've not understood the scheme you are in. Blaming everyone else isn't the answer. 

There are endless threads on this forum about transferring from a DB to a DC arrangement, so reading some of those might help you understand what's going on.

OP to access most of the above threads there is a search box at the top of the page where you should type in 'DB transfers'
You may notice that they occur less frequently in the last couple of years. That is because the transfer values ( CETVs) of DB pensions has gone down a lot ( due changes in certain financial markets) so posts like yours which were common three years ago are now now more few and far between, because due to the reduction in values it makes even less sense to transfer now, than it did then.