Can I really not move my pension without paying a Financial Adviser?

DeProfundisClamavi

I have two pensions, the Standard Life fund hasn't performed well, so I intended to move it in with the Pru fund (M&G)

...but Pru won't accept the transfer unless it's done with a financial adviser, and that 10 minute email exchange is going to cost me about 3% of my fund, approaching £3K

If I find an entirely new pension provider, it'll cost me time and I'd need real actual advice that will also cost money. I could move it within Standard Life fro free, but I have no idea what I'm doing

Any ideas please? 

Stubod

 I think if the fund is above £30k, then it is a requirment that you will need to go through a FA.....

westv

Stubod said:

 I think if the fund is above £30k, then it is a requirment that you will need to go through a FA.....

That is only if there are protected benefits.

Albermarle

The Pru have form on this , they charge 3% for going into drawdown for example. It is for 'advice' that is not actually financial advice.

OP The Pru also have a poor reputation for customer service, so I would be looking in fact to transfer it to Standard Life, and then pick another investment fund from the choice they offer.

dunstonh

I have two pensions, the Standard Life fund hasn't performed well, so I intended to move it in with the Pru fund (M&G)

Most Standard Life pensions have multple fund choices. Ranging from a couple of dozen to 30,000.
Most Pru pensions only have one fund available, although some have a dozen or so.  Their current product has a larger range but its quite expensive compared to modern options and the Pru way of doing things is clunk and their software appears dated compared to others.

...but Pru won't accept the transfer unless it's done with a financial adviser, and that 10 minute email exchange is going to cost me about 3% of my fund, approaching £3K

IIRC, Pru doesn't have financial advisers.   They have a non-advised sales process, and they charge 3% as an initial charge.

If I find an entirely new pension provider, it'll cost me time and I'd need real actual advice that will also cost money. I could move it within Standard Life fro free, but I have no idea what I'm doing

You have a choice.  DIY or pay someone to do it.     If you DIY well, you can save money. If you DIY badly it can cost you more.  With Pru, you are essentially going DIY, but paying them more than you would an adviser to do it.

gm0

The Pru are old school. And expensive.  And a lot of their product historic.  You don't hear about them much.  Once upon a time - door to door sales - "the man from the Pru" collecting life premiums was a creature of urban legend. Times change.  No idea what their business model is now.  

But on this occasion likely not to blame - the rules on the "cutoff" value for transfer of protected benefits are set by government via the armslength FCA and not by Pru or any other provider.  Some variation in admin but the "rule" for it being needed is imposed. 

The value and benefits from the product being left are the relevant ones. SL here if I read the post correctly.

The right to transfer benefits - full transfer out - is in ancient pensions act legislation as a consumer right. Which is good.  Not trapped by signing up long ago.

And yet innappropriate DB transfer scandals and sob stories from consumers who blundered (or were advised through a one way door by an unscupulous adviser) say to give up a "good" annuity rate - GAR linked to an indexed annuity - far above what's obtainable in today's interest rates - or by DC drawdown all at zero risk.  Things people would be mad to give up.  Bad product design based on assumptions long ago about central bank interest rates and life expectancy and annuity design.

This trail of personal misfortunes led - inevitably - to restrictions to shut the stable door after some of the horses had already bolted.

Pension freedoms - yay.  Consumers not all prospering based on exercising them without due care.  Something must be done.  This is something.  It was done.

The requirement for the consumer to take advice for DB to DC or DC protected benefits over 30k - such as guaranteed annuity rates (GAR).  Is policed by it being a breach for the firms to do the transfer at all for a consumer without evidence that the consumer has received full financial advice about their overall situation.  Above the entirely arbitrary threshold. That is in newer regulations.   No waiviers. No tick "i know what I want" on the web form. No get out of jail free for the consumer to opt out.  As it would NOT have addressed the problem being addressed.  Of misaligned incentives of receiving schemes and advisers.  They don't care about you giving up a GAR or why you might think (for you) it's a better plan.  And the scheme you leave.  Well - you are leaving.  You asked to.

It turns out in practice as a defacto nearly a ban for smaller pots.  Without actually banning it de jure. Which creates more political splash.  Very civil service.

The numbers for lifetime liability insured advice don't stack up for advisers on small pots.  

Without a hefy fee - regardless of the value ~30k.  So the Fee%/pot can be large.  

Any "adviser" Pru signpost - like any other adviser you might find independently - will be expensive.  Perhaps the Pru signposted one is even more expensive than "normal" I could not say.   But the problem is not the advice shopping - it's that you fall into the segment caught by this rule.

It is usually better to FIRST assess the protected benefit blocking transfer first.  If this is valuable - now you understand it.  Mission accomplished.  But if not compelling, still look at the investment options and pension access options in situ and see if they can be fitted into your overall plans.   Alternative investment choices at SL might suit you better.  Once you know a) what they offer - risk levels and costs  b) what you want - alongside other things you do.  

Schemes in general don't perform other than contributing by being cheap or expensive. 
Chosen investments do.  

Most pension schemes are a tax wrapper and some IT.  

So you have whatever limited choice of investments at SL. And some likely limited access methods (later on)

Perhaps you need independent pension planning advice from an IFA you find yourself.  
Or you need to read some books and ask more questions on forums to understand what is going on with your SL investments and the options available.

Measure twice. Cut once.

LHW99

Have you asked SL if there are any protected benefits on the policy?

If the answer is no, then the advice requirement is Pru's requirement, so you could do as @Albermarle suggests (or transfer to another provider - eg a work pension if you have a current one).

If in fact there are protected benefits, then it is financial regulations that require you to take advice.

dunstonh

The Pru are old school. And expensive.  And a lot of their product historic.  You don't hear about them much.  Once upon a time - door to door sales - "the man from the Pru" collecting life premiums was a creature of urban legend. Times change.  No idea what their business model is now.  

Very little left of the Pru.  Most of their focus is Asia nowadays.
In the UK, it's pretty much down to their pension offering, which feels incredibly dated.

They have two distribution methods.  An in-house non-advised sales team picking up 3% for getting people to transfer their legacy pensions into their modern plan, or IFAs using Pru because they want to access the Pru Fund (modern version of their with-profits fund - which I believe is not as good as the old pre-2003 WP fund).

Pru do not have the regulatory permissions to do transfers where there are safeguarded benefits.   So, if the Pru says you need to use a financial adviser and they won't do it, it's likely that there are safeguarded benefits.     If there are no safeguarded benefits, they will get one of their in-house sales team to do a non-advised transfer.

Marcon

LHW99 said:

Have you asked SL if there are any protected benefits on the policy?

westv said:

Stubod said:

 I think if the fund is above £30k, then it is a requirment that you will need to go through a FA.....

That is only if there are protected benefits.

You need to get the terminology right to avoid confusion. Protected rights were benefits built up as a result of contracting out of the state additional pension. They were abolished some years ago and simply became 'ordinary' rights with no special features or restrictions.

If a scheme has 'safeguarded rights' (all defined benefit schemes come under this heading, and some DC schemes with a 'promise' such as a Guaranteed Annuity Rate) and the transfer value is £30K+, then advice becomes mandatory.

DRS1

Does the OP even need to do a transfer at all.  Why not just check what the SL pension is invested in and what other options are available.  Then move the investment to something you think is right for you.

You may still want to check if you have a GAR with the SL pension - in case it falls away if you switch investments (I tend to associate GARs with with profits policies)