It is about time they changed the law, requiring a FA to deal with transferring away a DB Scheme

MyRealNameToo

greyscot said:
I now run a small Web Design Agency and charge a fair fee for my work on around 40 hours work for a project. Many of my competitors are charging 4 times as much, since, they have more hungry mouths to feed. So whoever uses them is not paying for any better advice, a better solution or for more time on the project, they are, essentially, paying for the Web Designers overheads. The same applies here. it appears I am paying for the risk factor and high insurance costs and not, neccessarily, the amount of work that is done. If the law can be changed to reduce the risk on FAs for my type of transaction, then that would go quite a way to reducing the costs of the FA. I am a big boy with a modicom of intelligence, so i am well aware of the RPI aspect and having a larger annuity now, is what I prefer.

Your own situation seems to be looked at from the wrong perspective, customers are clearly seeing a differential which they think justifies paying 4x the price for your competitors rather than saving money and using your agency. Sure much of it may be intangibles and you may not agree with their value but customers do. If I gambled on a venture that didnt work but I'm still repaying the loan my clients won't pay me more simply because my outgoings are more. 

IFA insurance is typically around 4% of revenue, so it's certainly noticeable but its not doubling their rate or anything. 

Unfortunately we live in a country where consumers are heavily protected and we litterally pay the price for that as businesses have to price in the fact they are liable for the stuff they sell even though they didnt make it and arent experts to be able to judge the products. Pension protections are more likely to get more restrictive than less. 

IFAs are fairly skilled jobs and hence their rates are between a cleaner who's generally considered unskilled and a lawyer who at the top of their game can charge thousands an hour. 

xylophone

OK - so we always referred to it as a hybrid scheme.  There's a portion that guaranteed to increase every year no matter what and a portion that is straight DC. 

Then it has safeguarded benefits and the rules as here apply.

https://assets.publishing.service.gov.uk/media/5a80b577ed915d74e33fbf54/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

The requirement is that advice from a suitably qualified adviser must be obtained, not that it must be followed.

The advice given could be against a transfer but this would not mean that a transfer would be impossible.

It would be necessary to find a scheme that would accept the transfer without a positive recommendation.

This has been discussed many times....

https://forums.moneysavingexpert.com/discussion/comment/80084205/#Comment_80084205

Marcon

Brie said:

The most recent at least was somewhat honest and gave me the standard line that it would cost something like £8k up front to look into the scheme to give advice but he had the full expectation that the answer would eventually state that it could not be transferred. 

I wonder if he said one thing and you 'heard' another - he said 'should', you heard 'could'. Let me have a guess at how the conversation might have gone:

You: I want to transfer from a hybrid scheme [with a DB underpin - assuming that's what it is? You have said 'There's a portion that guaranteed to increase every year no matter what' but that could be a cash balance scheme plus an ordinary vanilla layer. Sorry to labour the point but if you aren't certain, it's worth finding out in case it solves your problem at a stroke!]
Adviser: the advice isn't cheap and there's every chance that our advice could conclude that you should not transfer. If that's the case, you would have to find a scheme willing to accept the transfer against our advice - and that is currently close to impossible [or if he doesn't realise a stakeholder pension can still be opened/must accept the transfer, it'll simply be 'so you can't transfer it']

Brie said:

I have recently found that Aviva is willing to take a direct transfer from the scheme on a no advice basis but have yet to get through all the paperwork that I will have to complete to make that happen.  The hopeful result will be me having an enhanced annuity with Aviva.  

That sounds like Aviva's stakeholder pension, which has cropped up a number of times on this board in relation to DB transfers. You would still need advice before the ceding scheme can release the transfer and Aviva will want confirmation that full (not just abridged) advice has been received, regardless of what that advice says. They won't take it on a 'no advice' basis if the transfer is at least £30K and the ceding scheme has safeguarded benefits.

This thread makes useful reading (probably for @greyscot too) - my post of 24 January 2025 relates https://forums.moneysavingexpert.com/discussion/6582891/db-transfer-extortion/p1

Marcon

MyRealNameToo said:

IFA insurance is typically around 4% of revenue, so it's certainly noticeable but its not doubling their rate or anything. 

Looking at this, the increase in PI costs it could well be having a very significant impact on charge out rates:

Beddie

I feel there is a two-tier system - the rules on DB schemes are very onerous to "protect the customer" yet you can have £500k in a DC pension, take the lot out and spend it, with no one stopping you.

DB transfers should be allowed using at most a guidance Q&A, with no IFA needed. 

hoc

Rip Off Britain meets Nanny State

RogerPensionGuy

greyscot said:

In certain circumstances, as my own, below, it is about time they changed the law on requiring a FA to transfer out a DB scheme. It is scandalous what a FA will charge, for, basically, what is just a form filling exercise. I am looking to transfer my DB scheme to purchase a Lifetime Annuity. An Annuity with Standard Life, for example, will give me over £3,000 more, annually, than what the current DB scheme is offering. This is due to the DB scheme being for dual life and RPI linked. This combination, significantly, reduces the annual amount you receive, compared to a Lifetime, Single Life, Enhanced Annuity with Value Protection. This is based on Cash Equivalent Transfer value (CETV), I have just received from my DB provider. The benefit for purchasing an Annuity can't be any simpler, as the above demonstrates. I am not about to do anything mad. I am simply changing one pension for another, that very, obviously, will be in my best interests.  By the way, I am an ex Accountant, so don't really need any advice from a FA and I am quite confident in my own sums. If there are any FAs reading this, I am inviting you to justify why you feel you have to charge so much, especially, how many actual hours will be spent on a transfer. In my case, there is no risk. I am giving a specific instruction, so the excuse of requiring a high fee to match the long term risk, does not cut it with me, unfortunately. What's that saying about "having someone over a barrell"!!!

Just a question, 3K more PA than what £ PA?

Am I correct in saying no spouse in the picture now?

Is indexing the same or better in the annuity?

If a transfer is actioned, are you taking out PCLS?

Is the DB commutation rate low?

******

If I'm guessing no spouce currently, how about your 55 now and get a spouce a year(56) after transfer and say spounce is less than 10 years younger than you(47-possibly nil reduction) The dual life cover mentioned previously may look like more better value possibly.

***

Source: BBC https://share.google/SOhwcSmjwlCrkD0Qi

Andy_L

Presumably it will cease to be a problem in a decade or so as the legacy private sector DB pensions cease to have active deferred members who could transfer while the unfunded public sector schemes (almost all of them bar the LGPS) have already banned transfers to non-DB schemes

Marcon

Andy_L said:

Presumably it will cease to be a problem in a decade or so as the legacy private sector DB pensions cease to have active deferred members who could transfer while the unfunded public sector schemes (almost all of them bar the LGPS) have already banned transfers to non-DB schemes

Not sure you can have an 'active deferred' - I'm guessing you simply mean ''deferred'?

There'a way to go before they all reach the point of becoming pensioners - a lot longer than a decade or so - but as you say, the numbers in private sector schemes will be dwindling rather than increasing.

Andy_L

Marcon said:

Andy_L said:

Presumably it will cease to be a problem in a decade or so as the legacy private sector DB pensions cease to have active deferred members who could transfer while the unfunded public sector schemes (almost all of them bar the LGPS) have already banned transfers to non-DB schemes

Not sure you can have an 'active deferred' - I'm guessing you simply mean ''deferred'?

There'a way to go before they all reach the point of becoming pensioners - a lot longer than a decade or so - but as you say, the numbers in private sector schemes will be dwindling rather than increasing.

Missed word typo, should have been active or deferred (IE members who don't have a pension in payment)