Defined Benefit pension transfer advice

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6659272/defined-benefit-pension-transfer-advice

If there are any safeguarded benefits the chances are they will say they advise that you dont transfer. You can still use that to transfer if you want but you will need to find someone willing to accept a transfer against advice. Have you checked if your SIPP will? If they won't are you willing to have another elsewhere?

bunman1

Thanks all for your various responses. To add a bit more detail, the pension is a Royal Mail pension that will pay out £77k in 8.5 years time. The current transfer value is £69k. I would like to transfer it to a Vanguard SIPP and have the potential of significant growth beyond £77k in the next 8 years (conscious that it is by no means guaranteed). I have other pensions in addition so would not be destitute if I transferred and it subsequently lost value.

What I have understood from this thread is that:

• I need to find an IFA who would actually advise that this is a sensible thing to do
• or, find out if Vanguard will accept the transfer if it goes against advice I receive
• in either of the above two options I would probably have to pay a significant sum (c£3k) for this advice
• or, just wait until I'm 65, take the lump sum and invest it at that point (thus missing out on the potential growth in the interim)

xylophone

According to

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

Pension benefits with a guarantee which are safeguarded

To qualify as safeguarded benefits under the legislation, the pension benefits must include some
form of guarantee about the rate of secure pension income to be provided.

https://education.cwu.org/wp-content/uploads/2025/01/Booklet-4.-Royal-Mails-Cash-Balance-Section_15Jan2025.pdf

The Cash Balance Section gives
you a cash sum (a pot of money),
rather than a yearly pension or an
income for life, at retirement.

If there is no guarantee about the rate of secure pension income provided under the scheme, is the OP obliged to take advice?

Marcon

As I've already explained, advice is not mandatory if it's a cash balance scheme. Cash balance schemes do not have 'safeguarded benefits ' so the advice requirement doesn't apply.

xylophone

As I've already explained, advice is not mandatory if it's a cash balance scheme. Cash balance schemes do not have 'safeguarded benefits ' so the advice requirement doesn't apply.

See OP's response above. He does not appear to appreciate the point?

Or is there some misunderstanding between him and the administrator?

Or does he have safeguarded benefits as well as benefits that are not safeguarded?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81920648#Comment_81920648

What I have understood from this thread is that:

• I need to find an IFA who would actually advise that this is a sensible thing to do
• or, find out if Vanguard will accept the transfer if it goes against advice I receive
• in either of the above two options I would probably have to pay a significant sum (c£3k) for this advice
• or, just wait until I'm 65, take the lump sum and invest it at that point (thus missing out on the potential growth in the interim)

I think you need to read the through the thread again. As it is a cash balance scheme, it should be no problem to transfer it. It is possible that Vanguard ( or other providers) may misunderstand, as cash balance schemes are not that common, and you may have to explain to them there are 'no safeguarded benefits' .

HappyHarry

To clarify, in this case the ceding scheme (Royal Mail Pension Plan) make it quite clear that transfer advice is required before they will proceed with a transfer.

Transferring out - Royal Mail Pension

There may be other safeguarded benefits attached to the scheme which are not immediately obvious.

xylophone

https://education.cwu.org/wp-content/uploads/2025/01/Booklet-4.-Royal-Mails-Cash-Balance-Section_15Jan2025.pdf

Type of benefit The Cash Balance Section provides a guaranteed cash sum (this is a pot of money, rather than a yearly pension or income for life). You will get a minimum guaranteed amount of money at retirement. This amount is worked out based on:
• how many years you have paid in to the Cash Balance Section (your Service) (2),
• your Pensionable Pay for each of the years that you paid in (1), and
• the age that you take your cash sum.
You have flexibility about how to use this cash sum when you retire, including the option to buy a regular income from an external provider (an annuity) (6), invest your cash sum amount and take money out as and when youneed to in retirement (income drawdown) (7) or take all (or some) as cash (cash).

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

Pension benefits which are not safeguarded
Guaranteed lump sums
Pension benefits which offer a guaranteed lump sum but no guarantee about the rate of income
that may be provided are not safeguarded.

The Plan is described as a Defined Benefit Cash Balance but only that description makes it any different from a DC arrangement?

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81921569#Comment_81921569

…but reading that, it looks as if it applies where the member also has benefits in one or both of the salary related schemes as well as the Cash Balance Scheme, and OP has only referred to the Cash Balance Scheme. The link you've given tracks back to Sections A/B, for employees who joined before 1 April 1987. The Cash Balance Scheme is Section F.

OP, you must be getting more confused by the minute by people posting differing answers on this thread. Could you please give the date when you joined Royal Mail, assuming you joined their pension scheme at the time you joined employment? The key date is 1 April 2018 - any earlier than that and you'll definitely have some 'genuine' DB benefits and could need advice before you could transfer those out.

If you joined on or after 1 April 2018, I think you need to go back and ask the scheme if/why advice is needed if you only have Cash Balance benefits. Ask them to clarify if the Cash Balance scheme has 'safeguarded benefits' and if so, what those safeguarded benefits are. Then come back here if you need a translation!

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81921736#Comment_81921736

I did some googling.

The Gov.uk info on cash balance pensions, say it is a money purchase arrangement, so not DB.

However a couple of private/financial advisor etc type sites say it is a form of DB scheme.

So very confusing !