SIPP - Transferring into

Retired_I.F.A.

I've done hundreds of transfers of an individuals final salary scheme benefits to money purchase plans PP's. and S32's. though never a SIPP only to PP's that could be converted to a SIPP as they could not accept the GMP or it's alternative Protected Rights which I hear they will soon be allowed to accept. Mostly they have been for married folks and a fair portion of them from government sponsored FSS's.

I accept some of the early transfers I did may not have been compliant with the rules that later followed but all complied with the rules at the time and I further acknowledge that some would have been better off not transfering but only with hindsight of the actual investment as the pro's far outweighed the cons at the time and the investment risk was well accepted by all.

Obviously there have been changes since I retired most noteably the governments intervention affording the same 90% security to members of a final salary scheme folding up with inadequate funds to meet it's liabilities that a policyholder of an insurance company doing the same has had for decades but none of those I'm aware of change my view that transfering can be substantially better for I'd say more like 8 out of 10 people and if actuaries were independent and regulated as they should imo have been made to be years ago as many as 9 out of 10. All transfer values would then be unmanipulated and fair.

Dunstonh says 9 out of 10 it is estimated should not transfer but who is it doing the estimation? Is it the compliance/research team at his networks head office? If so you have to consider the fact they are not totally independent. It's in the interest of a network to steer it's members away from doing such transfers thus keeping indemnity premiums low which attracts more members and more income for the network. Now that I do know as fact having done a transfer of the preserved benefits of a director of the company that set up the very same network as Dunstonh joined.

I always took full commission on transfers from FSS schemes (5.4% I think it was) though any subsequent transfer into drawdown I did for free as imo it's simply double charging, the two are all apart of the same advice and same fund. That 5.4% may be a few thousand pounds to the client but it's a pittance to what the compensation/ fines IFA's run the risk of forking out should they have made a mistake or judged to have done some wrong by an ombudsman in his opinion.

dunstonh

Dunstonh says 9 out of 10 it is estimated should not transfer but who is it doing the estimation? Is it the compliance/research team at his networks head office? If so you have to consider the fact they are not totally independent. It's in the interest of a network to steer it's members away from doing such transfers thus keeping indemnity premiums low which attracts more members and more income for the network. Now that I do know as fact having done a transfer of the preserved benefits of a director of the company that set up the very same network as Dunstonh joined.

The estimate is based on the complaints handlers who deal with incoming complaints about mis-sold final salary scheme transfers.

I have also seen similar stats mentioned elsewhere. One home service provider estimated that 4 out 5 section 32 buy out bonds sold by them were mis-sales.

RIFA, you have to remember that we have claims companies jumping on every conceivable mis-sale now whether there is one or not. The justification has to really good now and you really have to be careful on judgement calls and hindsight decisions.

The FSA are already concerned at the number of SIPPs being taken out and having a final salary scheme transfer into it would just be like a red rag to a bull. Of course, there are circumstances it could be worth doing but it is best to assume its not and then find a reason why it is rather than the other way round. Statistically (and without knowing facts), you are better off not moving it.