Pension Transfer Fee
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reddevil375
Posts: 20 Forumite
Hi Guys,
Was hoping for some advice for my Mothers pension she had from 1982 - 88. She had a pension with a provider of around 85K (thats the transfer amount we have been given) and is a final salary pension. She wants to move this to a personal pension and take 25% tax free and the remainder put in a personal pension for flexible draw down. We have had a IFA take a look and they have recommended a pension and is charging us 5% to do the transfer. Does this sound about right in terms of fee's? I know you need to use a IFA for pensions above 30K but was not sure about the fee's. It works out to around £4.5K. They then will take a percentage from the pot each year to manage it (0.75%).
If you could let me know if this sounds right please. Many thanks in advance
Was hoping for some advice for my Mothers pension she had from 1982 - 88. She had a pension with a provider of around 85K (thats the transfer amount we have been given) and is a final salary pension. She wants to move this to a personal pension and take 25% tax free and the remainder put in a personal pension for flexible draw down. We have had a IFA take a look and they have recommended a pension and is charging us 5% to do the transfer. Does this sound about right in terms of fee's? I know you need to use a IFA for pensions above 30K but was not sure about the fee's. It works out to around £4.5K. They then will take a percentage from the pot each year to manage it (0.75%).
If you could let me know if this sounds right please. Many thanks in advance
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Comments
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The fees are probably about right as you may a proportionately higher % for a CETV that is not that large. .They charge a lot as they are worried you will come back and sue them if the money does not last as long as your mother hopes.
Apart from the fees are you sure it would be the right decision to transfer as you are giving up guaranteed income ?Have a look at this link for the pros and cons :
https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/five-good-reasons-good-with-your-money-guide-2018-edition.pdf
Also are you aware that if the IFA recommends that you do not transfer he/she will still want to be paid .
With a negative recommendation you can still transfer but most mainstream pension providers will not accept the transfer , again due to worries about future litigation from disappointed pensioners regretting giving up a DB pension.0 -
It works out to around £4.5K.
in the current market, that is cheap.0 -
in the current market, that is cheap.
Those fees sound horrendous, but I'm someone who's never possessed a final salary pension. If these are the charges IFA's expect for a simple transfer and those greedy ongoing charges then I'm happy I never did.
We don't know how old the mother is or when the pension is due, or it's terms relating to payout.
Pension freedoms are great until IFA's get involved.0 -
I paid 1% six months ago.0
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Mum is 65 and she can take pension anytime now. She was told due to small amount and the fact that most IFA will only look at over £130k pensions the fee is 5%. Seems alot but I think she has no choice. Thanks for replys0
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It is not a simple transfer. Transferring from a guaranteed DB pension to drawdown is high risk both for the IFA and the client. The client could lose money and the IFA be held responsible for compensation. In one often quoted case the IFA had to pay up even though he had recommended against the transfer.. The FCA do not like DB transfers. The % charges are high as the pension pot is small. I do not believe the actual charges in £s are wildly unreasonable.Keith_Clunk wrote: »Those fees sound horrendous, but I'm someone who's never possessed a final salary pension. If these are the charges IFA's expect for a simple transfer and those greedy ongoing charges then I'm happy I never did.
We don't know how old the mother is or when the pension is due, or it's terms relating to payout.
Pension freedoms are great until IFA's get involved.
The changes in the law to permit pension freedoms do not apply to DB pensions.. You were able to transfer DB pensions before the pension laws changed but in general in the past it would have been an obviously foolish thing to do. Very high transfer values and the DC pension freedoms have changed this.0 -
Seems alot but I think she has no choice.
What are her reasons for wanting to transfer out of this pension?0 -
Seems alot but I think she has no choice
She does have a choice - that is to leave it where it is and take the guaranteed income each month !0 -
Also she would probably get a commencement lump sum even from a DB pension. Some DB pensions allow part of the lump sum to be exchanged for income (and vice versa) - it may be worth checking whether one of these could be a viable option for her.Albermarle wrote: »She does have a choice - that is to leave it where it is and take the guaranteed income each month !0 -
#If these are the charges IFA's expect for a simple transfer and those greedy ongoing charges then I'm happy I never did.
The fact you consider it simple indicates that it is probably a good thing you never did it.Pension freedoms are great until IFA's get involved.
The pension freedoms have nothing to do with it. This is a DB transfer.
Do you have the same bias when you see DIY investors lose all their money by bad investment decisions? i..e do you say the pension freedoms are great until DIY investors get involved.0
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