IFA recommended transferring DB pension to SIPP
Terron
Posts: 846 Forumite
I met my IFA yesterday and he suggested that I transfer the whole of my hybrid pension with a DB underpin to my SIPP.
I am 59.
I make enough from BTL to enable me to live moderately comfortably with little effort involved.
I will be getting about £8k pa extra with no (significant) indexing and enough of a TFLS to get a new car from my smaller pensions (starting over the next 13 months).
In 6 years time I will get the SP - one year's contribution needed for the maximum new SP which I hope to make this year.
My IFA said that since my other income will cover my basic needs with a significant amount over for some luvury I don't need the extra £9k pa from the DB underpin, so he has recommended that I transfer the whole pension to my SIPP.
I know you can't give specific advice, but does the idea sound sensible? Is there anything I should consider?
I am 59.
I make enough from BTL to enable me to live moderately comfortably with little effort involved.
I will be getting about £8k pa extra with no (significant) indexing and enough of a TFLS to get a new car from my smaller pensions (starting over the next 13 months).
In 6 years time I will get the SP - one year's contribution needed for the maximum new SP which I hope to make this year.
My IFA said that since my other income will cover my basic needs with a significant amount over for some luvury I don't need the extra £9k pa from the DB underpin, so he has recommended that I transfer the whole pension to my SIPP.
I know you can't give specific advice, but does the idea sound sensible? Is there anything I should consider?
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I met my IFA yesterday and he suggested that I transfer the whole of my hybrid pension with a DB underpin to my SIPP.
I am 59.
I make enough from BTL to enable me to live moderately comfortably with little effort involved.
I will be getting about £8k pa extra with no (significant) indexing and enough of a TFLS to get a new car from my smaller pensions (starting over the next 13 months).
In 6 years time I will get the SP - one year's contribution needed for the maximum new SP which I hope to make this year.
My IFA said that since my other income will cover my basic needs with a significant amount over for some luvury I don't need the extra £9k pa from the DB underpin, so he has recommended that I transfer the whole pension to my SIPP.
I know you can't give specific advice, but does the idea sound sensible? Is there anything I should consider?
What? I am sorry, but this makes my blood boil. :eek:
Has your IFA completed an analysis, and shown you the detailed results of the Appropriate Transfer Analysis Report, together with its Transfer Value Comparator? Has the IFA provided you with a suitability report clearly showing the pros and cons of this transfer as applies to your situation? Does this report clearly recommend you transfer your DB pension, and if so, where to?
If you have these documents then you should have more than enough information to make this decision.
If you haven't got these, then your IFA has just broken every rule in the book, and both the FCA and your IFA's PI insurers would be most interested.
This is a hot topic area at present, as all Pension Transfer Specialists know, and unsubstantiated recommendations like these are part of the reason there has been a huge crackdown on DB transfer business in recent months.
It's part of the reason why PI insurers have either pulled out of the market, or increased their costs significantly, or are restricting the amount of DB transfer business an appropriately qualified IFA can write.
If your IFA is cutting corners like this, then I would worry about what other corners he is cutting when giving you advice.
Sorry. Rant over.
I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.0 -
Isn't making this sort of decision for you what you're paying your IFA for?Conjugating the verb 'to be":
-o I am humble -o You are attention seeking -o She is Nadine Dorries0 -
It's really unusual for an IFa to recommend transferring a DB to a Sipp...I agree, tread very carefully on this...0
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Hasn't your IFA explained fully and clearly why he is recommending this course of action? Has he provided a full report - and have you read it?0
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This is a pension with safeguarded benefits valued in excess of £30,000?
Is your IFA a Pension Transfer Specialist?
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf0 -
If after reading the IFA's detailed report and transfer value analysis you aren't sure, then you shouldn't do it.
This still applies even if it's a terrific idea and you are a fool for not being sure. If you later change your mind you can always transfer then once you are sure. However once you do you can't go back.
Will you still have enough income if there's a serious market crash and your tenants lose their jobs and stop paying the rent (which is the time when they're most likely to)?
What is the reason for transferring out? "I will have enough income from my BTL" isn't a reason to transfer, it's just ticking off one of the reasons for not transferring, and not very well based on the limited amount we've been told.0 -
My IFA said that since my other income will cover my basic needs with a significant amount over for some luvury I don't need the extra £9k pa from the DB underpin, so he has recommended that I transfer the whole pension to my SIPP.
I know you can't give specific advice, but does the idea sound sensible? Is there anything I should consider?
What is the value of the pot with DB underpin? Generally speaking, a single life RPI linked annuity of £9,000 with five years guarantee requires £378,000 to buy. You are potentially giving up a valuable benefit.0 -
JoeCrystal wrote: »What is the value of the pot with DB underpin? Generally speaking, a single life RPI linked annuity of £9,000 with five years guarantee requires £378,000 to buy. You are potentially giving up a valuable benefit.
This is a sensible comment, but just because something costs a lot of money to buy, doesn't mean you would actually choose to buy it if you had the cash, or that you should feel that you must not let it go for less than its replacement cost.
For example, a collection of mint unboxed Star Wars toys from the 70s and 80s could require £10,000 to buy today, but if you didn't have it you might not think you would want to spend £10,000 to buy it, and if you did already have it in your loft it might be quite rational to exchange it for less than £10,000 cash in hand so that you could better achieve your life's goals.0 -
Paul_Herring wrote: »Isn't making this sort of decision for you what you're paying your IFA for?
Not really. One cannot delegate decision making. The OP and his family will have to live with the consequences of his decision. He is only paying for advice, which might be good or bad. He has to decide.0 -
Deleted_User wrote: »Not really. One cannot delegate decision making. The OP and his family will have to live with the consequences of his decision. He is only paying for advice, which might be good or bad. He has to decide.
True - but the IFA is required to give a clear recommendation, with reasons. If OP can't decide what to do on that basis, either they are a hopeless ditherer (aren't we all!) or the IFA hasn't done their job properly - or possibly both.0
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