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  • FIRST POST
    • Reluctantpensioner
    • By Reluctantpensioner 29th Mar 18, 11:51 PM
    • 24Posts
    • 3Thanks
    Reluctantpensioner
    Avoiding IFA fees on DC pension transfer
    • #1
    • 29th Mar 18, 11:51 PM
    Avoiding IFA fees on DC pension transfer 29th Mar 18 at 11:51 PM
    I have a significant sum deferred in a inactive pension scheme.
    I want to transfer it to my Fidelity SIPP.
    This is from a self managed pension to a self managed pension, I have been managing it for 17 years. I should not have to pay a massive fee. Free from exit fees was an integral claim of the scheme.

    Here is the wording I am fighting with:
    "In line with the requirements introduced in the Pension Schemes Act 2015, I confirm that if the
    cash equivalent value of my main Plan benefits is more than £30,000.00, I have taken
    appropriate independent advice from a financial adviser registered by the Financial Conduct
    Authority before deciding to transfer my main Plan benefits*.

    *Note: This does not apply if:
    The benefits to be provided under the receiving pension plan are not ‘flexible benefits’ (e.g.
    defined contribution and cash balance benefits) for the purposes of the Pension Schemes
    Act 2015 and you provide adequate confirmation that the benefits to be provided are
    “safeguarded benefits” (e.g. defined benefit or career average benefits) or
    You are transferring only the value of your ‘flexible benefits’ AVCs. "
    This wording, with its double negatives, is incomprehensible. I understood DC to DC was advice free. This seems to say you can only transfer to purchase an annuity.

    In case it matters the funds are described as: Post 97 benefits c. 92% and AVC the rest.
Page 1
    • Malthusian
    • By Malthusian 30th Mar 18, 12:01 AM
    • 4,072 Posts
    • 6,380 Thanks
    Malthusian
    • #2
    • 30th Mar 18, 12:01 AM
    • #2
    • 30th Mar 18, 12:01 AM
    Are you only "transferring only the value of your !!!8216;flexible benefits!!!8217; AVCs" or are you trying to transfer a defined benefit plan?

    The wording suggests that there is at least a defined benefit scheme attached to this.
    • Reluctantpensioner
    • By Reluctantpensioner 30th Mar 18, 12:06 AM
    • 24 Posts
    • 3 Thanks
    Reluctantpensioner
    • #3
    • 30th Mar 18, 12:06 AM
    • #3
    • 30th Mar 18, 12:06 AM
    This is defined contribution (money purchase) only.
    The scheme managers probably have clients with the same employer, with DB, but I am not one of them.
    Yes, I want 100%, not 8%.
    • Linton
    • By Linton 30th Mar 18, 9:01 AM
    • 9,376 Posts
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    Linton
    • #4
    • 30th Mar 18, 9:01 AM
    • #4
    • 30th Mar 18, 9:01 AM
    The wording you give is certainly bad since it is of the form: This does not apply if A and B or C.

    A - The receiving pension benefits are not "flexible
    B - The benefits being provided are safeguarded
    C - You are only transfering flexible benefits.

    If you read it as meaning (A AND B) OR C rather than A AND (B OR C) it would seem to satisfy your situation since you are transfering flexible benefits.
    • sandsy
    • By sandsy 30th Mar 18, 9:08 AM
    • 1,321 Posts
    • 796 Thanks
    sandsy
    • #5
    • 30th Mar 18, 9:08 AM
    • #5
    • 30th Mar 18, 9:08 AM
    Tell us more about the post 97 benefits? That terminology is usually associated with increases on guaranteed benefits.
    • Tcquins
    • By Tcquins 30th Mar 18, 10:23 AM
    • 52 Posts
    • 31 Thanks
    Tcquins
    • #6
    • 30th Mar 18, 10:23 AM
    • #6
    • 30th Mar 18, 10:23 AM
    Most likely means your pension has safeguarded benefits worth over £30000.

    This includes GMP and/or GARS (guaranteed annuity rates). Hence why you require independent financial advice as you would lose these valuable benefits on transfer.
    • Linton
    • By Linton 30th Mar 18, 10:31 AM
    • 9,376 Posts
    • 9,505 Thanks
    Linton
    • #7
    • 30th Mar 18, 10:31 AM
    • #7
    • 30th Mar 18, 10:31 AM
    On the other hand the OP says the money is already in a self managed pension. So we need confirmation as to what "Post-97 benefits" actually means.
    • Simple Man
    • By Simple Man 30th Mar 18, 11:14 AM
    • 17 Posts
    • 2 Thanks
    Simple Man
    • #8
    • 30th Mar 18, 11:14 AM
    • #8
    • 30th Mar 18, 11:14 AM
    I have a significant sum deferred in a inactive pension scheme.
    I want to transfer it to my Fidelity SIPP.
    This is from a self managed pension to a self managed pension, I have been managing it for 17 years. I should not have to pay a massive fee. Free from exit fees was an integral claim of the scheme.

    Here is the wording I am fighting with:
    "In line with the requirements introduced in the Pension Schemes Act 2015, I confirm that if the
    cash equivalent value of my main Plan benefits is more than £30,000.00, I have taken
    appropriate independent advice from a financial adviser registered by the Financial Conduct
    Authority before deciding to transfer my main Plan benefits*.

    *Note: This does not apply if:
    The benefits to be provided under the receiving pension plan are not ‘flexible benefits’ (e.g.
    defined contribution and cash balance benefits) for the purposes of the Pension Schemes
    Act 2015 and you provide adequate confirmation that the benefits to be provided are
    “safeguarded benefits” (e.g. defined benefit or career average benefits) or
    You are transferring only the value of your ‘flexible benefits’ AVCs. "
    This wording, with its double negatives, is incomprehensible. I understood DC to DC was advice free. This seems to say you can only transfer to purchase an annuity.

    In case it matters the funds are described as: Post 97 benefits c. 92% and AVC the rest.
    Originally posted by Reluctantpensioner
    I agree the double negative is a bit puzzling but it makes sense when I compare it with my instructions for my DC plan:
    '...unless you tell us otherwise we will assume that the reason for the transfer is to obtain flexible benefits...'
    hence they are saying the adviser step can be waived if you AREN'T seeking flexible benefits, and you maintain any safeguarded benefits.
    • xylophone
    • By xylophone 30th Mar 18, 2:12 PM
    • 25,371 Posts
    • 14,967 Thanks
    xylophone
    • #9
    • 30th Mar 18, 2:12 PM
    • #9
    • 30th Mar 18, 2:12 PM
    In case it matters the funds are described as: Post 97 benefits c. 92% and AVC the rest.
    This is very odd if you are saying that the pension in question is definitely money purchase and not DB/hybrid.

    In DB pension schemes, there was a requirement pre 1997 to pay a Guaranteed Minimum Pension.

    Post 1997 benefits had to satisfy the "Scheme Reference Test".

    It was (and is) common in DB schemes to offer the members the opportunity of making AVCs.

    You advise that the pension in question is a simple money purchase (DC) arrangement.

    It seems to me that the administrator of the pension is under the impression that you are a deferred member of a DB or possibly a hybrid scheme and is asking you to confirm that

    The benefits to be provided under the receiving pension plan are safeguarded benefits for the purposes of the Pension Schemes Act 2015 and you are providing adequate confirmation of this fact


    or that

    You are transferring only the value of your ‘flexible benefits’ AVCs.

    Clearly the SIPP (the 'receiving plan" will not provide "safeguarded benefits".

    You need to contact the administrator of the scheme and clarify that the pension you wish to transfer is a pure DC scheme?
    • Reluctantpensioner
    • By Reluctantpensioner 30th Mar 18, 3:19 PM
    • 24 Posts
    • 3 Thanks
    Reluctantpensioner
    OP:
    Thanks for trying to help. I'm encouraged that some of you find the wording as confusing as I do.
    There is definitely no DB in this pension; I joined in 1999 and they had dropped DB and With-Profits from the scheme.
    There are no guarantees that I am aware of. It has always been presented as: here are the funds available, chose which you want to invest into?
    Last edited by Reluctantpensioner; 30-03-2018 at 3:34 PM.
    • dunstonh
    • By dunstonh 30th Mar 18, 4:27 PM
    • 92,574 Posts
    • 59,876 Thanks
    dunstonh
    hanks for trying to help. I'm encouraged that some of you find the wording as confusing as I do.
    Its not that we are finding the wording an issue. Its that we dont have the data available to us to understand that context.

    For example, the mention of 1997 rights does suggest there is safeguarded benefits.

    It could be a section 32 buy out bond (or hybrid which is now classified as one) with GMP. GMP is a safeguarded benefit.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • mgdavid
    • By mgdavid 30th Mar 18, 10:46 PM
    • 5,594 Posts
    • 4,916 Thanks
    mgdavid
    reluctant - it would help hugely if you'd name the Pension and Scheme so that the experts on here can answer from a position of full knowledge...
    The questions that get the best answers are the questions that give most detail....
    • Reluctantpensioner
    • By Reluctantpensioner 31st Mar 18, 12:14 AM
    • 24 Posts
    • 3 Thanks
    Reluctantpensioner
    The scheme manager is WillisTowersWatson.
    • sandsy
    • By sandsy 31st Mar 18, 9:33 AM
    • 1,321 Posts
    • 796 Thanks
    sandsy
    The scheme manager is WillisTowersWatson.
    Originally posted by Reluctantpensioner
    They just do the administration of the scheme, ie. ensure the contributions are collected and invested correctly, ensure payments are made etc. on behalf of the trustees.

    We need to know more about the pension scheme itself. The pension scheme itself will have a name - perhaps related to an employer you worked for? When did you start being a member of this scheme? When did you stop being an active member?
    • dunstonh
    • By dunstonh 31st Mar 18, 11:20 AM
    • 92,574 Posts
    • 59,876 Thanks
    dunstonh
    Look for words like GMP
    Or the pension being split between pre/post years or excess.

    If in doubt, ask the administrators what the safeguarded benefits are.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Reluctantpensioner
    • By Reluctantpensioner 17th Apr 18, 4:27 PM
    • 24 Posts
    • 3 Thanks
    Reluctantpensioner
    Finally have a reply from the administrators: "you have 100% defined contribution. An IFA is not mandated".
    I'm assuming they include boilerplate text in their forms to cover all possible scenarios.
    Thank's for the comments.
    • dptr
    • By dptr 17th Apr 18, 11:21 PM
    • 1 Posts
    • 0 Thanks
    dptr
    Hi,

    I've got a similar problem to the OP's. I'm trying to transfer from my DB scheme, and my scheme administrator requires a statement from each transferor's IFA certifying that the IFA has given them the regulatory transfer advice, regardless of whether the IFA's recommendation is positive or negative.

    But many of the IFAs I've contacted have said that they would not provide me with this statement if they were to advise me against transferring.

    So I'd be grateful to know of an IFA who would provide this statement even if they were to advise not to transfer. I've contacted many and this is one of several obstacles that prevent me from signing up with one of them.


    Thanks in advance for any suggestions.
    • xylophone
    • By xylophone 18th Apr 18, 4:10 PM
    • 25,371 Posts
    • 14,967 Thanks
    xylophone
    I've got a similar problem to the OP's.
    No, you haven't. It seems that you are wanting to transfer a DB scheme with benefits valued at more than £30,000 to a DC arrangement.

    The OP has now had it confirmed that the pension he wishes to transfer is simply a DC plan with no safeguarded benefits. He just wants to transfer to another DC scheme so that advice from an IFA is not mandated.

    http://www.thepensionsregulator.gov.uk/docs/db-dc-transfers-conversions-regulatory-guidance.pdf


    Trustee obligations regarding the advice

    36. Requiring members to obtain appropriate independent advice
    does not make trustees responsible for checking what advice was
    given, what recommendation was made or to confirm whether the
    member is following that recommendation.


    37. The trustees are required to check that appropriate independent
    advice has been received by the member before they carry out the
    transfer or conversion


    For this purpose, the adviser is required to
    provide confirmation in writing to the member, which includes the
    following information

    That the advice has been provided which is specific to the type
    of transaction proposed by the member.

    That the adviser has the required authorisations under the
    relevant legislation to provide advice on the transfer of
    safeguarded benefits.

    The reference number of the company or business in which the
    adviser works.

    The name of the member that was given the advice and the
    scheme in which they hold safeguarded benefits to which the
    advice applies22
    22
    Regulation 7 of the
    Pension Schemes
    Act 2015 (Transitional
    Provisions and
    Appropriate
    Independent Advice)
    Regulations 2015.

    38. Trustees should retain a copy of the adviser's written confirmation.

    39. When the trustees have received the confirmation that appropriate
    independent advice has been received, and before the transfer is
    made, they must check that the adviser has the correct permission
    to carry on the regulated activity


    Your problem is in getting the Adviser to provide the necessary confirmation.

    Some receiving schemes will refuse to accept a transfer in unless the advice is positive.

    https://www.telegraph.co.uk/pensions-retirement/financial-planning/will-no-one-help-cash-pension



    https://www.fca.org.uk/news/press-releases/fca-announces-changes-advice-pension-transfers

    https://www.handbook.fca.org.uk/handbook/COBS/9/5A.html
    Last edited by xylophone; 18-04-2018 at 4:14 PM. Reason: correcting punctuation glitch
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