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  • FIRST POST
    • WTY433
    • By WTY433 5th Aug 18, 6:41 PM
    • 22Posts
    • 1Thanks
    WTY433
    Trf from FS pension via St James Place
    • #1
    • 5th Aug 18, 6:41 PM
    Trf from FS pension via St James Place 5th Aug 18 at 6:41 PM
    I have read some great reviews and thoughts on here and wondered if any one out there had any thoughts on my situation. This is my 1st post so go easy on me.

    I am 55 and am in the fortunate position of not having to work anymore and I have enough income to live on through rental income.

    I also have a frozen final salary pension that has a normal payout age of 60. The income this will give me will naturally be taxed and theoretically I could manage without it.

    I recently spoke to an adviser from St James Place and although the advice and ideas he gave me make a lot of sense I am wary. Especially after reading all the comments on other posts about their charges.

    My dilemma is that the fund in question is worth a lot of money. (about 625,000) this increased by approx 50,000 last year and 100,000 the year before. These big rises are as a result of the transfer value being linked to guilt rates which are low if i understand it right.

    My thoughts are that the cost of gilts like everything else only have one way to go so it makes a lot of sense to transfer my fund out whilst it is still high. This also makes sense as the fund i am told is IHT friendly as there is a chance i wont need most of the money in there. I realise i will lose the guarantee of a pension for the rest of my life but im happy to take that chance due to my situation (Not relying on this money)

    The Adviser said that the only charges I will pay are the AMC and TER (about 1.71% in a balanced fund). They said they would take about 2% commission not the 4.5% stated on thier terms of business letter but i'm not sure how that would affect me if i'm only paying the AMC. They then said 0.5% per year. From what Ive read on other threads this apparently is quite high (the annual charge) but

    When i questioned them on their performance as Id read somewhere it was dire in between our meetings, they said the poor performance was on other funds and that the main portfolios they would be recommending put together by members of thier investment committee were strong (better than average) and they had portfolio comparisons to back this up which they left with me. They focused a lot on ARC as an independent benchmark and how they have outperformed thier rivals consistently many cases.

    It all looked impressive and i do have some FS experience but am very wary. Its a lot of money and sadly these days you can't trust anyone.

    I accept that good advice costs but the "Approx 2%" verbally stated is 12,500
    even 0.5% is 3000 per year for a fund that I intend to leave (especially with exit fees) seems a lot.

    Any thoughts / comments are greatly appreciated as this will be the biggest financial decision I have ever made in my 55 years.
Page 1
    • xylophone
    • By xylophone 5th Aug 18, 6:51 PM
    • 27,645 Posts
    • 16,610 Thanks
    xylophone
    • #2
    • 5th Aug 18, 6:51 PM
    • #2
    • 5th Aug 18, 6:51 PM
    being linked to guilt rates which are low
    No conscience?

    You'll need a Pension Transfer Specialist.

    https://www.fca.org.uk/consumers/pension-transfer

    https://adviserbook.co.uk/
    • Teaandscones
    • By Teaandscones 5th Aug 18, 7:07 PM
    • 134 Posts
    • 115 Thanks
    Teaandscones
    • #3
    • 5th Aug 18, 7:07 PM
    • #3
    • 5th Aug 18, 7:07 PM
    I wouldn't bank on the IHT benefits lasting
    • dunstonh
    • By dunstonh 5th Aug 18, 7:11 PM
    • 96,058 Posts
    • 63,875 Thanks
    dunstonh
    • #4
    • 5th Aug 18, 7:11 PM
    • #4
    • 5th Aug 18, 7:11 PM
    My thoughts are that the cost of gilts like everything else only have one way to go so it makes a lot of sense to transfer my fund out whilst it is still high.
    And can you afford taking on investment risk?
    Can you handle investment risk on such an amount? A minor 10% loss is 62,500. A typical crash is 125,000. How are you going to feel when you see your value 125,000 lower?

    The Adviser said that the only charges I will pay are the AMC and TER (about 1.71% in a balanced fund).
    no-one talks AMCs anymore unless it is an insured pension contract. They shouldnt be talking TER either (unless its non UCITS/ITs/ETFs). The FCA said to use OCF back in 2015. Recent experiences competing with SJP indicated the rep I was up against didnt disclose charges correctly either.

    When i questioned them on their performance as Id read somewhere it was dire in between our meetings, they said the poor performance was on other funds and that the main portfolios they would be recommending put together by members of thier investment committee were strong (better than average) and they had portfolio comparisons to back this up which they left with me. They focused a lot on ARC as an independent benchmark and how they have outperformed thier rivals consistently many cases.
    SJP can only offer SJP funds. An IFA can select from the marketplace. So, if a fund goes off the boil, the IFA can change it. With SJP, you are stuck with their funds. Remember SJP are sales reps.

    even 0.5% is 3000 per year for a fund that I intend to leave (especially with exit fees) seems a lot.
    0.5% is the going rate for an IFA. You would be paying the same for a sales rep to do less.
    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.
    • WTY433
    • By WTY433 5th Aug 18, 7:39 PM
    • 22 Posts
    • 1 Thanks
    WTY433
    • #5
    • 5th Aug 18, 7:39 PM
    He did bring the pension specialist with him
    • #5
    • 5th Aug 18, 7:39 PM
    On the 2nd meeting the adviser brought the pension specialist with him
    • WTY433
    • By WTY433 5th Aug 18, 7:44 PM
    • 22 Posts
    • 1 Thanks
    WTY433
    • #6
    • 5th Aug 18, 7:44 PM
    • #6
    • 5th Aug 18, 7:44 PM
    Thanks for all the help so far. - Useful stuff
    dunstonh - I accept that the investment may go down but over 5 years + history, although no guarantee, seems to suggest I would make in the longer term.
    Also bearing in mind my situation, is sticking with an enforced annuity which gives me taxable income i don't really need the best thing. (When considering the IHT angle)
    • HappyHarry
    • By HappyHarry 5th Aug 18, 8:48 PM
    • 814 Posts
    • 1,188 Thanks
    HappyHarry
    • #7
    • 5th Aug 18, 8:48 PM
    • #7
    • 5th Aug 18, 8:48 PM
    May I respectively suggest you a proper IFA to assess your transfer options.

    You are likely to receive better advice (as SJP are very limited in what they can offer), and a proper IFA is likely to be less expensive than an SJP sales rep.
    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.
    • Aegis
    • By Aegis 5th Aug 18, 9:32 PM
    • 5,003 Posts
    • 3,270 Thanks
    Aegis
    • #8
    • 5th Aug 18, 9:32 PM
    • #8
    • 5th Aug 18, 9:32 PM
    Bear in mind the fact that he has 2 options on the table, advising you to leave the scheme where it is and advising you to transfer it away. In the former case, he will be paid nothing. In the latter, he will receive 12,500 up front and over 3,000 a year, guaranteed for 6 years because of the early exit penalty (i.e. a further 18,000). Which do you think he will be more keen to advise you to do?


    Go to an independent adviser that can do a proper analysis on a fixed fee basis where you can exit any recommended investments without a penalty. Otherwise you leave yourself open to poor outcomes as a result of a bias that the company should have dealt with itself years ago if they wanted to offer good quality advice in this area.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • dunstonh
    • By dunstonh 5th Aug 18, 9:33 PM
    • 96,058 Posts
    • 63,875 Thanks
    dunstonh
    • #9
    • 5th Aug 18, 9:33 PM
    • #9
    • 5th Aug 18, 9:33 PM
    dunstonh - I accept that the investment may go down but over 5 years + history, although no guarantee, seems to suggest I would make in the longer term.
    They said that about endowments. They never failed.... until they did.
    They said that last time defined benefit transfers were popular.... and around 4 out of 5 turned out wrong with hindsight.

    Also bearing in mind my situation, is sticking with an enforced annuity which gives me taxable income i don't really need the best thing. (When considering the IHT angle)
    If its a DB scheme then annuities have nothing to do with it. If you are worried about death benefits and IHT then how does life assurance stack up?
    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.
    • atush
    • By atush 5th Aug 18, 11:21 PM
    • 17,314 Posts
    • 10,866 Thanks
    atush
    Have you seen an actual IFA? Ie not a tied sales agent like SJP?

    Do you have a spouse or dependent to receive a pension shouold you die?

    If you have no spouse/dependent and you have no one else to inherit your pot- what do you think you can achieve outside your DB pension?
    • WTY433
    • By WTY433 6th Aug 18, 9:25 AM
    • 22 Posts
    • 1 Thanks
    WTY433
    HI atush,
    I saw one IFA but his knowledge didn't seem great so I wasn't that confident in his ability. To be fair the SJP pension specialist seemed to know his stuff.
    From the comments made I think I do need to try again with another IFA.
    Comments have been made about if the fund was not performing and an IFAs ability to move to different funds but I wonder whether they would actually do this. Maybe this depends on the quality of the IFA.

    I have a spouse and 3 children. If I have left the pension where it is then my understanding is that for the next 5 years they would get the fund (which may reduce if gilts go up) but once i take it they would only get a pension for 5 years. then it stops.
    My issue with this is that i don't particularly need the pension (I may take the tax free lump sum) and if i do take the pension i will probably end up paying 40% tax on it which i don't really ant to do.
    Drawing down from the fund when required sounds a better option for me which I can do if i transfer it.
    Also if / when i die the fund / pension would not stop as it would in the current scheme so there should be quite a bit there for them in the money purchase scheme which i am assured is quite IHT friendly, currently

    Thanks for all the comments - they have been really helpful in my decision making
    • dunstonh
    • By dunstonh 6th Aug 18, 9:41 AM
    • 96,058 Posts
    • 63,875 Thanks
    dunstonh
    Comments have been made about if the fund was not performing and an IFAs ability to move to different funds but I wonder whether they would actually do this. Maybe this depends on the quality of the IFA.
    If you employ the adviser with ongoing servicing then yes they will. If you employ them on a transactional basis, then no they will not. At least the IFA can change them. Unlike the SJP sales rep.

    If you see an IFA that you don't like the next option is to find another IFA. Not to go with a sales rep.
    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.
    • Aegis
    • By Aegis 6th Aug 18, 9:45 AM
    • 5,003 Posts
    • 3,270 Thanks
    Aegis
    HI atush,
    I saw one IFA but his knowledge didn't seem great so I wasn't that confident in his ability. To be fair the SJP pension specialist seemed to know his stuff.
    Originally posted by WTY433

    There's no reason to expect that he doesn't know the technical information, but ultimately he is still only there to sell SJP products and investments. He cannot go to the whole of market if something else is more appropriate for you, and if you transfer via them you will be locked into their financial "advice" service for six years due to the tapering exit penalty for changing your mind.



    From the comments made I think I do need to try again with another IFA.
    Comments have been made about if the fund was not performing and an IFAs ability to move to different funds but I wonder whether they would actually do this. Maybe this depends on the quality of the IFA.

    This is important, but it is arguably more important to realise that the lock-in period ties you to SJP, not just tot he specific investments. This means:
    • If you fall out with an IFA for whatever reason, you can fire them immediately. Under this SJP model, doing so would expose you to a 6% penalty in year one on top of any initial fees you had already paid for the transfer itself.
    • If the pension trustees make so many mistakes that you would prefer another trustee, an IFA can find a new one for you. Acting under this model, you would be subject to a 6% penalty to change trustee, because you would have to exit all of the SJP services to do this.
    • If you dislike the investments, you have only three options, namely 1) suck it up, 2) switch to their in-house discretionary manager and add another layer of fees, or 3) transfer out of SJP and pay the 6% tapered exit penalty again.
    It's really important to understand that other advisers do not charge this type of exit penalty, at least in part because doing so in anything other than a "vertically integrated" company like SJP is now banned.



    The really important thing to consider when deciding on an adviser is "what will it cost me to change my mind about the ongoing service?" If you go to an IFA, that cost should be zero - you can always exit an IFA servicing contract without penalty. If you go to SJP, you could end up paying 6% of your pension to change your mind. Which pricing model will encourage your adviser to look after you more?



    I have a spouse and 3 children. If I have left the pension where it is then my understanding is that for the next 5 years they would get the fund (which may reduce if gilts go up) but once i take it they would only get a pension for 5 years. then it stops.

    That's unusual to say the least. Normally a defined benefit scheme has a five-year guarantee period followed by a reduced spouse's pension for life, typically between 50% and 70%. As an added benefit, this is normally based on the pre-PCLS income entitlement, so it can actually be much better value than it first appears if you are minded to take a lump sum up front.



    My issue with this is that i don't particularly need the pension (I may take the tax free lump sum) and if i do take the pension i will probably end up paying 40% tax on it which i don't really ant to do.
    Drawing down from the fund when required sounds a better option for me which I can do if i transfer it.

    Nothing wrong with that as a reason, but you should consider the pension as a part of your retirement plans rather than as something you are forced to take. For example, by having the pension, what might your other investments be able to do if they don't need to provide you with an income?



    Also if / when i die the fund / pension would not stop as it would in the current scheme so there should be quite a bit there for them in the money purchase scheme which i am assured is quite IHT friendly, currently

    This can be an excellent reason for transferring if the pension is genuinely surplus to requirements, but you can consider other options for maximising benefits to your children while also keeping the guaranteed lifetime income. Insurance is one option, offsetting (as described above) is another.


    Thanks for all the comments - they have been really helpful in my decision making

    Best of luck navigating this murky world! In my view, pension transfers done well represent the pinnacle of financial planning professionalism. Done poorly, the outcomes can be disastrous (see British Steel...).
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • atush
    • By atush 6th Aug 18, 10:58 AM
    • 17,314 Posts
    • 10,866 Thanks
    atush
    I have a spouse and 3 children. If I have left the pension where it is then my understanding is that for the next 5 years they would get the fund (which may reduce if gilts go up) but once i take it they would only get a pension for 5 years. then it stops.
    Triple check this- it sounds like you are talking about a guarantee period- not the spousal (and dependents) pensions. Which are Normal in DB pensions.

    You may or may not want to transfer, but whatever you do- check your DB benefits and DONT use SJP.
    • Seabee42
    • By Seabee42 6th Aug 18, 11:01 AM
    • 364 Posts
    • 219 Thanks
    Seabee42
    I think whether you should transfer or not is one thing but getting advice from a sales person who only gets paid for recommending his owns firms stuff does not seem like they are really in your corner. This does not seem like an objective way to decide to invest over half a million.
    • WTY433
    • By WTY433 6th Aug 18, 3:30 PM
    • 22 Posts
    • 1 Thanks
    WTY433
    atush ... i've just rechecked the spouses pension which is 50% of pension and death benefit is remaining installments under 5 years guarantee. (before retirement = 5 years pension as if retired early so thanks for referring me back to that

    Aegis... My income for the foreseeable future comes from rental properties so unless I sell some houses then this will continue to be the case which means I cannot do much there. The pension income on top will take me to higher rate tax. (Just) - I don't really need that much money to live on hence the transfer idea.

    Thanks all so far for all contributions. Really helpful.
    I'm hearing loud and clear that SJP are expensive, inflexible and bias with underhand tie ins.
    • Aegis
    • By Aegis 6th Aug 18, 3:35 PM
    • 5,003 Posts
    • 3,270 Thanks
    Aegis
    atush ... i've just rechecked the spouses pension which is 50% of pension and death benefit is remaining installments under 5 years guarantee. (before retirement = 5 years pension as if retired early so thanks for referring me back to that

    Aegis... My income for the foreseeable future comes from rental properties so unless I sell some houses then this will continue to be the case which means I cannot do much there. The pension income on top will take me to higher rate tax. (Just) - I don't really need that much money to live on hence the transfer idea.

    Thanks all so far for all contributions. Really helpful.
    I'm hearing loud and clear that SJP are expensive, inflexible and bias with underhand tie ins.
    Originally posted by WTY433
    Where your income significantly exceeds your outgoings and is likely to continue doing so, that again tends to be a reasonable motivator for a transfer.


    To be honest, you sound like one of the somewhat rare cases where a transfer might be a decent idea. Just take care to find someone who will do the job well in as unbiased a fashion as possible.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • WTY433
    • By WTY433 6th Aug 18, 6:15 PM
    • 22 Posts
    • 1 Thanks
    WTY433
    Just a thought.
    If I go to an IFA and he/she charges me an amount / flat fee and annual charge for investing the money into certain funds. Wont there be AMCs etc on those funds as well?
    accepting all the previous stuff about unbias, lock in period etc
    I just want to make sure i am 100% on this charging stuff
    • Aegis
    • By Aegis 6th Aug 18, 6:23 PM
    • 5,003 Posts
    • 3,270 Thanks
    Aegis
    Just a thought.
    If I go to an IFA and he/she charges me an amount / flat fee and annual charge for investing the money into certain funds. Wont there be AMCs etc on those funds as well?
    accepting all the previous stuff about unbias, lock in period etc
    I just want to make sure i am 100% on this charging stuff
    Originally posted by WTY433
    You basically need to look at three charges:
    • Adviser charges - what the adviser charges you to look after your money
    • Platform charges - what the administrative functions for holding your investments costs
    • Investment charges - the total cost of owning the various funds and other investments held within your portfolio
    With pensions it's possible that you might also get a pension charge if your adviser recommends a third-party SIPP provider, but that would likely be unnecessary unless you need something rather more bespoke than average.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • OldMusicGuy
    • By OldMusicGuy 6th Aug 18, 6:52 PM
    • 642 Posts
    • 1,393 Thanks
    OldMusicGuy
    Why not go DIY to minimize costs? Just get a pension specialist to do the transfer advice and then put the money in low cost, passive trackers. Then all you have is platform and fund fees. It doesn't sound like you need to be really "clever" with this investment.
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