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  • FIRST POST
    • phykell
    • By phykell 10th Sep 18, 1:23 PM
    • 18Posts
    • 0Thanks
    phykell
    IFA Rubber Stamp
    • #1
    • 10th Sep 18, 1:23 PM
    IFA Rubber Stamp 10th Sep 18 at 1:23 PM
    Hi,

    I have a final salary pension but its ongoing management is an issue as any queries I have are dealt with very slowly, if at all. Although I may, in theory, lose some value if I transfer it out, Iím certain that I want to consolidate it with one of my other pensions. Unfortunately, itís claimed that because the transfer value exceeds a specific amount, legislation applies which requires me to show that I have taken the advice of an IFA. Can anyone suggest the quickest and most effective route? I imagine there will need to be a charge involved even if an IFA is effectively just rubber-stamping the transfer process.

    Thanks
Page 3
    • Lummoxley
    • By Lummoxley 12th Sep 18, 12:57 AM
    • 142 Posts
    • 437 Thanks
    Lummoxley
    In the event of the latter offering a better deal then surely a transfer out could at least be considered?
    Originally posted by phykell
    You could have an apple a year plus guaranteed increases. Or you could have a pear a year which might be 2 pears one year and 1/2 a pear the next with no guaranteed increase.

    I'm 52 now so could take action to change my income stream, I'm not sure I could do that at 72 years old. I know which one I'd prefer to reduce financial uncertainty in retirement.
    • Marcon
    • By Marcon 12th Sep 18, 1:11 AM
    • 495 Posts
    • 353 Thanks
    Marcon


    On another note, while "performance" may not apply to a final salary scheme, surely there are some that are better than others. For example, if the transfer value is £100k and the annual payment on retirement is (say) £3k (assuming you haven't had enough contributions to meet the final salary amount) with £1.5k paid to dependants in the event of death before retirement age, then surely that can be compared to an alternative pension which might pay (say) £4.5k per annum. In the event of the latter offering a better deal then surely a transfer out could at least be considered?
    Originally posted by phykell
    If you mean a DC pension funded by the transfer value, which then offers a pension 50% higher than the DB scheme from which you are transferring, that's quite simply unrealistic.
    • HappyHarry
    • By HappyHarry 12th Sep 18, 3:27 AM
    • 759 Posts
    • 1,116 Thanks
    HappyHarry


    On another note, while "performance" may not apply to a final salary scheme, surely there are some that are better than others. For example, if the transfer value is £100k and the annual payment on retirement is (say) £3k (assuming you haven't had enough contributions to meet the final salary amount) with £1.5k paid to dependants in the event of death before retirement age, then surely that can be compared to an alternative pension which might pay (say) £4.5k per annum. In the event of the latter offering a better deal then surely a transfer out could at least be considered?
    Originally posted by phykell
    Yes, some final salary schemes have more generous transfer values than others.

    But, and this is the important bit, you can't transfer your final salary scheme to a different final salary scheme offering a higher transfer value.
    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.
    • hyubh
    • By hyubh 12th Sep 18, 7:55 AM
    • 2,256 Posts
    • 1,738 Thanks
    hyubh
    On another note, while "performance" may not apply to a final salary scheme, surely there are some that are better than others. For example, if the transfer value is £100k and the annual payment on retirement is (say) £3k (assuming you haven't had enough contributions to meet the final salary amount) with £1.5k paid to dependants in the event of death before retirement age, then surely that can be compared to an alternative pension which might pay (say) £4.5k per annum.
    Originally posted by phykell
    On that basis, public sector pensions are rubbish, because most you can't transfer out from at all, and the remainder transfer out on a basis that currently gives much lower transfer values than private sector schemes.

    While schemes are legally allowed to reduce transfer values due to funding issues, it's not a certainty even if there is a sizeable deficit, because crystallising liabilities is generally considered a good thing - it hastens reaching the end point when the sponsoring employer can offload the outstanding liabilities to an insurer.

    In the event of the latter offering a better deal then surely a transfer out could at least be considered?
    Sure, but as the others have said, transferring from DB to DC is fundamentally a conversion from one sort of thing into another, and needs to be understood on those terms.
    • NoMore
    • By NoMore 12th Sep 18, 11:37 AM
    • 238 Posts
    • 221 Thanks
    NoMore
    You can't pick and choose a DB pension, that's provided by your employer. Its part of the terms and conditions of the job.

    You could change job I suppose, but you then can't transfer previous entitlement to the new DB pension (except for certain Public sector pensions I think, like LGPS to TPS, but I'm no expert on that).
    Last edited by NoMore; 12-09-2018 at 11:40 AM.
    • Marcon
    • By Marcon 12th Sep 18, 11:41 AM
    • 495 Posts
    • 353 Thanks
    Marcon
    You can't pick and choose a DB pension, that's provided by your employer. Its part of the terms and conditions of the job.

    You could change job I suppose, but you then can't transfer previous entitlement (except for certain civil service pensions I think, like LGPS to TPS, but I'm no expert on that).
    Originally posted by NoMore
    You have a statutory right to transfer out of a DB scheme until you are within one year of that scheme's Normal Retirement Age. Sometimes you may be able to transfer out even if you are within a year of NRA (but you can't transfer once your pension from that scheme is in payment).

    Whether any new scheme you join will accept the transfer is normally entirely up to the new scheme.
    • Malthusian
    • By Malthusian 12th Sep 18, 2:24 PM
    • 4,651 Posts
    • 7,435 Thanks
    Malthusian
    A local firm near us took on a new client from another firm. That person was heavily invested in a high risk non-mainstream property fund. The new adviser kept telling him to get out. The client refused the returns were good. The fund collapsed. The client complained to the new adviser who rejected the complaint as they had been trying to get him out of it for ages and they were not the adviser that recommended it. He went to the FOS and the FOS upheld the complaint because although it could see the audit trail telling the person to get out of the fund and why they should get it, they didnt feel the adviser was forceful enough.
    Originally posted by dunstonh
    DRN?

    (characters)
    • dunstonh
    • By dunstonh 12th Sep 18, 2:57 PM
    • 94,525 Posts
    • 62,471 Thanks
    dunstonh
    DRN?

    (characters)
    Originally posted by Malthusian
    Network case didnt appeal. They accepted the adjudicator's decision. So, not published. They had, already by then, spent about two years arguing that they didnt have liability as it was unregulated and not sold by them but the network gave in. The firm owner took me out for breakfast when the outcome was given and spent a few hours ranting about it. To be fair, I wouldn't blame him.
    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.
    • Malthusian
    • By Malthusian 12th Sep 18, 3:46 PM
    • 4,651 Posts
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    Malthusian
    I had a feeling you were going to say that. I don't blame him either. I blame the network. Entirely their fault if they didn't appeal, not the system's. Everyone knows you have to go to ombudsman level if you want a grown-up to look at it.

    We have one side of the story and I suspect it may have been embellished, especially after two years of being a running sore. If I'd been the one invited for breakfast, I would have commiserated and said isn't it awful. But not treated it as information of value on the regulatory system.
    • telboyo
    • By telboyo 12th Sep 18, 10:05 PM
    • 399 Posts
    • 457 Thanks
    telboyo
    £5000 seems a lot
    I am planning to transfer a small final salary pension to a SIPP. The CETV is £38,000 or so am I expected to 15 % of the value to get advice on what to do with it. If they advised me that I am being foolish and the receiving pension would not accept my transfer on that basis I would be £5000 pound down on the deal. On the one hand the government says you can decide what you can do with your pension but must pay upto 1/6 of your pension pot if you exceed £30K.
    Today I have been looking at IFAs found through the .Gov.uk website, none of them show any fees except "Minimum £450" no sliding scale above that.
    • Brynsam
    • By Brynsam 12th Sep 18, 11:02 PM
    • 1,591 Posts
    • 1,150 Thanks
    Brynsam
    I am planning to transfer a small final salary pension to a SIPP. The CETV is £38,000 or so am I expected to 15 % of the value to get advice on what to do with it. If they advised me that I am being foolish and the receiving pension would not accept my transfer on that basis I would be £5000 pound down on the deal. On the one hand the government says you can decide what you can do with your pension but must pay upto 1/6 of your pension pot if you exceed £30K.
    Today I have been looking at IFAs found through the .Gov.uk website, none of them show any fees except "Minimum £450" no sliding scale above that.
    Originally posted by telboyo
    If the advice is 'don't transfer' and your preferred SIPP provider then declines to accept the transfer, you could then transfer to a stakeholder pension and then into the SIPP - which would then be a DC to DC transfer, so no advice needed for the 'onward' transfer.
    • WillowCat
    • By WillowCat 13th Sep 18, 5:28 PM
    • 827 Posts
    • 999 Thanks
    WillowCat
    I paid 2% of a transfer value of £127k last year. The payment was only due on transfer, and was taken out of the transfer pot (given my income that year was only £3k there was no way it was being paid in cash).

    We had already discussed that they didn't do insistent client - which was fine by me - and there would have been no charge had they thought they couldn't recommend a transfer.
    • Dox
    • By Dox 13th Sep 18, 11:41 PM
    • 938 Posts
    • 719 Thanks
    Dox
    I paid 2% of a transfer value of £127k last year. The payment was only due on transfer, and was taken out of the transfer pot (given my income that year was only £3k there was no way it was being paid in cash).

    We had already discussed that they didn't do insistent client - which was fine by me - and there would have been no charge had they thought they couldn't recommend a transfer.
    Originally posted by WillowCat
    You don't feel that might have encouraged them to find reasons to recommend a transfer?
    • tacpot12
    • By tacpot12 14th Sep 18, 8:02 AM
    • 1,382 Posts
    • 1,186 Thanks
    tacpot12
    There is a conflict in the FCA guidelines. On the one hand it allows clients to go against advice under the insistent client rules. On the other it says advisers should not transact where they know it to be bad advice.
    Originally posted by dunstonh
    I don't see this contradictory. The FCA Guidelines allow clients to go against advice, but says advisers should not transact where they know it to be bad advice.

    This leaves the clients with the advice that they are told they must obtain, no advisor to help them go against the advice. This seems logical, albeit that it forces the client down the DIY route; it is their money after all.
    • tacpot12
    • By tacpot12 14th Sep 18, 8:28 AM
    • 1,382 Posts
    • 1,186 Thanks
    tacpot12
    A local firm near us took on a new client from another firm. That person was heavily invested in a high risk non-mainstream property fund. The new adviser kept telling him to get out. The client refused the returns were good. The fund collapsed. The client complained to the new adviser who rejected the complaint as they had been trying to get him out of it for ages and they were not the adviser that recommended it. He went to the FOS and the FOS upheld the complaint because although it could see the audit trail telling the person to get out of the fund and why they should get it, they didnt feel the adviser was forceful enough.

    This is what advisers are up against.
    Originally posted by dunstonh
    Thank you for this example. This does appear to be unfair action by the FOS. I expect that the regulations and guidance available to advisors would not lead them to conclude that this FOS decision was likely. The advisors appear to have been poorly served by the FOS.

    Given this decision, the only safe action, if a client will not act on advice you have given, is to sack the client.

    I wonder if the FOS realise the consquences of this decision? The conseqence seems to be that if an IFA completes a annual review and updates their advice, the client now has to take it, or be sacked. Doesn't this just lead to the IFA providing a 'discretionary' management service with the client being left to sanction the changes or walk?

    Personally, I would prefer a situation where the client is not forced to act on the advice given and advisors are not liable for the outcome if the client does not act on the advice. The FOS appear to have a different approach in mind.
    • Malthusian
    • By Malthusian 14th Sep 18, 10:02 AM
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    Malthusian
    I wonder if the FOS realise the consquences of this decision?
    Originally posted by tacpot12
    As the decision was not escalated to grown-up level (ombudsman), and therefore was not published, and no-one has heard of it outside anecdotal second-hand chats in the pub or third-hand chats on anonymous internet forums, the consequences of the decision are that the client got some free money from his IFA's network.

    If you have advised a client to get out of their unregulated investment while they can, and given that advice the emphasis it deserves with words like "in the strongest possible terms" in bold and underlining, and kept a copy of that letter or email, and you are prepared to go to Ombudsman level in the very rare case that a complaint goes against you (most IFAs get less than one complaint per year, and those complaints have among the lowest uphold rates in the industry), then there is no reason to think you are not safe.

    There should be no reason to sack the client and leave them all alone when the investment eventually does go bust.

    The fundamental problem is that DunstonH's friend was an employee of a network and it was not his moral stand to make. The network had ultimate liability and it was their decision to pay up.

    Personally, I would prefer a situation where the client is not forced to act on the advice given and advisors are not liable for the outcome if the client does not act on the advice. The FOS appear to have a different approach in mind.
    What the FCA and the FOS does not want is a return to the "execution only" scam where the adviser hands the client a letter saying "I advise you not to do this" but gives the client a nudge and a wink and says "This is just some legal crap I have to give you, obviously you should go ahead and cash in your final salary scheme". Then when it goes tits-up and the client complains, the adviser says "But I advised you not do it." (In the previous incarnation of this fiddle, the adviser would have said "But you signed a letter confirming you hadn't taken advice and were making your own decision.")

    The starting assumption is that if you help the client do it and take money off them for helping them do it then you are liable. That's the job.
    • Malthusian
    • By Malthusian 14th Sep 18, 10:11 AM
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    Malthusian
    You don't feel that might have encouraged them to find reasons to recommend a transfer?
    Originally posted by Dox
    Only if WillowCat went to one of those bucket shops that churns out defined benefit transfers by the hundreds and depends on defined benefit transfers for survival.

    Many established, reputable IFAs do very few defined benefit transfers and will start by looking for any reason to recommend against a transfer, due to the liability, likelihood of being targeted by ambulance-chasing CMCs and higher professional indemnity insurance costs. A measly £3k is not going to make enough difference to their business to make them recommend an unsuitable high-risk transfer.

    "Contingent charging" may be politically non-U but is still common practice because clients don't like forking out hundreds or thousands of pounds for being told to do nothing.
    • dunstonh
    • By dunstonh 14th Sep 18, 10:29 AM
    • 94,525 Posts
    • 62,471 Thanks
    dunstonh
    I gave that adviser a call and asked him. Basically, as they had taken on the servicing rights of the policy and were collecting an adviser charge, they took on responsibility for the advice going forward.

    The discussions over coming out of the fund were done via email. The FOS didnt feel that there was enough emphasis on how high a risk the person was taking and that a report should have been written showing the advice the adviser would give as the alternative and then show it being overruled via the client on an insistent client basis. So, although the words were said, they didnt give any impression of urgency or importance. Apparently, the reference was just very high risk but no context on what that risk meant and the adviser accepted first rejection by the client without questioning it more.

    Still a harsh decision but perhaps a bit more understandable as an adviser is meant to be there to protect the client from themselves. Yes, a line has to be drawn somewhere but the adviser should have scared the hell out of the client and he didnt.

    Apparently, he hasn't been billed yet as although the complaint was upheld, the client also made a complaint to the original seller who has since ceased trading and its now with the FSCS. The outcome on that will decide how much he has to pay, if any.

    As Happyharry says, this is just what I am being told by that adviser. As he was a network adviser, he doesnt actually see what the FOS said. He just gets the network summary of it. So, I am hearing the story a few times removed.
    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.
    • Malthusian
    • By Malthusian 14th Sep 18, 3:27 PM
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    Malthusian
    That makes more sense. I agree entirely with your line of thinking - "the adviser should have scared the hell out of the client and he didnt" - and the adviser was also clearly responsible for the investments if he was collecting an ongoing fee on them. Harsh but a harsh lesson learned.

    HappyHarry hasn't commented on this as far as I can see - maybe you were thinking of one of my posts.
    • HappyHarry
    • By HappyHarry 14th Sep 18, 3:29 PM
    • 759 Posts
    • 1,116 Thanks
    HappyHarry
    I don't think it was me.
    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.
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