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  • FIRST POST
    • PlanToRetire
    • By PlanToRetire 14th Jan 20, 7:13 PM
    • 17Posts
    • 20Thanks
    PlanToRetire
    Possible Transfer Value and Advice
    • #1
    • 14th Jan 20, 7:13 PM
    Possible Transfer Value and Advice 14th Jan 20 at 7:13 PM
    Good evening, I need some help with a possible Final Salary Pension Scheme Transfer.
    I am 54, and my husband has just retired. I have 3 smaller pensions to the value of about £100,000. My main scheme is a Final Salary and I am thinking of taking it at 55. However I will probably still work part time. If I leave the pension where it is, at 55 I can get a lump sum of £67.5k and a pension of 10k per year.
    The estimated transfer value is 498k and I am considering transferring to a drawdown arrangement. I work for an Investment Company and they offer Pension help, although it does seem to be more Wealth Management. I had the initial consultation with this Company today. However my issue is that they will make a recommendation re the transfer – but if they recommend not to transfer then I can not go ahead with them. The fee of 1% (£5k) still needs to be paid.
    Obviously I will consider carefully the advice given, but if I go through this process and the recommendation is not to transfer then if I do decide to go ahead then I will need to do through the whole process again.
    I looked into this 2 years ago with my previous employer and I decided not to proceed after getting the initial Transfer Value (which was 75k lower), but I do remember that if I decided to transfer regardless of the advice the Financial Advisor would proceed on my behalf
    So my first question is this:

    Is it usual for an Advisor to not assist with a Transfer if they recommend not to transfer?

    As I said, I am prepared to pay for advice, however I know that the Advisor will err on the side of caution – which is understandable – but I feel that if I do decide to Transfer I will have to pay the first Advisor and still be in the same position.

    Therefore the next question is 1% of the Transfer Value reasonable?

    Any help would be most appreciated
Page 2
    • shortseller09
    • By shortseller09 15th Jan 20, 11:00 AM
    • 10 Posts
    • 2 Thanks
    shortseller09
    Be careful as some advisers will not sign off on the transfer if the advice is negative, and also some ceding schemes require a positive recommendation.
    • PlanToRetire
    • By PlanToRetire 15th Jan 20, 11:06 AM
    • 17 Posts
    • 20 Thanks
    PlanToRetire
    Just be aware that finding the right type of IFA , with the right qualifications , who is willing to do the work can be difficult . So might be easier to stick with the work one . As already said.
    Originally posted by Albermarle
    Indeed. I am now veering to leave it where it is anyway because it seems like such a faff.

    However my main issue is that my husband is 9 years older, so if I go after him there will be nothing - which is fine if I last till 96 but not so great if I die at 60 (for example). My family don't have a great track record - oldest grandparent died at 74 and oldest parent at 71. I know that doesn't mean that I will go early......but is the reason why I was thinking of transferring out in the first place, as I wanted to leave a pot for my children.
    • Dox
    • By Dox 15th Jan 20, 11:26 AM
    • 1,863 Posts
    • 1,396 Thanks
    Dox
    Be careful as some advisers will not sign off on the transfer if the advice is negative, and also some ceding schemes require a positive recommendation.
    Originally posted by shortseller09
    All the ceding scheme will require is confirmation that the member who wants to transfer out has received advice. They certainly can't start imposing conditions on whether that advice was to transfer or stay put (and most schemes will decline to see the advice, to further endorse the message that it is a decision for the member).

    As for the adviser, they don't need to sign off on the transfer; they need to sign whatever form the ceding scheme requires to confirm advice has been provided.
    • PlanToRetire
    • By PlanToRetire 15th Jan 20, 11:30 AM
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    PlanToRetire
    All the ceding scheme will require is confirmation that the member who wants to transfer out has received advice. They certainly can't start imposing conditions on whether that advice was to transfer or stay put (and most schemes will decline to see the advice, to further endorse the message that it is a decision for the member).

    As for the adviser, they don't need to sign off on the transfer; they need to sign whatever form the ceding scheme requires to confirm advice has been provided.
    Originally posted by Dox
    Many thanks, a lot to think about.
    • Malthusian
    • By Malthusian 15th Jan 20, 11:39 AM
    • 7,356 Posts
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    Malthusian
    Makes me think that there is a market opening for such a person, who will always give negative recommendations and can charge much less than other people. It doesn't seem that there would be any liability involved as it's a negative recommendation, but the criteria for taking advice has been fulfilled!
    Originally posted by jimi_man
    No adviser will do that unless they are crooked. And if an adviser is crooked the charges are likely to be much higher than you think.

    A recommendation not to transfer a DB pension is high risk, e.g. because if the client dies unmarried, their children will come waving torches and pitchforks asking why the adviser screwed them out of hundreds of thousands of pounds. Or the client will complain years down the line if the stockmarket booms and they calculate they could have been much better off.

    This is why increasing numbers of reputable advisers refuse to advise on DB pensions at all and professional indemnity insurers refuse to cover it except for eye-bleedingly high premiums.

    To operate in the way you describe the adviser would have to a) ignore their training and their professional responsibility to give best advice, b) prepare an exit-scam so they can dump the eventual liabilities on their PI insurer or FSCS and swan off into the sunset, rather than paying them out of their own money, c) lie to their PI insurer (because otherwise their PI costs will eliminate the ability to charge peanuts). This would make them a crook.

    Anyone prepared to follow this business model would have no reason not to go the whole hog and tell their clients that actually transferring out is a brilliant idea because they can make superhot fire returns from dilapidated monasteries in Leipzig and carbon storage sheds in Laos.

    The fact that advising people to transfer out of a DB scheme is high-risk doesn't mean the opposite is automatically low-risk. Both advice to transfer out and advice to stay put could leave the client hundreds of thousands of pounds worse off and it's impossible to know which will be the case. That makes both those things high-risk.

    If you pay an adviser for a formal recommendation (expect this to cost several thousand pounds) they must sign the declaration to say they have given advice. Refusing to do so is essentially a) lying and b) not doing the job you paid them for. However, you should still ask them upfront whether they will sign the declaration if the advice is negative. Because you don't want to have to go through the Financial Ombudsman to force them into it.
    • PlanToRetire
    • By PlanToRetire 15th Jan 20, 11:46 AM
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    PlanToRetire
    If you pay an adviser for a formal recommendation (expect this to cost several thousand pounds) they must sign the declaration to say they have given advice. Refusing to do so is essentially a) lying and b) not doing the job you paid them for. However, you should still ask them upfront whether they will sign the declaration if the advice is negative. Because you don't want to have to go through the Financial Ombudsman to force them into it.
    Originally posted by Malthusian
    Thank you. I have a further meeting with the Advisor next week and am going to ask – if you recommend not to transfer, and I then decide to go ahead, will you advise my Final Salary Scheme that you have given me all the info (and I have decided to go against this). I will also phone the Scheme helpline and ask them if this is sufficient.

    Of course, this may be academic as they may recommend a transfer based on my info, or I may decide to stick with the Scheme anyway.

    All would be much simpler if I knew my date of death! Always had it in my head that I won’t make old bones but my predicating skills are not great.......
    • JoeCrystal
    • By JoeCrystal 15th Jan 20, 11:50 AM
    • 2,096 Posts
    • 1,503 Thanks
    JoeCrystal
    All would be much simpler if I knew my date of death! Always had it in my head that I won’t make old bones but my predicating skills are not great.......
    Originally posted by PlanToRetire
    Well, according to the ONS, you got a 50% chance to live to 84, a 25% chance to live to 92 and a 10% chance to live to 97.
    • Malthusian
    • By Malthusian 15th Jan 20, 11:51 AM
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    Malthusian
    Indeed. I am now veering to leave it where it is anyway because it seems like such a faff.
    Originally posted by PlanToRetire
    The FCA thinks that 9 times out of 10 that is the correct decision. If a few months of admin are enough to deter you from transferring then that suggests it isn't a good idea.

    Transferring out of a DB scheme is a highly risk-seeking decision so any investor for whom it is suitable should be champing at the bit at the thought of having to deal with all that money invested in the stockmarket, with all the extra admin and worry associated with that. I'm the kind of person who would if the price was right (as are many forum regulars) but I'm in a minority.

    However my main issue is that my husband is 9 years older, so if I go after him there will be nothing - which is fine if I last till 96 but not so great if I die at 60 (for example).
    True, but you'll both be dead. Defined benefit pensions are designed on the assumption that the members want guaranteed income in retirement and not an inheritance.

    And your heirs will still get your defined contribution pensions and any assets in your estate.

    If leaving an inheritance is a priority you could look at using the DB income to buy whole of life insurance and / or investing surplus income.

    My family don't have a great track record - oldest grandparent died at 74 and oldest parent at 71.
    What kind of health were they in at 55 and how does that compare with yours?
    • MallyGirl
    • By MallyGirl 15th Jan 20, 11:51 AM
    • 4,132 Posts
    • 9,593 Thanks
    MallyGirl
    It is tricky. I am still considering transferring my FS pension out but it may not even be possible by the time I get to an age where I want to do it. My case is different though in that my transfer value is 50x the annual pension and that pension is only £1875 pa so would not even pay my fuel bill. Transferring it into my SIPP would simplify things for a relatively low risk (to me).
    • Malthusian
    • By Malthusian 15th Jan 20, 11:56 AM
    • 7,356 Posts
    • 11,823 Thanks
    Malthusian
    Well, according to the ONS, you got a 50% chance to live to 84, a 25% chance to live to 92 and a 10% chance to live to 97.
    Originally posted by JoeCrystal
    I normally caveat the ONS stats by pointing out that a lot of the 50% who won't live to 84 have serious illnesses or congenital disabilities that the OP already knows they don't have (or they'd've mentioned it). When doing their own calculations they have to kick those people out of the equation which bumps up their own odds of living longer. Plus they have lots of money, plus they use a high level of spelling and grammar.

    However the OP's family history of health issues might come into play depending on how relevant it is. There are plenty of genetic indicators of lower life expectancy but there are also plenty of families with multiple generations who died in their 70s because they worked for long periods with dangerous chemicals, or didn't go for a jog often enough.
    • PlanToRetire
    • By PlanToRetire 15th Jan 20, 12:04 PM
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    PlanToRetire
    What kind of health were they in at 55 and how does that compare with yours?
    Originally posted by Malthusian
    Dad was dead at 51 and Mum had dementia from her early 60's......which I am sure explains why I want to transfer in a nutshell!

    Many thanks all for your helpful replies. It has given me a lot to think about, I'm now going to go to the spreadsheets to look at all the possible scenarios.
    • p00hsticks
    • By p00hsticks 15th Jan 20, 12:33 PM
    • 7,370 Posts
    • 8,271 Thanks
    p00hsticks
    Thank you. I have a further meeting with the Advisor next week and am going to ask – if you recommend not to transfer, and I then decide to go ahead, will you advise my Final Salary Scheme that you have given me all the info (and I have decided to go against this). I will also phone the Scheme helpline and ask them if this is sufficient.
    Originally posted by PlanToRetire
    As far as I'm aware, it's not the Final salary scheme you need to inform/persuade - it's whatever scheme you intend to move into.

    You need to be asking the advisor firstly to confirm that s/he is a Pension Transfer Specialist, and then, assuming s/he says yes - if you recommend not to transfer, will you still sign the necessary paperwork to confirm that you have given advice that I can then use to transfer out.
    • PlanToRetire
    • By PlanToRetire 15th Jan 20, 1:11 PM
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    PlanToRetire
    As far as I'm aware, it's not the Final salary scheme you need to inform/persuade - it's whatever scheme you intend to move into.

    You need to be asking the advisor firstly to confirm that s/he is a Pension Transfer Specialist, and then, assuming s/he says yes - if you recommend not to transfer, will you still sign the necessary paperwork to confirm that you have given advice that I can then use to transfer out.
    Originally posted by p00hsticks
    Ah I see. So much (great) info - I am going to take all day Sunday to go over my options and decide my course of action.
    • AlanP
    • By AlanP 15th Jan 20, 2:10 PM
    • 1,838 Posts
    • 1,520 Thanks
    AlanP
    As far as I'm aware, it's not the Final salary scheme you need to inform/persuade - it's whatever scheme you intend to move into.

    You need to be asking the advisor firstly to confirm that s/he is a Pension Transfer Specialist, and then, assuming s/he says yes - if you recommend not to transfer, will you still sign the necessary paperwork to confirm that you have given advice that I can then use to transfer out.
    Originally posted by p00hsticks
    The legal position is that you have to satisfy the trustees of the FS/DB scheme that you have received advice, from a qualified person, as you are giving up a safeguarded benefit.

    Whether that advice is Go or Stay is of no concern to them.

    The requirement that some receiving providers have in place that they only accept positive transfers is not a legal requirement but is their operational decision.
    • ZingPowZing
    • By ZingPowZing 15th Jan 20, 2:11 PM
    • 422 Posts
    • 173 Thanks
    ZingPowZing
    You are right to be wary, PlanToRetire. Your instinct is correct imo.

    When you commit to pay an adviser regardless of whether he provides a positive recommendation, you will get a negative recommendation, because that is the safer course for the adviser. So, not only would you be throwing away £5k, you wouldn't even know if the advice is correct for you.

    And then, unless you adviser has given a prior undertaking to sign a declaration on the receiving scheme of whatever provider you can find before the CETV deadline, your only recourse would be to move it to AJ Bell or start the process again with a new CETV.

    Such was my experience but I'm not saying don't do it. I did turn my DB into a SIPP and would have regretted it sorely if I hadn't - following my first adviser's recommendation would have been a far bigger mistake than paying him off.
    Didn't hear the train last night doesn't mean it didn't go.
    • AlanP
    • By AlanP 15th Jan 20, 2:12 PM
    • 1,838 Posts
    • 1,520 Thanks
    AlanP
    As far as I'm aware, it's not the Final salary scheme you need to inform/persuade - it's whatever scheme you intend to move into.

    You need to be asking the advisor firstly to confirm that s/he is a Pension Transfer Specialist, and then, assuming s/he says yes - if you recommend not to transfer, will you still sign the necessary paperwork to confirm that you have given advice that I can then use to transfer out.
    Originally posted by p00hsticks
    The legal position is that you have to satisfy the trustees of the FS/DB scheme that you have received advice, from a qualified person, as you are giving up a safeguarded benefit.

    Whether that advice is Go or Stay is of no concern to them.

    The requirement that some receiving providers have in place that they only accept positive transfers is not a legal requirement but is their operational decision.

    Theoretically you could ask a SIPP provider to transfer your benefits from the XYZ Ltd DB Scheme and the point at which "has advice been taken" question will be answered is when XYZ Ltd Db Scheme Admin receive the transfer request as they are the ones on the hook not the SIPP provider.
    • ZingPowZing
    • By ZingPowZing 15th Jan 20, 2:21 PM
    • 422 Posts
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    ZingPowZing
    Thank you. I have a further meeting with the Advisor next week and am going to ask – if you recommend not to transfer, and I then decide to go ahead, will you advise my Final Salary Scheme that you have given me all the info (and I have decided to go against this). I will also phone the Scheme helpline and ask them if this is sufficient.
    Originally posted by PlanToRetire
    Also get an undertaking that the adviser will sign a declaration on the transfer-in form of the pension; no reason why he should refuse, you may think, but mine did and it effectively prevented me from moving directly to the provider of my choice.
    Didn't hear the train last night doesn't mean it didn't go.
    • cfw1994
    • By cfw1994 15th Jan 20, 2:24 PM
    • 577 Posts
    • 541 Thanks
    cfw1994
    I suspect all it will take is a significant market crash, nothing out of the ordinary, just similar to those seen in the past and we will move into "PPI" territory.

    At which point people like the op (no offence intended) will start to plead they were misled. Hopefully there will be sufficient audit trail nowadays to show they were going against the professional advice to stay put.
    Originally posted by Dazed and confused
    I cannot understand how that (bold) would possibly be the case. Well, I can imagine them grumbling......
    ....but if a company advised to NOT transfer out, and they did - there is a clear line to the advice that keeps the company entirely in the clear. Nothing like PPI whatsoever, surely - any evidence to suggest otherwise?

    The problem is the cost of the insurance I believe. I am pretty sure there have been cases of negative recommendation, insistent client transfer, it all goes pear-shaped and the client still successfully claimed against the advisor who told not to transfer.
    Originally posted by MallyGirl
    Any evidence? I cannot see how any reasonable legal system would find in favour of such a plaintiff, given that scenario!



    OP, when having that initial conversation with an IFA, I *suspect* you may be wise to allow them to believe they would manage your pot forever after. Do check on costs/fees to move out later if you wanted to, but if the IFA expects to them be managing your wealth, I would imagine they would be more inclined to want you as a customer

    Of course I could be wrong.....but......

    Good luck!
    • ZingPowZing
    • By ZingPowZing 15th Jan 20, 2:27 PM
    • 422 Posts
    • 173 Thanks
    ZingPowZing
    The legal position is that you have to satisfy the trustees of the FS/DB scheme that you have received advice, from a qualified person, as you are giving up a safeguarded benefit.

    Whether that advice is Go or Stay is of no concern to them.

    The requirement that some receiving providers have in place that they only accept positive transfers is not a legal requirement but is their operational decision.

    Theoretically you could ask a SIPP provider to transfer your benefits from the XYZ Ltd DB Scheme and the point at which "has advice been taken" question will be answered is when XYZ Ltd Db Scheme Admin receive the transfer request as they are the ones on the hook not the SIPP provider.
    Originally posted by AlanP
    Bad timing, I posted almost at the same time as AlanP. Most SIPP providers' transfer-in forms
    require the signature of a financial adviser (simply to the fact that advice has been provided) and will not accept a transfer without it. Again, it's self-protection.
    Didn't hear the train last night doesn't mean it didn't go.
    • PlanToRetire
    • By PlanToRetire 15th Jan 20, 2:36 PM
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    PlanToRetire
    Bad timing, I posted almost at the same time as AlanP. Most SIPP providers' transfer-in forms
    require the signature of a financial adviser (simply to the fact that advice has been provided) and will not accept a transfer without it. Again, it's self-protection.
    Originally posted by ZingPowZing
    So it really sounds like I need to have the destination SIPP set up first, and to also ensure that the IFA is willing to sign the declaration on the transfer-in form.

    That’s before they actually give advice and I make my decision!
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