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trouble transferring out of a DB scheme

MickR
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trouble transferring out of a DB scheme

#268432

Postby MickR » December 1st, 2019, 10:23 pm

Hi,

I'm approaching my early retirement age and have had an updated forecast from my DB scheme and the transfer out value is very tempting. I have other investments, SIP's, buy to let flats etc and my wife has already taken her works pension so I'm not reliant on my DB income. However, I'm struggling to find an Adviser who will provide the recommendation I require for me to initiate the transfer and they have now started to refuse to act for insistent clients. This apparently is due to increased pressure from the FCA and potential liabilities they may have if the subsequent investments didn't perform as expected.

I know the stance of the FCA is to protect naive pensioners from unscrupulous investment managers, but it feels they making any transfers impossible, irrespective the clients wishes. anyone with any ideas or suggestions?

thanks

Mick

xxd09
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Re: trouble transferring out of a DB scheme

#268441

Postby xxd09 » December 1st, 2019, 11:54 pm

I have heard of this problem on this boards
FCA wielding the big stick has frightened many IFAs -the only financial advisers with legally enforced fiduciary responsibility
I wonder if you were proactive and asked your lawyer to draw up a document signed by you absolving your IFA of his liability-if that would work?
xxd09

MickR
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Re: trouble transferring out of a DB scheme

#268443

Postby MickR » December 2nd, 2019, 12:19 am

not sure, they just now seem to be totally risk averse. one IFA I visited last month said they would sit me in front of a video recorder to prove that I acknowledged their advice but still wanted to go ahead as an insistent client, but they have now withdrawn this option. The guy said if it was him, he would take the cash , but from a company perspective, they couldn't recommend.

main issue is that originally I thought you just had to show that you had taken advice, and that you had the final say with the DB administrators. However, no one, not even my SIP provider (ii), will actually perform the transfer unless you have a positive assessment from an IFA.

for info, I haven't got projections for my NRI at 65, but for 55, the transfer value is 43 times the annual income plus 3 x annual as a cfls

Mick

mc2fool
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Re: trouble transferring out of a DB scheme

#268446

Postby mc2fool » December 2nd, 2019, 12:35 am

MickR wrote:anyone with any ideas or suggestions?

I and some others here have happily used the Better Retirement Group via SippClub. For our experience start reading here: viewtopic.php?f=17&t=10528#p127599 (note, the SippClub link in that thread no longer works, use one below instead).

I see their web pages have changed a bit since I used them 18 months ago, they seem to be a bit more equivocal than before so maybe they're feeling the FCA clampdown. But their initial review is still free (although I see they will now require you to watch some "educational videos ... identifying the advantages and disadvantages of transferring your pension") -- and so is their advice if it turns out to be not to transfer. So, you only pay them if they recommend a transfer. ;)

The site also no longer specifies costs, now saying they'll email you that after you apply. The last I looked it was 1% min £2.5K max £7.5K.

https://sippclub.com/why-a-final-salary ... -best-now/, if you want to skip all the bumf at the start, search in the page for Transfer Service

MickR
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Re: trouble transferring out of a DB scheme

#268457

Postby MickR » December 2nd, 2019, 9:16 am

thanks will check them out.

Anyone else in here used the same company? or Better Retirement Group

Mick

mc2fool
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Re: trouble transferring out of a DB scheme

#268462

Postby mc2fool » December 2nd, 2019, 9:51 am

MickR wrote:thanks will check them out.

Anyone else in here used the same company? or Better Retirement Group

Mick

If you read the thread I linked to you'll see I wasn't the first (or last) in here to use them.

Alaric
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Re: trouble transferring out of a DB scheme

#268489

Postby Alaric » December 2nd, 2019, 11:09 am

MickR wrote:I know the stance of the FCA is to protect naive pensioners from unscrupulous investment managers


Particularly with drawdown options and risk adverse DB schemes offering enhanced transfer values, the FCA's stance is unhelpful. They would do better to crack down on allowing SIPPs to be invested in off the wall investments. You don't after all hear of a ban on transferring from cash ISAs to invested ISAs. In my mind having a version of a SIPP which only allowed the same investment types as ISAs would be desirable.

I think there are two questions to be answered.
Firstly does the propose transferee understand the benefits being given up and is capable of choosing investments personally?
Secondly, does the transfer value fairly reflect the benefits being given up? That hasn't always been the case. For example it use to be the case, perhaps still is, that if you left and rejoined a public sector employer several years later, your earlier period of service could be reactivated against your current salary. If a transfer value on leaving didn't reflect that option, arguably it was "unfair".

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Re: trouble transferring out of a DB scheme

#268497

Postby ursaminortaur » December 2nd, 2019, 11:45 am

Alaric wrote:
MickR wrote:I know the stance of the FCA is to protect naive pensioners from unscrupulous investment managers


Particularly with drawdown options and risk adverse DB schemes offering enhanced transfer values, the FCA's stance is unhelpful. They would do better to crack down on allowing SIPPs to be invested in off the wall investments. You don't after all hear of a ban on transferring from cash ISAs to invested ISAs. In my mind having a version of a SIPP which only allowed the same investment types as ISAs would be desirable.


Ss far as I am aware most SIPPs pretty much only allow the same investments as Stocks and Shares ISAs. There are SIPPs which allow you to invest directly* in more exotic investments such as commercial property but they are fewer in number and generally cost a lot more to setup and run.

* You can of course invest indirectly in property via REITs (Real Estate Investment Trusts) in both SIPPs and Stocks and Shares ISAs.

MickR
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Re: trouble transferring out of a DB scheme

#268626

Postby MickR » December 2nd, 2019, 8:33 pm

hmm maybe too late for the SIPP Club/Better Retirement Group

https://register.fca.org.uk/ShPo_FirmDe ... 00MfGkJAAV

Cease Pension Transfer Advice
Effective from 24 October 2019, the Firm must immediately cease:

1) advising on conversion or transfer of pension benefits; and
2) completing pipeline business in relation to the conversion or transfer of pension benefits; and
3) providing any confirmation that independent advice has been provided for the purposes of section 48 of the Pension Schemes Act 2015.

mc2fool
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Re: trouble transferring out of a DB scheme

#268644

Postby mc2fool » December 2nd, 2019, 9:38 pm

MickR wrote:hmm maybe too late for the SIPP Club/Better Retirement Group

Ah, maybe so, but I do note that the previously linked-to SippClub page says "we'll select the most appropriate firm offering the lowest fee" which I don't remember it saying before (which may just be my failing memory :)), so maybe they're passing it out to others now.

If I were you I'd drop SippClub an email and ask what the situation is. Search for an @ in the previously linked-to page, or scroll to the bottom for their phone number....

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Re: trouble transferring out of a DB scheme

#268671

Postby Alaric » December 3rd, 2019, 12:30 am

ursaminortaur wrote: There are SIPPs which allow you to invest directly* in more exotic investments such as commercial property but they are fewer in number and generally cost a lot more to setup and run.


If I understand the FCA's concerns, it would be that "expensive" SIPPs are allowed to invest in highly speculative investments, Brazilian forests perhaps. Gullible investors with large sums available from pension transfer values might be talked into such speculation. The other concern could well be that even the future investment of the transferred sum is conventional, the client would be signed up to a management deal that siphoned off a percent or two every year. Thus if analysing the transfer value suggests a rate of return of 4% should match it, that increases to 6% if 2% is going in advice fees.

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Re: trouble transferring out of a DB scheme

#268768

Postby ursaminortaur » December 3rd, 2019, 11:54 am

Alaric wrote:
ursaminortaur wrote: There are SIPPs which allow you to invest directly* in more exotic investments such as commercial property but they are fewer in number and generally cost a lot more to setup and run.


If I understand the FCA's concerns, it would be that "expensive" SIPPs are allowed to invest in highly speculative investments, Brazilian forests perhaps. Gullible investors with large sums available from pension transfer values might be talked into such speculation. The other concern could well be that even the future investment of the transferred sum is conventional, the client would be signed up to a management deal that siphoned off a percent or two every year. Thus if analysing the transfer value suggests a rate of return of 4% should match it, that increases to 6% if 2% is going in advice fees.


My understanding is that IFAs looking at a transfer from a DB scheme just look at the transfer value and benefits being given up they don't look at the specific scheme being transferred into other than to make sure it is an authorised scheme. The comparison they make is between the current DB scheme and the modelled expected return from a typical/average DC scheme (in many cases at the time advice is being sought the client may well not have confirmed which scheme or provider they will be transferring into). If you want to transfer to an authorised scheme which has greater than usual charges or invests in exotic but FCA allowed investments then that is your choice though hopefully if you explicitly tell your IFA about such plans they would caution against it. Outright scams claiming to allow you to access your pension before 55, or using QROPs to transfer to an unauthorised overseas scheme promising gigantic returns via dodgy invesrtments are of course a different matter - but again the IFA will only be able to advise against that if the client tells them that is what they are intending to do.

fca2019
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Re: trouble transferring out of a DB scheme

#268869

Postby fca2019 » December 3rd, 2019, 5:26 pm

The other option (not mentioned) is you simply keep the DB scheme and if you don't need the income not draw on it. Then in later retirement reconsider and start drawdown when needed. This would enhance the payout. i.e. You could keep as a backup.

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Re: trouble transferring out of a DB scheme

#269842

Postby DrBunsenHoneydew » December 7th, 2019, 3:25 pm

fca2019 wrote:The other option (not mentioned) is you simply keep the DB scheme and if you don't need the income not draw on it. Then in later retirement reconsider and start drawdown when needed. This would enhance the payout. i.e. You could keep as a backup.

Not all DB schemes "enhance" your pension just because you start drawing it later than the scheme 's standard pension age.
The NHS 1995 scheme for example has a standard start age of 60. If you decide not to take till age 63 say, you'd get the same as if you started taking it from age 60, but would have thrown away 3 years' income.


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