genou wrote:Watis wrote:I've just been through this process with an IFA paid for by my DB pension provider, who wrote to me offering a telephone meeting with their chosen IFA to discuss my options.
It transpires that they are required by law to do this for everyone with a pension pot in excess of £30,000 but it was presented as if they were doing me a favour.
Watis
I think you'll find that advice is required to take more than 30k out of a DB pension, but there is no obligation on the pension provider / employer to pay for it. They were doing you a favour.
Think we need to clarify the language here...
There is no 'pension provider' as such with a DB Scheme; in simple terms, there is the sponsoring company (ie the employer, who ultimately has responsibility for funding the scheme), an administrator (ie the third party that manages the scheme and pays out the monthly pension payments), and the scheme trustees (ie the appointed body of individuals who comprise a board, and oversee all aspects of the scheme on behalf of the members, be they retired, deferred or active, and are subject to legal frameworks and other formal governance, as well as oversight by the Pensions Regulator). I could expand as I'm sure others could, but this is a reasonable illustration of who does what.
It is true that for any CETV greater than £30,000 the law dictates that the trustees must see evidence that the member has sought financial advice from a registered adviser prior to making their decision. The adviser may advise against taking the CETV and the member decide to go ahead anyway, but either way the trustees must see evidence that advice was sought and guidance given, even if ignored.
Trustees sometimes also make arrangements for members approaching retirement to have a discussion with a preferred company of financial advisers, selected so they can become familiar with the scheme rules and options at retirement and thus provide a useful service to the scheme members, and may have reached agreement that this initial consultation is free, perhaps with any subsequent, deeper engagement between the member and financial advisers being paid for by the member, often at contractually reduced rates, and possibly paid for out of their pension up to a pre-defined limit (ie taken from their lump sum).
As DB schemes are relatively straightforward, such arrangements are more often put in place for DC schemes where there is now greater flexibility and choice of how a pension can be taken of course (annuity, flexi-drawdown, cash lump sums etc.). I mention this because many members of DB schemes are also members of DC schemes with the same employer, due the the DB scheme being closed and employees then joining the DC section of that same employer's scheme. Hence the advisers can give illustrations of different tunes that can be played using the combined DB and DC pensions at retirement.
Finally, and whilst in theory it is limited to DC pensions, I would strongly advise anyone with any questions to seek answers from Pensionwise, the government funded agency. If you are aged 50 or over, you can have a free 30 minute consultation over the phone or face to face, and also they have a very good webchat facility (that I often use) with direct access to pension experts who in my experience are very knowledgable indeed, and can clarify the complex tangle of options and associated limitations that recent pensions legislation has created. I am often very surprised at how few people are aware of this service:
https://www.pensionwise.gov.uk/enAll of the above is simplified, so any experts out there could pedantically pick holes I'm sure, but nevertheless I hope it's useful to some readers.