DB Pension Transfer costs
Discussion
Excuse me if this is not a simple question but I am looking at transferring out a DB pension to a personal. I've been through all the risk assessment stuff etc and I'm fairly confident I know what I'm doing and what the risks and benefits are.
My pension provider has advised that the normal charge for this is 2.5% of the pot value but have reduced it to 2% since they are looking after other things for me. That's a one off charge for the transfer. All things being equal, is that a good deal? It amounts to an eye-watering amount of cash!
Ongoing charges for the pension in the future are 0.6% which I'm OK with.
Thanks.
My pension provider has advised that the normal charge for this is 2.5% of the pot value but have reduced it to 2% since they are looking after other things for me. That's a one off charge for the transfer. All things being equal, is that a good deal? It amounts to an eye-watering amount of cash!
Ongoing charges for the pension in the future are 0.6% which I'm OK with.
Thanks.
That is way too much, you are being ripped off.
Most IFA's are capping fees at 1% which is still too bloody much for a letter saying you have had advice.
It's a shark pit at the moment with DB transfers as the IFA's have a monopoly on the job.
You only need advise if the fund value is greater than 30k so I'm assuming it is.
Most IFA's are capping fees at 1% which is still too bloody much for a letter saying you have had advice.
It's a shark pit at the moment with DB transfers as the IFA's have a monopoly on the job.
You only need advise if the fund value is greater than 30k so I'm assuming it is.
CAPP0 said:
I haven't received all the details yet but they did say that charge includes a 6-step process (those steps yet to be detailed) and a full financial review - it's not just the "do you know the risks and accept them" letter - if that helps!
Yup heard all that from mine as well. It's to pacify you into thinking it's a hard job.You fill in a questionnaire which they then transpose into a "report"
5 yrs ago that letter was £500, now it's 10k
Either way it should be 1% max.
If it helps a £730 transfer this week cost £7k all in.
Brads67 said:
CAPP0 said:
I haven't received all the details yet but they did say that charge includes a 6-step process (those steps yet to be detailed) and a full financial review - it's not just the "do you know the risks and accept them" letter - if that helps!
Yup heard all that from mine as well. It's to pacify you into thinking it's a hard job.You fill in a questionnaire which they then transpose into a "report"
5 yrs ago that letter was £500, now it's 10k
Either way it should be 1% max.
If it helps a £730 transfer this week cost £7k all in.
Brads67 said:
It's a shark pit at the moment with DB transfers as the IFA's have a monopoly on the job.
Fees have risen primarily due to the soaring premiumshttps://www.ft.com/content/5ec82fbc-51a0-11ea-90ad...
Chozza said:
Out of interest what value/multiplier did they offer for the transfer out ? ( i'm assuming this was fixed for a period of time )
And what would you get today ?
On paper the quote is still valid; I received it about 3 weeks ago and it has a 3 month validity. However, whether Corona will kill that I don't yet know. My pension advisor said they'd never had an offer retracted or lowered, but then we've never had COVID either.And what would you get today ?
It's about 45x the annual pension on offer, excluding lump sum (which isn't large, less than 3x annual pension). I'm 60 this year and not anticipating getting any telegrams from the palace
Derek Chevalier said:
Fees have risen primarily due to the soaring premiums
https://www.ft.com/content/5ec82fbc-51a0-11ea-90ad...
That was the reason I was given.https://www.ft.com/content/5ec82fbc-51a0-11ea-90ad...
CAPP0 said:
Derek Chevalier said:
Fees have risen primarily due to the soaring premiums
https://www.ft.com/content/5ec82fbc-51a0-11ea-90ad...
That was the reason I was given.https://www.ft.com/content/5ec82fbc-51a0-11ea-90ad...
Wonder how investor would feel if their February £1m private pension fund was now valued at £600k given investment losses in last few weeks? And did not recover or fell further in the short term? The alternative was a no risk £25k-35k pa pension with a 50% widows pension that someone else worried about, fully protected.
PPI claims firms will be queueing up to claim for this and that if the investor had not burnt the advisors office down first.
Some DB transfers are merited, but many are not. Careful third party explanation of what are the implications and the fit with the personal circumstances is not a bad idea.
Predict many who thought this is a 'no brainer'/why does it cost some much to rubber stamp my wishes etc will be whinning big time if values don't bounce up very soon.
PPI claims firms will be queueing up to claim for this and that if the investor had not burnt the advisors office down first.
Some DB transfers are merited, but many are not. Careful third party explanation of what are the implications and the fit with the personal circumstances is not a bad idea.
Predict many who thought this is a 'no brainer'/why does it cost some much to rubber stamp my wishes etc will be whinning big time if values don't bounce up very soon.
Robert-q32ja said:
Wonder how investor would feel if their February £1m private pension fund was now valued at £600k given investment losses in last few weeks?
I'm struggling to understand why the falls would be so great. Surely part of the transfer process is to understand how much investment risk the person is happy taking AND needs to take to ensure they don't run out of money? Given a "typical" 60/40 portfolio was down approx. 16% from the peak, are there really that many people who have transferred and put all of their money into 100% (UK?) equities?But agreed, this is the first big test of portfolios in over a decade so will be interesting to see how it pans out.
FTSE100 lost about 25-28% up to Monday and small cap and specialist funds 40-45% plus in last 3 weeks, so it can happen. And many 'informed investors' will fill their private pensions with equity based assets.
But I am trying to make the point that the potential negatives are considered, which I don't think many people who have transferred or are cynical about the process in place to inform/educate think much about.
But I am trying to make the point that the potential negatives are considered, which I don't think many people who have transferred or are cynical about the process in place to inform/educate think much about.
Possibility that some DB schemes, eg if poorly matched, may seek to temporarily suspend transfers out
http://www.actuarialpost.co.uk/article/suggestion-...
http://www.actuarialpost.co.uk/article/suggestion-...
Robert-q32ja said:
But I am trying to make the point that the potential negatives are considered, which I don't think many people who have transferred or are cynical about the process in place to inform/educate think much about.
The company I am using have insisted that I sit through 15 (count 'em) short videos outlining the pros and cons and then take a test at the end to confirm my understanding (which I passed at 19/20 questions correct).CAPP0 said:
The company I am using have insisted that I sit through 15 (count 'em) short videos outlining the pros and cons and then take a test at the end to confirm my understanding (which I passed at 19/20 questions correct).
Good, but suspect this was not happening 24, 18 or 12 months ago for most people who transferred. Which is why most gatekeepers (advisors) have walked or been told processes not robust enough (read investor and advisor far to casual in the approach expected).Claims management/lawyers will be chewing on this for decades and compensation paid out enormous. Predict the advisors who did most wont be around to find the £ to meet the bill.
Edited by Robert-q32ja on Wednesday 25th March 12:54
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