transfer of pension funds - protected pension age
Discussion
I am in the very fortunate position of having saved enough in my company defined contribution pension scheme to be able to retire in a year’s time when I reach the age of 55.
The company will not allow me to drawdown from funds that are held in the scheme, therefore I plan to transfer roughly half to a SIPP (they allow partial transfers whilst an active member), with the balance left in the company scheme (as a deferred member) where it should benefit from additional compound growth as the company pays the management fees.
I have come up against what seems to be an irrational barrier, which is that the funds in the company scheme have a protected pension age of 55 and the SIPP providers that I have looked at therefore require me to take regulated financial advice. This is despite the fact that a protected pension age is not a safeguarded benefit therefore advice is not a legal requirement, and despite the fact that I intend to crystallise the benefits of the transferred funds prior to April 2028 i.e. before the date on which the protection has any value.
I am loath to pay a percentage of the fund value for what seems to me to be a relatively straightforward piece of advice. Has anyone else been in this position, and if so were you able to find a SIPP provider that did not impose this requirement, or alternatively a Financial Advisor that was willing to provide the advice for a (relatively modest) fixed fee?
The company will not allow me to drawdown from funds that are held in the scheme, therefore I plan to transfer roughly half to a SIPP (they allow partial transfers whilst an active member), with the balance left in the company scheme (as a deferred member) where it should benefit from additional compound growth as the company pays the management fees.
I have come up against what seems to be an irrational barrier, which is that the funds in the company scheme have a protected pension age of 55 and the SIPP providers that I have looked at therefore require me to take regulated financial advice. This is despite the fact that a protected pension age is not a safeguarded benefit therefore advice is not a legal requirement, and despite the fact that I intend to crystallise the benefits of the transferred funds prior to April 2028 i.e. before the date on which the protection has any value.
I am loath to pay a percentage of the fund value for what seems to me to be a relatively straightforward piece of advice. Has anyone else been in this position, and if so were you able to find a SIPP provider that did not impose this requirement, or alternatively a Financial Advisor that was willing to provide the advice for a (relatively modest) fixed fee?
Someone I know managed to co-opt their wife's financial adviser to facilitate the transfer who was not at all happy to be involved but didn't want to lose the wife's business. This was 2019 when the transfer values were silly high. The mortgage was paid off and it was the first step to early retirement.
I expect it is now even harder to find a cooperative financial adviser who will be concerned that you will came back a few years down the line claiming bad advice.
I expect it is now even harder to find a cooperative financial adviser who will be concerned that you will came back a few years down the line claiming bad advice.
If the total value of your safeguarded or Defined Benefit (final salary) pension is £30,000 or less, you can transfer it without needing to take professional advice. However, if the cash-equivalent transfer value (CETV) exceeds this limit, obtaining advice from an FCA-authorized specialist is legally mandatory.
I used an IFA to transfer two DB pensions in 2020. It wasn’t cheap but I’m fairly sure it was a fixed fee not a percentage (altho someone has since argued that point on here with me). The reason I say that is that there were separate fees for each transfer and the starting price for both was the same despite the second pension being only ~15% of the main one. I did negotiate the second one down a little. But as a fixed fee it was 5 figures back then; probably more now. The transfer was then accepted by my chosen provider. Note also that the IFA who handles your transfer approval cannot legally provide you with subsequent financial advice.
It’s a fairly lengthy process to gain approval (4-5 weeks) and a lot of information is required to be produced by you.
I’ve zero connection other than being a satisfied customer but if you want more info or contact details, feel free to PM.
It’s a fairly lengthy process to gain approval (4-5 weeks) and a lot of information is required to be produced by you.
I’ve zero connection other than being a satisfied customer but if you want more info or contact details, feel free to PM.
gt4rs.wp said:
If the total value of your safeguarded or Defined Benefit (final salary) pension is £30,000 or less, you can transfer it without needing to take professional advice. However, if the cash-equivalent transfer value (CETV) exceeds this limit, obtaining advice from an FCA-authorized specialist is legally mandatory.
The OP is looking to transfer a DC pension-Cappo- said:
I used an IFA to transfer two DB pensions in 2020. It wasn t cheap but I m fairly sure it was a fixed fee not a percentage (altho someone has since argued that point on here with me). The reason I say that is that there were separate fees for each transfer and the starting price for both was the same despite the second pension being only ~15% of the main one. I did negotiate the second one down a little. But as a fixed fee it was 5 figures back then; probably more now. The transfer was then accepted by my chosen provider. Note also that the IFA who handles your transfer approval cannot legally provide you with subsequent financial advice.
It s a fairly lengthy process to gain approval (4-5 weeks) and a lot of information is required to be produced by you.
I ve zero connection other than being a satisfied customer but if you want more info or contact details, feel free to PM.
Lots of information but, completely irrelevant as the OP is talking about a DC not DB pension.It s a fairly lengthy process to gain approval (4-5 weeks) and a lot of information is required to be produced by you.
I ve zero connection other than being a satisfied customer but if you want more info or contact details, feel free to PM.
Note; there is no reason why an IFA who handles a DB transfer can’t continue to provide you with financial advice
craig1912 said:
Lots of information but, completely irrelevant as the OP is talking about a DC not DB pension.
Note; there is no reason why an IFA who handles a DB transfer can t continue to provide you with financial advice
Yep fair enough, I didn’t clock that. Note; there is no reason why an IFA who handles a DB transfer can t continue to provide you with financial advice
The IFA I used was very specific in that he was not legally allowed to provide ongoing advice post-transfer (I asked, as I liked his approach and may have used him). I can only guess that’s to do with all the historic issues around DB transfers going south due to biased advice, but I didn’t follow it up in detail at the time.
Aiui any DC pot with less than £30k and no safeguarded features can be transferred without specific third party advice.
If they are any special features than advice may still be needed even if the pot is still less than £30k.
If the pot is over £30k then advice will be needed.
Contacting Pension bee might count as specific advice perhaps ?
When I transferred my DC Pot it was at the same time as using a CETV on my DB Pension although the company I was transferring both to ( SJP but I was already an existing client ) still wanted a initial percentage fee.
I refused point blank to pay this and it was dealt with by way of Early withdrawal fees applying for 5 years.
As I had no intention to do this that seemed a far better and cheaper solution.
If they are any special features than advice may still be needed even if the pot is still less than £30k.
If the pot is over £30k then advice will be needed.
Contacting Pension bee might count as specific advice perhaps ?
When I transferred my DC Pot it was at the same time as using a CETV on my DB Pension although the company I was transferring both to ( SJP but I was already an existing client ) still wanted a initial percentage fee.
I refused point blank to pay this and it was dealt with by way of Early withdrawal fees applying for 5 years.
As I had no intention to do this that seemed a far better and cheaper solution.
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