pension transfer- final salary to sipp
Discussion
I asked this question before, but as you’ll see below the figures have changed quite a bit!
I have a small final salary pension from previous employment (not worked there for probably 10 years) and I am not sure what to do. basics are:
worth- £1,200 per year
transfer value- £44,000
no ongoing benefits that I would ‘lose’ transferring out of the scheme.
when i requested a transfer value 2 years ago, they only quoted £20k transfer value. which at the time following research/ talking to people- 16 times the annual value wasn’t a great transfer value. but now it’s up at 36 times, I’m wondering if this is worth revisiting?
Now because the fund is valued over £30k I would need professional advice before I would be allowed to transfer, how much would I need to budget for this cost? Do I need to pay this personally or can this be deducted from the pension cost?
I have a small final salary pension from previous employment (not worked there for probably 10 years) and I am not sure what to do. basics are:
worth- £1,200 per year
transfer value- £44,000
no ongoing benefits that I would ‘lose’ transferring out of the scheme.
when i requested a transfer value 2 years ago, they only quoted £20k transfer value. which at the time following research/ talking to people- 16 times the annual value wasn’t a great transfer value. but now it’s up at 36 times, I’m wondering if this is worth revisiting?
Now because the fund is valued over £30k I would need professional advice before I would be allowed to transfer, how much would I need to budget for this cost? Do I need to pay this personally or can this be deducted from the pension cost?
malks222 said:
I asked this question before, but as you’ll see below the figures have changed quite a bit!
I have a small final salary pension from previous employment (not worked there for probably 10 years) and I am not sure what to do. basics are:
worth- £1,200 per year
transfer value- £44,000
no ongoing benefits that I would ‘lose’ transferring out of the scheme.
when i requested a transfer value 2 years ago, they only quoted £20k transfer value. which at the time following research/ talking to people- 16 times the annual value wasn’t a great transfer value. but now it’s up at 36 times, I’m wondering if this is worth revisiting?
Now because the fund is valued over £30k I would need professional advice before I would be allowed to transfer, how much would I need to budget for this cost? Do I need to pay this personally or can this be deducted from the pension cost?
I'm in a very similar position, as a FS pension mine is worth £900 per year but they've offered a transfer value of £48k. I have a small final salary pension from previous employment (not worked there for probably 10 years) and I am not sure what to do. basics are:
worth- £1,200 per year
transfer value- £44,000
no ongoing benefits that I would ‘lose’ transferring out of the scheme.
when i requested a transfer value 2 years ago, they only quoted £20k transfer value. which at the time following research/ talking to people- 16 times the annual value wasn’t a great transfer value. but now it’s up at 36 times, I’m wondering if this is worth revisiting?
Now because the fund is valued over £30k I would need professional advice before I would be allowed to transfer, how much would I need to budget for this cost? Do I need to pay this personally or can this be deducted from the pension cost?
You're correct, you need to use an independent to carry out the transfer due to its value.
When I initially made some inquiries on starting the transfer process, the ball park I was seeing was approximately £500 for the paperwork + 3% of the pot value.
Thankfully the company the FS pension is with have since done a deal with a specialist company & are going halves on the fees. Additionally there's no percentage of the pot taken, meaning I can move the whole sum for just £300 & drop it in my SIPP.
The fees have to be paid up front.
Any percentage of the pot taken, as I recall, was taken upon completion.
Hope this helps!
malks222 said:
Now because the fund is valued over £30k I would need professional advice before I would be allowed to transfer, how much would I need to budget for this cost? Do I need to pay this personally or can this be deducted from the pension cost?
My wife is in a very similar position to you, with a transfer value of £75k. We cannot find a IFA that will help us. I don't mind paying 3% or whatever of the transfer value, it's simply that no-one wants to know. They all say "eleventy billion minimum, sir".If anyone can point me in the direction of a IFA that will handle transfers such as this, I'd be grateful to know of their details.
This may help explain why you may struggle with the transfer:
https://www.fca.org.uk/firms/pensions-and-retireme...
In particular this : "We expect advisers to start from the position that a firm should only consider a transfer is suitable if it can clearly demonstrate that, on contemporary evidence, the transfer is in the client’s best interests"
While reputable firms have always taken this stance with DB transfers, it does reinforce that the common client attitude of "its my money, I can do what I like with it", is not one shared by the regulator.
.
https://www.fca.org.uk/firms/pensions-and-retireme...
In particular this : "We expect advisers to start from the position that a firm should only consider a transfer is suitable if it can clearly demonstrate that, on contemporary evidence, the transfer is in the client’s best interests"
While reputable firms have always taken this stance with DB transfers, it does reinforce that the common client attitude of "its my money, I can do what I like with it", is not one shared by the regulator.
.
Brave Fart said:
malks222 said:
Now because the fund is valued over £30k I would need professional advice before I would be allowed to transfer, how much would I need to budget for this cost? Do I need to pay this personally or can this be deducted from the pension cost?
My wife is in a very similar position to you, with a transfer value of £75k. We cannot find a IFA that will help us. I don't mind paying 3% or whatever of the transfer value, it's simply that no-one wants to know. They all say "eleventy billion minimum, sir".If anyone can point me in the direction of a IFA that will handle transfers such as this, I'd be grateful to know of their details.
It not just a factor of costs per se, but the smaller pot is often a reflection or indicator of one's wider financial security. I get approached by individuals with small DB pots all the time and a little probing (fact-finding) normally turns up limited other sources of guaranteed income and resources. As above, in simple terms, the regulator's position is that transfers are deemed unsuitable unless a compelling case can be put forward.
Of course, fees can be a barrier, but often companies are turning you away to SAVE you money on fees. To explain further; my fees for DB transfers are non-contingent on the transfer going ahead, so you could end up paying a fee only to find out that the advice is actually not to transfer. As such, an initial chat whereby some guidance is offered to you at no cost is valuable and should not be seen as the IFA not considering you a worthwhile prospect, rather it is potentially saving you time and money for advice that will ultimately put you right back where you started.
It is not always as above, but it is a common scenario in my experience.
Edited by DoubleSix on Saturday 2nd May 11:35
DoubleSix said:
You'll struggle with small pots like these.
It not just a factor of costs per se, but the smaller pot is perhaps a reflection or indicator of one's wider financial security. I get approached by individuals with small DB pots all the time and a little probing (fact-finding) normally turns up limited other sources of guaranteed income and resources.
Of course, fees can be a barrier, but often companies are turning you away to SAVE you money on fees. To explain further; my fees for DB transfers are non-contingent on the transfer going ahead, so you could end up paying a fee only to find out that the advice is actually not to transfer. As such, an initial chat whereby some guidance is offered to you at no cost is valuable and should not be seen as the IFA not considering you a worthwhile prospect, rather it is potentially saving you time and money for advice that will ultimately put you right back where you started.
It is not always as above, but it is a common scenario in my experience.
Could you give a few examples of what sort of circumstances you find people in where you do recommend a transfer going ahead please?It not just a factor of costs per se, but the smaller pot is perhaps a reflection or indicator of one's wider financial security. I get approached by individuals with small DB pots all the time and a little probing (fact-finding) normally turns up limited other sources of guaranteed income and resources.
Of course, fees can be a barrier, but often companies are turning you away to SAVE you money on fees. To explain further; my fees for DB transfers are non-contingent on the transfer going ahead, so you could end up paying a fee only to find out that the advice is actually not to transfer. As such, an initial chat whereby some guidance is offered to you at no cost is valuable and should not be seen as the IFA not considering you a worthwhile prospect, rather it is potentially saving you time and money for advice that will ultimately put you right back where you started.
It is not always as above, but it is a common scenario in my experience.
b
hstewie said:
hstewie said:DoubleSix said:
You'll struggle with small pots like these.
It not just a factor of costs per se, but the smaller pot is perhaps a reflection or indicator of one's wider financial security. I get approached by individuals with small DB pots all the time and a little probing (fact-finding) normally turns up limited other sources of guaranteed income and resources.
Of course, fees can be a barrier, but often companies are turning you away to SAVE you money on fees. To explain further; my fees for DB transfers are non-contingent on the transfer going ahead, so you could end up paying a fee only to find out that the advice is actually not to transfer. As such, an initial chat whereby some guidance is offered to you at no cost is valuable and should not be seen as the IFA not considering you a worthwhile prospect, rather it is potentially saving you time and money for advice that will ultimately put you right back where you started.
It is not always as above, but it is a common scenario in my experience.
Could you give a few examples of what sort of circumstances you find people in where you do recommend a transfer going ahead please?It not just a factor of costs per se, but the smaller pot is perhaps a reflection or indicator of one's wider financial security. I get approached by individuals with small DB pots all the time and a little probing (fact-finding) normally turns up limited other sources of guaranteed income and resources.
Of course, fees can be a barrier, but often companies are turning you away to SAVE you money on fees. To explain further; my fees for DB transfers are non-contingent on the transfer going ahead, so you could end up paying a fee only to find out that the advice is actually not to transfer. As such, an initial chat whereby some guidance is offered to you at no cost is valuable and should not be seen as the IFA not considering you a worthwhile prospect, rather it is potentially saving you time and money for advice that will ultimately put you right back where you started.
It is not always as above, but it is a common scenario in my experience.
I’ll follow this thread with interest. I’ve £32K from and old pension now with L&G. I was hoping the financial crash would have brought it below the £30K threshold. I am told it is worth £560/yr pension. Which as is less than a 2% return i’m happy to take my chances in the real world.
Thanks tp the poster who mentioned the IFA who’ll engage. I’ll check them out.
Thanks tp the poster who mentioned the IFA who’ll engage. I’ll check them out.
Aha - mines is from 6 months of a DB scheme with a company that went into admin. I have had two further DC pensions since combined into a SIPP which i have managed up to about £300K. Also have a fairly generous DC scheme with my current employer which they put about £900/month into. Is this the sort of insight an IFA wants to see to justify the transfer?
cavey76 said:
Aha - mines is from 6 months of a DB scheme with a company that went into admin. I have had two further DC pensions since combined into a SIPP which i have managed up to about £300K. Also have a fairly generous DC scheme with my current employer which they put about £900/month into. Is this the sort of insight an IFA wants to see to justify the transfer?
All IFA's will have there own protocols and 'standards' - there's no broad rule one can apply, but I think it's fair to say that the best firms have very high thresholds to allow DB transfers to proceed - mine certainly does! There are some firms out there who are perhaps scooping up business in this space (that has been turned away by the more rigorous firms) and I have a suspicion this may prove to be a future cause for column inches in the national press...
For reference, none of the assets you've mentioned are capital-backed or providing guaranteed income as it stands.
DoubleSix said:
All IFA's will have there own protocols and 'standards' - there's no broad rule one can apply, but I think it's fair to say that the best firms have very high thresholds to allow DB transfers to proceed - mine certainly does!
There are some firms out there who are perhaps scooping up business in this space (that has been turned away by the more rigorous firms) and I have a suspicion this may prove to be a future cause for column inches in the national press...
For reference, none of the assets you've mentioned are capital-backed or providing guaranteed income as it stands.
My guess too.There are some firms out there who are perhaps scooping up business in this space (that has been turned away by the more rigorous firms) and I have a suspicion this may prove to be a future cause for column inches in the national press...
For reference, none of the assets you've mentioned are capital-backed or providing guaranteed income as it stands.
Is you impression that some companies are knowingly acting against their clients best interests to make a quick buck or do you think it's more likely to be people doing things off the back of that approval like transferring their DB pension and dumping it all in something super volatile like Scottish Mortgage Trust then claiming against the company that approved the transfer if it falls flat on its face?
bhstewie said:
hstewie said: My guess too.
Is you impression that some companies are knowingly acting against their clients best interests to make a quick buck or do you think it's more likely to be people doing things off the back of that approval like transferring their DB pension and dumping it all in something super volatile like Scottish Mortgage Trust then claiming against the company that approved the transfer if it falls flat on its face?
I wouldn't go that far necessarily - it takes two to tango.... the regulator will always take the view that the clients in these situations are simply wide-eyed victims of greedy firms, but my personal opinion and (as demonstrated across the pages of PH) is that many clients simply take the view that they want the money in hand and don't register the value of future guaranteed income. You can advise these people to sit tight on their DB scheme and they will simply go elsewhere to get the answer they want, not the answer they need.Is you impression that some companies are knowingly acting against their clients best interests to make a quick buck or do you think it's more likely to be people doing things off the back of that approval like transferring their DB pension and dumping it all in something super volatile like Scottish Mortgage Trust then claiming against the company that approved the transfer if it falls flat on its face?
They will also probably be first in line to register a claim when the chickens come home to roost so I think it quite understandable and correct that good IFAs are wary.
DoubleSix said:
I wouldn't go that far necessarily - it takes two to tango.... the regulator will always take the view that the clients in these situations are simply wide-eyed victims of greedy firms, but my personal opinion and (as demonstrated across the pages of PH) many clients simply take the view that they want the money in hand and don't register the value of future guaranteed income. You can advise these people to sit tight on their DB scheme and they will simply go elsewhere to get the answer they want, not the answer they need.
Thank you 
I have an old DB that I keep meaning to look into but as you say a guaranteed income even a reasonably small one is a powerful thing IMO.
I don't know your take on this but one argument I see on other forums is that a guaranteed income sometimes "frees up" other money so it can be used to take on a bit more risk than you might without the guaranteed income there as a safety net.
bhstewie said:
hstewie said:DoubleSix said:
I wouldn't go that far necessarily - it takes two to tango.... the regulator will always take the view that the clients in these situations are simply wide-eyed victims of greedy firms, but my personal opinion and (as demonstrated across the pages of PH) many clients simply take the view that they want the money in hand and don't register the value of future guaranteed income. You can advise these people to sit tight on their DB scheme and they will simply go elsewhere to get the answer they want, not the answer they need.
Thank you I have an old DB that I keep meaning to look into but as you say a guaranteed income even a reasonably small one is a powerful thing IMO.
I don't know your take on this but one argument I see on other forums is that a guaranteed income sometimes "frees up" other money so it can be used to take on a bit more risk than you might without the guaranteed income there as a safety net.
If you are retired on an Armed Forces pension that covers all your fixed outgoings and decent savings then you are in a strong position to discuss transferring benefits you might have accumulated in a past life.
Conversely, if you are relying on a DC scheme for your retirement income, have no substantial savings and perhaps a vulnerable dependent then, well... the picture is not so compelling....
(I am of course massively simplifying the situation for purposes of general discussion - Pensions advice, particularly DB pensions advice is complex)
Edited by DoubleSix on Saturday 2nd May 19:32
Double Six, thank you for your replies. My wife's DB pension will pay around £1600 p.a. (NOT index linked) should she reach the grand old age of 65. In return, her old employer's scheme gives us £75k now - she's aged 55. We have assets in cash and property of well over £1.5 million, we have no debts at all, no dependants and are both still earning and in good health.
It's frankly a no brainer to take the transfer sum, and yet no-one will allow us to do what we wish with our own money!
I'm a Chartered Accountant (he says modestly) so it's not like I don't know my financial onions.
I'm happy to sign a disclaimer saying "I won't sue if it all goes tits up" but apparently the regulators don't believe me. Or my wife.
I'm rather angry that on the one hand, the rules say "Mr BF, withdraw your DC pension pot and spend it on tat if you wish", but also say "but you cannot access your wife's DB value, because, ooh, that's somehow different!"
Anyway, thanks for letting me vent - I shall pursue the option that another poster mentioned somewhere upstream.
It's frankly a no brainer to take the transfer sum, and yet no-one will allow us to do what we wish with our own money!
I'm a Chartered Accountant (he says modestly) so it's not like I don't know my financial onions.
I'm happy to sign a disclaimer saying "I won't sue if it all goes tits up" but apparently the regulators don't believe me. Or my wife.
I'm rather angry that on the one hand, the rules say "Mr BF, withdraw your DC pension pot and spend it on tat if you wish", but also say "but you cannot access your wife's DB value, because, ooh, that's somehow different!"
Anyway, thanks for letting me vent - I shall pursue the option that another poster mentioned somewhere upstream.
I have accrued a considerable transfer value and went through the whole "keep in DB, with set income" or take it out and have a fund at earlier age and 'family wealth'
Like others have said when I turn to brown bread, my wife gets half. Then it's goes to zero.
Having ransferred it out, this becomes a pot that in my demise will transfer to her, and then the kids (assuming there is not a complete erosion of the fund). In addition I can access this from 55 (against 67 sans actuarial reduction).
My IFA (I talked to 4) was one I was comfortable with, discussed the pros and cons and also discussed the possibilities with my wife.
I dithered and then when I got another transfer value, the sun was a much higher value, and also the multiple to calculate was higher.
When I started thinking about it, the cost was circa £6k and then ongoing fees to manage the fund. In late 2019, the fee was more than double that! Apparently the insurance cost for the IFA had increased dramatically and this was the reasoning for the fees. I contacted some of the others that I had talked to and they too had higher fees.
I opted to go ahead, had a considerable sum that I put to a discretionary fund manager.
All in q1 20.
Could there be a potentially be the worse time in history to be putting a large chunk into the market?
I have a 12-15yr outlook so am hoping that there will be considerable growth!
Anyway, I am happy to pass on details of the person I used. I strongly recommend that if you are considering moving large sum, you get on with the IFA. My chap is smart, my wife gets on with him and I'm hopeful he will remain as contentious as he has been since I met him.
In addition a colleague of mine has been using him for a few years and has provided positive reports so I am comfortable with my choice.
Like others have said when I turn to brown bread, my wife gets half. Then it's goes to zero.
Having ransferred it out, this becomes a pot that in my demise will transfer to her, and then the kids (assuming there is not a complete erosion of the fund). In addition I can access this from 55 (against 67 sans actuarial reduction).
My IFA (I talked to 4) was one I was comfortable with, discussed the pros and cons and also discussed the possibilities with my wife.
I dithered and then when I got another transfer value, the sun was a much higher value, and also the multiple to calculate was higher.
When I started thinking about it, the cost was circa £6k and then ongoing fees to manage the fund. In late 2019, the fee was more than double that! Apparently the insurance cost for the IFA had increased dramatically and this was the reasoning for the fees. I contacted some of the others that I had talked to and they too had higher fees.
I opted to go ahead, had a considerable sum that I put to a discretionary fund manager.
All in q1 20.
Could there be a potentially be the worse time in history to be putting a large chunk into the market?
I have a 12-15yr outlook so am hoping that there will be considerable growth!
Anyway, I am happy to pass on details of the person I used. I strongly recommend that if you are considering moving large sum, you get on with the IFA. My chap is smart, my wife gets on with him and I'm hopeful he will remain as contentious as he has been since I met him.
In addition a colleague of mine has been using him for a few years and has provided positive reports so I am comfortable with my choice.
Edited by Meeten-5dulx on Sunday 3rd May 00:14
Brave Fart said:
Double Six, thank you for your replies. My wife's DB pension will pay around £1600 p.a. (NOT index linked) should she reach the grand old age of 65. In return, her old employer's scheme gives us £75k now - she's aged 55. We have assets in cash and property of well over £1.5 million, we have no debts at all, no dependants and are both still earning and in good health.
It's frankly a no brainer to take the transfer sum, and yet no-one will allow us to do what we wish with our own money!
I'm a Chartered Accountant (he says modestly) so it's not like I don't know my financial onions.
I'm happy to sign a disclaimer saying "I won't sue if it all goes tits up" but apparently the regulators don't believe me. Or my wife.
I'm rather angry that on the one hand, the rules say "Mr BF, withdraw your DC pension pot and spend it on tat if you wish", but also say "but you cannot access your wife's DB value, because, ooh, that's somehow different!"
Anyway, thanks for letting me vent - I shall pursue the option that another poster mentioned somewhere upstream.
You are quite sure there is no GMP or Statutory Revaluation rate applicable to your wife's pension?It's frankly a no brainer to take the transfer sum, and yet no-one will allow us to do what we wish with our own money!
I'm a Chartered Accountant (he says modestly) so it's not like I don't know my financial onions.
I'm happy to sign a disclaimer saying "I won't sue if it all goes tits up" but apparently the regulators don't believe me. Or my wife.
I'm rather angry that on the one hand, the rules say "Mr BF, withdraw your DC pension pot and spend it on tat if you wish", but also say "but you cannot access your wife's DB value, because, ooh, that's somehow different!"
Anyway, thanks for letting me vent - I shall pursue the option that another poster mentioned somewhere upstream.
DoubleSix said:
lots of god information
thanks for the info, I completely understand that it’s hard to get people to do this sort of work. And totally understand why- i could get £45k transferred time my sipp and basically punt it all on risky shares and be left with nothing come retirement. It’s quite a risk for a firm to take giving that advice. I’ll have a look around and see if I can find anyone that I can talk too. I’m going to speak to Julian/ Nik at IM, as I want to review my overall financial situation too and I have the time to do so at the moment.
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