Transfer of (small) Barclays DB Pension

[troika]

Wondering if anyone can help. My wife has a very small DB Pension from years ago when she worked at Barclays (1964 Scheme, 100% pre - 1988 GMP). She has received an upto date transfer figure from WTW (increased 20% in 18 months) and it appears compelling, particularly as the projected pension does not have annual increases. HL will accept a transfer in to her SIPP but this is obviously subject to her receiving advice from a PTS. The challenge is that due to the relatively small transfer value (less than £60K), unless I can find a PTS able to do this for a reasonable fee, it doesn’t make sense.

Can anyone point me in the right direction? I think the fact that there is no annual increase from 60 makes it a sensible thing to do.

[troika]

Stay in Bed Instead said:

What fee do you consider reasonable?

What she doesn’t need to pay for is a ‘financial review’. I know this pot is small for a DB transfer, but it’s also a small element of her overall position, which does not require an overhaul. What she needs is someone who knows this Scheme to review the numbers in isolation and say, yes, it makes sense to transfer. Barclays even send the form to sign. It can’t be a lot of work. I’m thinking a couple of hours of time at a rate I’d pay a solicitor. What do you think is reasonable?

[troika]

darreni said:

I'd be surprised if you can get anyone to touch a DB transfer of that size.

Crazy really. The fact it is so small makes the wider risk of transferring it practically zero. It’s a tidying up exercise really.

[troika]

Brads67 said:

I actually thought is was capped ?

If not then too right it should be. They are banned from transferring and charging commission so this is how they got round it. Basically commission by another name.

5 years ago it would cost £750 to have a report done giving you the advise you need whether you heeded it or not.

Same thing now could be 10k and be on the basis of restricted advise tying you to there company (and their IFA commission) as they will not deal with insistent clients.

I understand the liability aspect but they do not make themselves look good in this part of the market.

Quite. The costs being mentioned for something very straightforward and boiler plate is quite ridiculous. It makes my lawyer / accountant look very, very cheap for what they do and they also have strict compliance / PI insurance etc etc.

[troika]

lordturpin said:

Half a days work ?

Well, it look me half an hour to crunch the numbers including a tea break. Someone who knows the Scheme (which is presumably why you consult an ‘expert’ in such matters should have it all worked out in 10 minutes,

[troika]

Stay in Bed Instead said:

It is a legal requirement that she seeks regulated financial advice on the transfer, and the Financial Conduct Authority only permit suitably qualified individuals to do so.

In order to assess whether or not the transfer is in her best interest the adviser must assess her current financial position, potential financial position in retirement, attitude to risk, health, etc and consider that against the guaranteed benefits from the defined benefit scheme which will require specific enquiries to the scheme in question.

Then they have to cover the cost of their PI insurance as people who don't get out what they thought they would are all too ready to blame someone else (often assisted by NWNF scumbags).

I would be amazed if you could get anyone to do it for under £1500.

My solicitor and accountant also have to be suitably qualified. My accountant would have this sussed out in minutes. Why can’t these ‘experts’ charge for the time it takes at a rate which reflects their qualifications?

[troika]

darreni said:

Lol, ask your accountant to do it?

It would make sense wouldn’t it. He knows our financial position better than anyone else.

[troika]

phope said:

The courts are also in no mood to seek any changes in regulation for 'insistent clients'

https://www.ftadviser.com/regulation/2019/12/19/wa...

The complainant said: "I am being forced by a 'catch-all' and unnecessarily blunt regulatory protocol to pay a significant sum of money for advice that I neither need nor want, and am qualified so to decide, and that is on an increasingly challenged assumption I can even find an IFA prepared to execute the transaction in the first place.

The more I look into this, the more I’m starting to think the whole thing is a sham.

[troika]

Stay in Bed Instead said:

You have obviously found a niche in the market.

Why don't you qualify to provide financial advice and then transfer advice, and then you can offer to sign off defined benefit transfers for £500 a pop.

What could go wrong?

Edited by Stay in Bed Instead on Friday 24th January 20:31

The thing is, it’s her money, is a very small % of her overall net worth and she doesn’t need or want to give thousands of it away in return for a boiler plate report which won’t give a conclusive recommendation either way. She’d happily sign any disclaimer that she can’t sue anybody, ever.

Edited by troika on Friday 24th January 21:13

[troika]

NickCQ said:

troika said:

The more I look into this, the more I’m starting to think the whole thing is a sham.

It’s a situation entirely of the regulator’s creation. What we are seeing here and elsewhere is the flip side of the ‘redress / compensation’ industry that the FOS created with the PPI payouts.

Meaning people like my wife are at the mercy of a system which allows ‘experts’ to effectively extort money in order for her to obtain her own money. Brilliant.

[troika]

rockin said:

It isn't "her money" - what she has is a DB promise of a future income. To convert that promise into hard cash involves some sensible regulation to protect people, many of whom get over-excited at the sight of a pound sign with lots of zeroes after it - and don't appreciate the considerable value of a DB promise.

In the situation you describe it may be well worth exploring a transfer-out, and I doubt that spending a couple of thousand pounds (or whatever) on advice would make someone decide not to proceed.

It can't be the first time Barclays administrators have seen this situation. They have almost certainly seen cases before and may be able to point you in the direction of independent advisers who have assisted other people on an acceptable basis.

I fully appreciate what you are saying. It is clear from the figure offered (i.e. what they are willing to pay now to relinquish their future obligation to her) and from due diligence that Barclays are very keen to shift these obligations from their books. It just seems distasteful to be forced to pay thousands to a third party to rubber stamp it with no added value.

[troika]

vindaloo79 said:

I think this is the cheapest place you can get it done.

https://www.finalsalarytransfer.com/p/117/about-ou...

They wanted my wife to provide a full transparency of all her outgoings and financials in order to get my DB done. They charge a low fee.

I heard Barclays had one of highest multipliers when I did my transfer in 2017. Mine was 35 times prospective pension. I think theirs was a staggering 53 times. If you feel like you won't live more than 25 years then I felt like having the money at multipliers beyond 30 times was worthwhile - at least for those with a risk appetite.

Thank you, but it appears you have to let them manage your money post transfer. It all stinks.

Yes, the Barclays figures are very high, particularly in this case as there is no annual increase in the pension paid. If we’re both not dead by the time the multiplier years have passed, it might buy a loaf of bread. It all makes total sense to transfer, but it seems Dick Turpin has the keys to the exit door.

[troika]

darreni said:

Your anger is misplaced. It should be directed toward the regulators.

I’ve advised on DB transfers for the last 25 years & I agree that you should be able, as a grown up, to sign an indemnity and make your own transfer decisions.

Thanks, the pendulum certainly seems to have swung too far. I understand that some people have been scammed but that doesn’t mean everyone else should be held to ransom to manage their own finances.

As someone who sees this on a daily basis, do you think any changes will be made to loosen the handcuffs? She has 5 years until this pension starts to be drawn.

Edited by troika on Saturday 25th January 09:23

[troika]

Stay in Bed Instead said:

I can assure you that millionaire IFA's a few and far between.

Edited by Stay in Bed Instead on Saturday 25th January 09:41

Maybe they should get better at managing their money?!

I’m not blaming the player, I’m blaming the game. Seems crazy that it’s so easy for people to rack up huge debts, yet people who actually have money are treated like children.

[troika]

rockin said:

It really isn't yet "her money". If she were to die tomorrow (heaven forbid) it evaporates. The money only becomes hers when she's met the necessary conditions for transfer-out which include,

• Staying alive, and
• Getting advice.

Advice protects everybody in the picture, including Barclays. That's because people who thought they "had money" tend to get litigious after the event - typically when they've lost money through their own actions and then go looking for someone else to blame. The system is there for good reason.

Well, I don’t need to take advise on how and where to invest in DC pensions, shares, ISA’s etc. Don’t tell me, that will be coming down the line (what with Woodford etc). People will have to pay for advice before buying a particular fund, share, bond etc. Where will it stop?

[troika]

Stay in Bed Instead said:

That's different.

The advice here relates to the possible benefits and pitfalls of giving up a guaranteed income, in favour of an unguaranteed income. Not advice on where to invest it thereafter. Essentially transferring the future income risk/reward from the DB pension arrangement to the member.

Ask yourself this, why are Barclays offering such a generous transfer value to do so?

She knows exactly what she’s giving up. Even by the most basic DCF analysis assuming she lives to 100 makes it the right thing for her to do. I’m now resigned to the fact that I’m not going to get anywhere with this, it’s just a matter of principle.

Barclays clearly know what they are doing. An increase in transfers benefits the Scheme accounts. Transfers are calculated on a best estimate basis and the liabilities are accounted for at mark to market. It’s a win win, if it could be carried out easily.

[troika]

Stay in Bed Instead said:

Have Barclay's ever made any discretionary increases to deferred pensions or pensions in payment?

I honestly don’t know because it’s irrelevant. Even if they have in the past, the only thing that’s guaranteed is what’s in the Scheme rules.

[troika]

Stay in Bed Instead said:

It does matter, that's the point. The member does not know exactly what they are giving up, just the minimum they are giving up. What if they have a history of granting RPI increases?

A qualified IFA must take that into account.

They have absolutely zero obligation to do so. It’s all pre 1988 GMP. The contract is all that counts in my book.

[troika]

Stay in Bed Instead said:

Which illustrates why the law mandates that financial advice is obtained.

Are you suggesting that if an advisor ‘thinks’ Barclays may be mega generous and pay more than the contract states, I can sue the advisor when they don’t?!

BTW, I do appreciate your views on this topic...!

[troika]

What a sorry state of affairs when it seems nobody is allowed to take any responsibility for their own actions.