MegaSack DRAW - This year's winner is user - rgwb
We will be in touch
I'm looking to move my final salary pension into my private pensions.
I have my values but require an IFA to provide advise and then give a statement to that effect.
So far I've been fobbed off with waffle and been quoted 10k (that's capped btw) to produce this report.
I know all about PII and the huge massive cost of it apparently, but to be honest I can't imagine how a report costs 10 grand.
I'm definitely moving it but when I say this I'm told they won't deal with an insistent client even though that would limit there liability if a future claim was made against them.
Not that there would be as my FTV offer is quite unreal.
I get that most of the above will make sense only to IFA types or pensioners, but any advice or references would be good.
If it's a one off fee it may be better than regularly creaming off the pension investments like my IFA does for arranging and advice he initially gave (okay, technically I can still call on his advice but in the main it's all managed by the provider company and an annual questionnaire now and doesn't involve him. He still makes a nice sum from it though).
If DB and transfer value > £30k.....
You must, by law, use an IFA; you can't change the rules of this particular game.
IFA will not just accede to your wish; they are required to give you independent 'best advice' - and be able to demonstrate that, if required; they will not do anything which risks them losing their licence.
Meet some IFAs - most/all offer an initial meeting FOC; interview them and negotiate charges.
Independent chartered financial planner in preference to IFA.
I'm in the early stages of transferring mine. Fees are around £4k, the IFA's info pack details all the charges for different pieces of advice
Charges seem to run at 1% or higher which is wrong as well because they do the exact same job regardless of fund value.
Just finding it frustrating paying someone 10 grand for what is pretty much 5 hrs work.
We paid a 10k ifa fee for a product but the law is the law, seemed a lot at the time but the product worked and saved us many multiples of the fee.
All I hear about on the various podcasts is mis selling and fraud, for us the product worked but it could quite easily be missold.
Sorry to appear vague it wasn't a pension tho.
Do providers do any checks on the legitimacy of the IFA advice/report? Can't you just knock something up?
More importantly, why would you want to move a DB pension into a DC pension? Unless there are exceptional circumstances you're transferring all the investment risk from your employer/pension provide to yourself. You could very easily end up worse off.
About 18 months ago I transferred one worth about £200k, but only as it had collapsed into the Pension Lifeboat and exited without any index linking, so I'd lost most of the DB benefits. Even then I'm still taking on all the risk and no guarantee I will do better than had I left it in the scheme. Had it not collapsed there's no way I'd have touched it. As it is I've taken a bet on inflation, if inflation stays low for the next 25 years I'll probably be worse off, if it rises I'll probably be better off.
Do providers do any checks on the legitimacy of the IFA advice/report? Can’t you just knock something up?
They transfer the money to the IFA's approved scheme directly, you never see any of it. Most SIPP providers won't accept a DB pension transfer as they don't want the risk of being sued for miss-selling. They will vet the IFA's report carefully to make sure he takes the fall if anything goes wrong. It was a very protracted process when I did it 18 months ago. There's so much bad press about poorly advised transfers esp over British Steel, that there was lots of talk about a blanket ban on transferring; although that hasn't happened yet.
OP, to sum up - it won't happen just because you want it to. You need to have a compelling and persuasive case to put to an IFA and, even then, there is no guarantee they will agree.
Everyone you will deal with will be risk-averse and focussed on ensuring they do everything by the book.
One of the key questions from any IFA will be the one Footflaps raised above - why transfer from DB too DC.
If you cannot answer that convincingly and persuasively, that's the end; it won't be the only question.
They will look at your DC from every angle - indexation, death in service as examples - to determine it's value.
Then there will be financial modelling and Monte Carlo simulations.
Employers are keen to offload DC pension liabilities because certainty for the employee means cost for the employer; they're not offering apparently generous transfer values because they're nice people. They're trying to sell the risk to you.
Let us know how you get on.
Cost me 2k to consolidate all my pensions, and year later it’s more than paid for itself. I just used unbiased, fed in my details and picked one that was local and had a good google rating. Crude but seems to have worked and they’re proactive too.
Why should I need them to agree though?. The law states I need to have taken advice, not that I heed it.
How on earth can an IFA stop me from moving my pension.? Is that even possible? Some random stranger ruining my plans for my life ?
brads - some information missing.
Are you referring to DB or DC pension?
What transfer value have you been quoted?
Do you understand the rules regarding pension transfers? Doesn't matter whether or not you agree with them.
Using a chat forum attached to a bike site is unlikely to get you best advice.
You are ignoring informed advice from people who've been there.
Suggest you read the legislation - carefully and ensure you understand it - before posting again.
What, exactly, is your concern?
Is it the level of fees?
Is it the fact that you can't get what you want without making a significant effort?
Yes, an IFA can definitely stop you from making a pension transfer - if it's DB and transfer value exceeds £30k. That IFA will not be a 'random stranger'; they will be a qualified professional advisor
Whether our not you are capable of deciding whether or not to make a transfer is irrelevant; the rules are there for a reason.
You give the impression, unconvincingly, that you know exactly what you want; go do - if you can - but do report back.
Ok will do, although it seems you have not read the thread properly.
Can I assume you are an IFA ?
I’m no great lover of the financial advice industry, but it’s not the ‘5 hours’ work they are charging you for, it’s the lifetime of liability. As others have said, those are the rules currently, and as valid and thought through as you transfer maybe, that’s why it’s expensive.
Charges seem to run at 1% or higher which is wrong as well because they do the exact same job regardless of fund value.
Just finding it frustrating paying someone 10 grand for what is pretty much 5 hrs work.
If I were sitting on a potential transfer value of £1m then I think I'd pay the £10k for proper advice.
I’m looking to move my final salary pension into my private pensions.
I’m definitely moving it but
You are precisely the kind of client who has made this issue you are finding necessary.
I don't think the problem is the fee, it's the fact a good IFA will tell you it's madness.
Still, it's your future you are ruining; crack on.
Why should I need them to agree though?. The law states I need to have taken advice, not that I heed it.
How on earth can an IFA stop me from moving my pension.? Is that even possible? Some random stranger ruining my plans for my life ?
You don't need them to agree, but no SIPP provider will touch your DB pension with a bargepole if there isn't a compelling case for the transfer made by someone else with liability insurance in place which will pay for the possible law suit down the line when you lose half your pension investing in a Woodford style fund....
When I transferred mine not only did I need the IFA recommendation signed and sealed but it had to explicitly recommend the SIPP provider by name and the investment fund split etc as the SIPP providers wouldn't take any risk at all on it. All a bit silly as on Day 2 I could then sell all the funds and stick it all in Neil Woodford and watch it all go down the drain, but then that decision would be all mine and I couldn't blame the SIPP provider for it....
DB pension transfers is the next big finance miss-selling scandal, only it will take a few years for everyone to realise how much money they've lost as a result.
brads - I have read the thread thoroughly; I'm not an IFA and not related to one either.
Just pointing out the obvious - as others have.
DB pension transfers is the next big finance miss-selling scandal, only it will take a few years for everyone to realise how much money they’ve lost as a result.
I work loosely in the sector and this is the big topic right now. A couple of big providers have lost their licenses already and an increasing number of firms have decided not to touch this kind of work any more due to the liabilities.
I suspect this means that anyone who will do it will be very careful and will also charge a good amount for it. They're taking on the risk and so they want covering for that.
If you need a good firm to talk to I can likely get you a name or 2. But don't expect it to be a cheap option or for it to be an easy process.
This thread is very timely - I'm just looking into this now for a (relatively) small preserved DB pension. I asked locally for advice quotes (Cumbria) and no-one would touch me with a bargepole. I have ended up speaking to Age Partnership and am currently going through the procedure of getting drawdown and annuity quotes from them. There's no charge if I choose not to take their advice, but if I do, it's 3.5% of my fund, plus an ongoing fee of 0.5% for continuing advice (optional). I really don't know what to do ....
I really don’t know what to do ….
Unless you have compelling unusual circumstances eg you your DB pension fund is teetering on insolvency, just leave it be.....
Yes, they offer a big chunk of cash as a transfer value, but to guarantee the same benefits you probably need even more cash as they're only offering a lump sum which will create those benefits if everything goes OK investment wise. Stick 25% in the next Woodford fund etc and you'll be worse off....
I have a friend who is an IFA and he took all the exams to do this sort of thing in the last couple of years.
The report and the research that goes into it does take quite a long time if done properly, and there is also the risk element as the advice given has a long term for most people.
It is a difficult market and lots of people are pulling out because of the risk.
If you want an introduction to someone who is trustworthy - let me know
There can be good reasons for transferring a DB pension but they are quite specific and with respect it doesn't sound like they apply to you (or you haven't articulated them)
There is a reason the majority of companies have closed them to new members, they are expensive and very good for the employee. I have 2, one from 2 yr employment and one from 10 yrs. I also have a SIPP and an ISA and have moved my other DC pensions into my SIPP. Other investments have more risk but I like to keep these DB pensions as future guaranteed income, even if I could make the capital larger.
There is a reason the majority of companies have closed them to new members, they are expensive and very good for the employee.
The one I had was incredible, I paid in under £1k a year for 7 years and then even after it collapsed in the Pension Protection Fund, losing 10% and all index linking, 20 years later I got £200k. No way could I have made that return buying tracker funds, a very, very good deal.
That is ridiculous! But as many others have said, if you have a defined benefit pension then I’d stop complaining and leave it where it is. The rest of us are throwing money at private pensions and getting a fraction back of what these schemes give.
One scenario when transferring out could be beneficial is due to ill health. It's no good getting £x per year and carking it within a few years when you can transfer it to a SIPP and have a good time for a few years and leave the remaining SIPP pot to your loved one, as opposed to a reduced widows/widowers pension.
Cheers folks.
Some interesting facts and some sweeping uniformed assumptions lol.
I'm not here to argue, I was simply deeply disappointing with my first exposure to IFA's.
This is an enhanced offer that will be my only option to retire at 55 and is equivalent to 73yrs of my pension at normal retirement age (not taking 14yrs rpi into account mind)
I think ruining my life is a bit of a stretch haha.
I'm also still paying into another final salary pension at the minute.
Now because some popel seem to take offence at my plans, we'll just leave it here and I'll get on to talking about bikes.
Just bought an Orange 5 factory 🙂
I was simply deeply disappointing with my first exposure to IFA’s.
I honestly don't see how the current scheme can continue. They were stopped from taking kickbacks on investment products (a good thing), so now they have to make money from fees.
Only the costs of being an IFA, office, insurance, qualifications etc is quite high and most people baulk as being asked to cough up £5k / 2-3% for advice.
Yet, nearly everyone needs professional advice over pensions.
The rules are incredibly complex, so you need to be very smart to be able to understand them all and offer sensible advice (which I suspect 90% of IFAs don't / can't do).
Whole situation is a complete mess, with people like St James Place charging a fortune for bugger all and getting away with it (or less now the Sunday Times has been exposing them over the last few weeks).
73 years of pension at normal retirement age? So...living until age 140!
Either way if you have an opportunity to retire at 55 go for it. The rest of us are just jealous.
I honestly don’t see how the current scheme can continue. They were stopped from taking kickbacks on investment products (a good thing), so now they have to make money from fees.
Only the costs of being an IFA, office, insurance, qualifications etc is quite high and most people baulk as being asked to cough up £5k / 2-3% for advice.
Yet, nearly everyone needs professional advice over pensions.
I agree, it is a mess. It's something that people need, but won't pay for.
The rules are incredibly complex, so you need to be very smart to be able to understand them all and offer sensible advice (which I suspect 90% of IFAs don’t / can’t do).
Thing is though, for most people investing 'normal' amounts of money, the only advice they need when saving for a pension is 'save more'. The actual investment decisions are effectively a coin-toss, they'd probably simply be best in a Vanguard-like lifestyle fund (and I know we've talked about this before and our opinions may differ here 🙂 )
When they come to draw down their pension they need a bit more advice, as, since the move away from compulsory annuities, you can really badly affect your long term options by taking too much too soon. Again though, for 'normal' people, it's not actually that complex.
And yeah, only 10% of IFAs actually advise, the other 90% are Independent Financial Salespeople...
Whole situation is a complete mess, with people like St James Place charging a fortune for bugger all and getting away with it (or less now the Sunday Times has been exposing them over the last few weeks).
I think 'fortune' and 'bugger all' are overstating it a bit, much of the problem with SJP is the image of 1980's finance sales that they project (and it is their mindset). In actual terms of 'value for money' they're not that different to most of the investment management firms. You could argue that for their high net worth clients, and some are very high net worth, SJP are able to offer some incredibly specific, tailored, complex advice, possibly better than most others. The thing is though that most of their clients are the 'normal' kind I mentioned above, who don't need specialist advice, but are still paying for it.
The actual investment decisions are effectively a coin-toss, they’d probably simply be best in a Vanguard-like lifestyle fund (and I know we’ve talked about this before and our opinions may differ here 🙂 )
No problem with those, although I'm not sure Vanguard does SIPPs yet, but you could invest through another platform.
Having said that, if you're not going to buy an annuity on your 65th B'day, it can be argued that tapering into bonds is very conservative given you might be drawing down for another 30 years plus and you might want to stay in equities.
I like discussions such as above, I have some db as part of the whole package and have to fess up the buy out offers are eye watering, but as confirmed they are high for a reason. Db is guaranteed, I got an 8% benefit uplift one year...theres no way I could have got that with my own dabbling. An educated debate although i think we lost the op.
Having said that, if you’re not going to buy an annuity on your 65th B’day, it can be argued that tapering into bonds is very conservative given you might be drawing down for another 30 years plus and you might want to stay in equities.
Agreed, and, mea culpa, 'lifestyle' is a specific type of fund and is probably not the word I should have used, I should have just gone with 'simple'. Agree with the general point though, hence:
When they come to draw down their pension they need a bit more advice, as, since the move away from compulsory annuities, you can really badly affect your long term options by taking too much too soon.
Things must have changed since I transferred my DB pot into a SIPP 3-4years back. I used a local IFA, told him what I wanted him to do & why, and that he was only getting the gig if he agreed to facilitate it. £500 flat fee & all very smooth, no caveats from the SIPP provider, though it took a few weeks.
Since I did this equity markets have boomed compared to bonds, to which the values of DB plans are linked, so I'm nicely up... for now. But I'd be very wary about making a similar move now as even though transfer values can be eye-watering there doesn't appear to be the same upside in equities going forward: the increases in stock markets have outstripped the underlying growth of the constituent companies and that simply cannot continue indefinitely.
I'm very happy with my IFA. Alan Moore of Sam Wealth.
after advice on here i transferred all my old static DC pensions into a SIPP, with a spread of 5 global 'pots/funds/whatever theyre called'? im 55 and could access it now, but obviously want to keep letting it grow a few more years yet.
im told that each time i want to add to that SIPP, thered be a transaction charge of mebbes a tenner or so, so if i have a grand to save, rather than put £200 in each pot and pay £50, stick it all in the cheapest pot and pay a tenner and itll all even itself up over time. sounds good advice.
now, if we have regular bit of money to stick away, would we be better starting an ISA as a savings pot instead of sticking it into the SIPP, and making sure that the ISA has that same spread of investments?
im just thinking that if we start to have many smaller amounts to invest, and get charged every time we plop these into the SIPP, would we be better putting these small amounts into an ISA, (guessing that theres no transaction/deposit fees and that the tax implications/returns are exactly the same).
im thinking monthly savings really.......
thanks
I have a company pension which I match to get the max contribution from my company. I then put additional into a holding fund/ISA to have some liquid just in case, then periodically move it into my SIPP and get the 40% relief.
With an ISA you've paid income tax on the money before you put it in, but you won't pay any tax on it when you take it out and you can take it out anytime.
With a pension you get the income tax that you've already paid on the money back when you put it in, but you'll pay income tax on it when you take it out, and you'll have to wait to get at it.
The answer is to have a mix; ISAs as medium-term (rainy day/new roof) savings, pensions as retirement income (plus whatever ISAs you have left by that point).
dont really understand tax and what-have-yer, i spose what im asking is, are they both the same 'tax-wise'?
anything put into a SIPP from savings would be from take home pay, same for ISA.
if i invested in an ISA which used the same 5 funds that are invested in the SIPP (can you even do that?), would my return be the same as a SIPP, in my pocket, after 5 years say?
if there are differences, what are they?
thanks
EDIT: typed this at same time as you posted IHN, thanks.
these regular(ish) deposits would be used as a retirement fund really, not to be touched until 5 yrs time when im 60 and hope to retire. maybe wishful thinking, i havent done my maths yet, but its defo for 5 years.
dont really understand tax and what-have-yer, i spose what im asking is, are they both the same ‘tax-wise’?
anything put into a SIPP from savings would be from take home pay, same for ISA.
Nope they are not the same....
The principle is that you should only be taxed once.
So with ISAs you pay in from your taxed income and take out tax free.
With pensions (SIPPs) you pay in from your gross income or pay in from net and get the tax back. Anything you then take out is treated as income, so you get taxed on it.
There is one big exception, currently from 55 you can take 25% of a pension as a tax free lump sum.
and that the tax implications/returns are exactly the same
The tax implications are different if you move into a different tax band as a result. Putting money into an ISA doesn't change how much tax you paid on that money. Putting it into a SIPP does. If you earned £22.5k, you'd pay 20% tax on £10, as the Personal Allowance is £12.5k. If you put it in a SIPP, you get that tax back. If you take it out at £5k per year, and you have a state pension paying you £7.5k, your income isn't over the PA so you don't pay any tax.
Similarly, if you're paid enough to pay 40% tax, putting enough in a SIPP to get your taxable income below the threshold saves you 40% - and you'll probably only pay 20% when you take the pension.
Effectively, pensions allow you to pay the tax rate for your lower pension income when you're living off that income, rather than on the higher working income when you originally earned it. You just have to work out how much difference that makes to you, based on what you earn, where the tax bands are, how much you can afford to put away (and whether you think the rules will change!)
It depends on your marginal tax rate. If you pay tax at 40% then that is the relief you will get on your SIPP contribution. When you take your money out of your SIPP as above you "may" pay tax but unless you have a large pension then its likely you will then pay tax at 20% so you have a benefit at the end.
You can top up your pension with your ISA and the tax man never sees that so you could have circa £12k pension (zero tax) plus £10k ISA, £22k in total but no tax to pay
There is one big exception, currently from 55 you can take 25% of a pension as a tax free lump sum.
Correct me if I am wrong Footflaps but doesnt that limit the tax relief that you have on any future contributions? Once you start taking your pension (even if you are still working and contributing) then the benefits are reduced?
thanks
The principle is that you should only be taxed once.
yes, so i suppose thats what i mean when i ask if the 'return in my pocket in 5 yrs time' will be the same.
i sort of get it that the tax comes off at different times, but as a 20% tax payer, does that mean it really doesnt matter which i choose? and that if it doesnt matter from a tax POV, then it may make sense to choose the ISA (with the same investment funds) if im not charged any transaction fees each time i chuck some wedge in?
in short, im asking whats my best way of saving to get the best return in 5 years time if i make regular payments every month or two 😀
cheers
thanks
The principle is that you should only be taxed once.
yes, so i suppose thats what i mean when i ask if the 'return in my pocket in 5 yrs time' will be the same.
i sort of get it that the tax comes off at different times, but as a 20% tax payer, does that mean it really doesnt matter which i choose? and that if it doesnt matter from a tax POV, then it may make sense to choose the ISA (with the same investment funds) if im not charged any transaction fees each time i chuck some wedge in?
in short, im asking that at 55, whats my best way of saving to get the best return in 5 years time if i make regular payments every month or two 😀
cheers
My company closed its pension scheme and appointed WPS (Work Place Solutions) as the IFA so I don't know how much they paid. WPS helped me get my pension invested by Brewin Dolphin in Glasgow who are reassuringly Scottish and seem to be doing a good job despite the poor returns for somebody with a moderate risk profile. WPS have been OK but in the end they are just part of the financial services "industry", which generally employs kids.
ISAs c/w SIPPs - Other considerations:
On death, your spouse can inherit your ISA and retain the tax free benefits.
On death, any beneficiary can inherit your SIPP without inheritance tax if you die before age 75.
If you die within 2 years of transferring a defined benefit pension to a SIPP it can be subject to inheritance tax.
Correct me if I am wrong Footflaps but doesnt that limit the tax relief that you have on any future contributions? Once you start taking your pension (even if you are still working and contributing) then the benefits are reduced?
Yes, although I don't know exactly how it all works as I'm only 48 so have only studied the 'putting money in' part of it all (as it may well all change before I hit 55).
I'm guessing with some care you could possibly continue to make contributions to a married partner's pension as long as it came from your salary and not the 25% tax free (pretty sure you'd get fried for doing that). Before doing that I'd want some proper tax advice though....
On death, any beneficiary can inherit your SIPP without inheritance tax if you die before age 75.
I've never understood why 75 given your partner could easily have another 25 years left and may be entirely reliant on your pension.
in short, im asking that at 55, whats my best way of saving to get the best return in 5 years time if i make regular payments every month or two
I would go SIPP as you get 20% tax back and can take 25% of it all tax free when you decide to start taking your pension. In your case, as you are already 55, if you suddenly have to take money out, it's not a problem.
On death, any beneficiary can inherit your SIPP without inheritance tax if you die before age 75.
I’ve never understood why 75 given your partner could easily have another 25 years left and may be entirely reliant on your pension.
Seems arbitrary, but after 75 they still inherit, but have to pay income tax on it.
[A SIPP can be passed down the generations, i.e. your SIPP can be passed on to your spouse, and when they die, it can be passed on to whoever their beneficiaries are].
All these can change with any future government policies. IANAFA.
I would go SIPP as you get 20% tax back and can take 25% of it all tax free when you decide to start taking your pension. In your case, as you are already 55, if you suddenly have to take money out, it’s not a problem.
and theres no transaction fee implications? if i were to pay in a deposit to a SIPP every month, would that cost me £120ish? against nothing for an ISA?
and theres no transaction fee implications? if i were to pay in a deposit to a SIPP every month, would that cost me £120ish? against nothing for an ISA?
There would be a fee for buying shares / funds each time which would be platform dependant, normally around £10. But you could just pay in £120/month and only buy shares once every 6 months. The fee is normally the same for an ISA/SIPP for a given platform.
Eg HL share dealing fees are https://www.hl.co.uk/shares/share-dealing/dealing-charges
EDIT having seen that page, if you're buying funds (which I think is what you have), they don't charge a 'dealing' fee.
EDIT having seen that page, if you’re buying funds (which I think is what you have), they don’t charge a ‘dealing’ fee.
not sure what a dealing fee is. i wouldnt be 'buying shares/funds' each time would i? just topping up what ive already bought, or doesnt it work like that?
im simply wondering whether id have to pay a fee (tenner?) every time i deposited money and stuck it onto my 'lowest value' fund to even up the balance. and for arguments sake, i may to this each month. no fee with either SIPP or ISA?
and yes youre right, i went for the 5 recommended funds (spread globally) at 20% each.
When you pay in money to HL etc it just sits in an account earning no interest, which might be fine, but normally you then pick a fund / share and ask HL to buy as many shares as they can with your £. That involves a bit of work for them which they then charge you for 'trading fee' with shares. With funds they don't seem to charge a trading fee, but they take 0.45% of your total funds invested with them as a fee each year.
So, no one off fee to top up your funds each month, but you pay an annual overall fee of 0.45% to them for using the platform.
With funds they don’t seem to charge a trading fee, but they take 0.45% of your total funds invested with them as a fee each year.
so..... please excuse me for still being a thickie, but am i right in thinking that itll cost me nothing at all to keep pumping deposits into HL, nothing to then put that money into the lowest value fund, and then log out. the only cost will be 0.45% per year, which they would still have taken anyway, but as theres a bit more wedge in there now itd obviously be a bigger annual fee?