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Where Taxpayers and Advisers Meet

Transferring a DB (Final Salary) Pension – Cheapest Option of obtaining ‘advice’

Sepoy
Posts: 8
Joined: Mon Nov 14, 2016 10:50 pm

Transferring a DB (Final Salary) Pension – Cheapest Option of obtaining ‘advice’

Postby Sepoy » Sun Oct 18, 2020 11:11 am

Hi there, I want to transfer a deferred Defined Benefit (Final Salary) pension into an existing SIPP that I manage myself. The pension CETV is over £30k so I know that I have to seek financial advice before trying to arrange it.

My own circumstances are such that I currently have no need for additional pension income as I am divorced, live with my partner, have a good secure job that I enjoy, rent out my own properties, have other pensions and 2 children in late 20’s/early 30’s.

By transferring the total pension value to a SIPP I can take lump sums as/when the need arises and still have a sizeable inheritance to pass down to my children when the inevitable happens.

To be charged an eye watering 3 or even 4% fee for advice that I simply won’t need, nor take any notice of, seems like a complete waste of money, so is there any cheaper way of getting ‘advice’ in transferring a DB pension?

Many thanks for your interest in reading this and hopefully I’ll get some useful info back.

Bryn Walker
Posts: 2
Joined: Wed Oct 07, 2020 6:44 pm

Re: Transferring a DB (Final Salary) Pension – Cheapest Option of obtaining ‘advice’

Postby Bryn Walker » Wed Oct 21, 2020 12:57 pm

Topical given the recent changes.

Sepoy
Posts: 8
Joined: Mon Nov 14, 2016 10:50 pm

Re: Transferring a DB (Final Salary) Pension – Cheapest Option of obtaining ‘advice’

Postby Sepoy » Thu Oct 22, 2020 9:00 am

Yes, it's certainly a bit daunting to say the least.

I've had 3 days of constant phone calls and looking at web sites, but I'm more confused than ever now.

ben_power
Posts: 28
Joined: Tue Feb 27, 2018 8:34 pm

Re: Transferring a DB (Final Salary) Pension – Cheapest Option of obtaining ‘advice’

Postby ben_power » Thu Oct 22, 2020 11:31 am

HI,

As an IFA I deal with these frequently.

The issue you have is that it's not as straightforward as it appears and any advice provided by an adviser needs to be proven to be in your best interest. A huge amount of research and stress testing (TVAS) is required and the liability for the advice provided is with the adviser/advisory firm. The regulations have recently changed as well (October 1st) meaning that an initial fee must be charged up front 'before' any analysis is undertaken and applies regardless of the outcome. This has been implemented by the FCA in order to deter people from wanting to transfer out and give up valuable benefits.

In your case, there may be strong evidence that a transfer out might be in your best interest but in the vast majority of cases it is not. There are a lot of differing factors to take into consideration, one obvious one being age. As an example, a friend of mine recently asked me to 'sign-off' the advice to transfer out of a DB into his SIPP listing similar reasons to yourself and I do believe that he has a strong argument to warrant a transfer (in the future) but as he is only 43 at the moment how can I evidence what his income requirements will be at 57 (access to pensions is rising to age 57 from 2028) and therefore prove that he does not need the income the existing DB pension is promising him. A lot can change in 14 years!

You will be able to find IFAs that can facilitate the analysis at a much lower rate than the 3%/4% though but you won't find anyone that can do it for free. They will take on all the risk of the advice.

By all means pm me and I can help further if needed.


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