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Needing an FCA to transfer

stooz
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Needing an FCA to transfer

#463673

Postby stooz » December 6th, 2021, 10:56 pm

I have a dB pension that has a better transfer value than it does annual pension.
It's impossible to get decent information about it so I want to combine it with another one that is much more open with its facts.

To give you an idea, I have to call and request a letter that takes 2 weeks for an estimate of current annual pension. Don't ask about where is invested...

But it won't let me transfer without a letter from an FCA saying I got advice.

Very annoyingly i can only find fees of 1% which is going to cost me thousands for the privilege.

I appreciate the benefit is next of kin pension attached but is there any suggestions to make this cheaper?

Alaric
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Re: Needing an FCA to transfer

#463682

Postby Alaric » December 6th, 2021, 11:31 pm

stooz wrote:To give you an idea, I have to call and request a letter that takes 2 weeks for an estimate of current annual pension. Don't ask about where is invested..



You need to give a lot more information. Is it an arrangement you set up yourself, or is it through a former employer? If as seems possible from the context, it's a defined benefit scheme, where it's invested and how much it charges are not greatly your concern since you or your heirs should get the promised benefits regardless, Alternatively it might be an insurance company scheme written as "with profits" with some form of benefit guarantee.

mc2fool
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Re: Needing an FCA to transfer

#463689

Postby mc2fool » December 7th, 2021, 12:40 am

stooz wrote:But it won't let me transfer without a letter from an FCA saying I got advice.

Very annoyingly i can only find fees of 1% which is going to cost me thousands for the privilege.

I appreciate the benefit is next of kin pension attached but is there any suggestions to make this cheaper?

You mean an IFA (Independent Financial Adviser) not FCA (Financial Conduct Authority).

1%, painful as it is, is about typical. But bewarned, the law only says you must take advice and the 1% will be what you pay for the advice -- irrespective of what the advice ends up being. So you could end up where for your 1% the IFA advises against a transfer, and your problem then becomes finding another pension to transfer into that will let you do it against advice (an "insistent" client).

The topic of transfers comes up fairly regularly on this board. I suggest you search through it and read everything that's already been discussed. Here's a couple to start with: viewtopic.php?p=400630#p400630 and viewtopic.php?p=330369#p330369

elkay
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Re: Needing an FCA to transfer

#464191

Postby elkay » December 8th, 2021, 11:29 am

I am in the process of transferring out a pension pot from a DB scheme, and the charge is approximately 1.5%. This is a reduced charge for the IFA I am using, to match preferential rates with 2 other IFAs that were recommended by the scheme and the Union. The size of the pot is probably a factor - a smaller pot would warrant a higher % charge compared to a larger pot. At the end of the day there isn't a significant amount of difference in the work by the advisor.

Key factors influencing cost:
- FCA expect the charges to reflect the effort by the IFA - a low charge might indicate not much effort and therefore scope for misselling. I believe there are minimum rates that the FCA expect to be charged, but I don't know if these are influenced by the pot size.
- Because of the strict guidelines from the FCA, and the default position that "no-one in their right mind would transfer out of a DB scheme" (...) indemnity insurance for IFAs has leapt significantly, and will be reflected in the charges.
- Because of the indemnity insurance rates, there are is a much reduced pool of advisors that have actually certified for providing guidance on transfers, hence less competition for the work. Also, the advisors are likely to be larger business rather than individuals.

I have been through the process and received a final report and recommendation which provided me with little more than I found in my own research and decision making. It does feel like a waste. However:
- It was a necessary evil to get the advice, as required by the FCA, and the benefits financially to me outweigh the costs.
- The charge is probably a fair reflection of the effort + indemnity insurance + risk for the IFA.

Hope this helps.
ellkay

chas49
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Re: Needing an FCA to transfer

#464241

Postby chas49 » December 8th, 2021, 1:47 pm

mc2fool wrote:
stooz wrote:But it won't let me transfer without a letter from an FCA saying I got advice.

Very annoyingly i can only find fees of 1% which is going to cost me thousands for the privilege.

I appreciate the benefit is next of kin pension attached but is there any suggestions to make this cheaper?

You mean an IFA (Independent Financial Adviser) not FCA (Financial Conduct Authority).

1%, painful as it is, is about typical. But bewarned, the law only says you must take advice and the 1% will be what you pay for the advice -- irrespective of what the advice ends up being. So you could end up where for your 1% the IFA advises against a transfer, and your problem then becomes finding another pension to transfer into that will let you do it against advice (an "insistent" client).

The topic of transfers comes up fairly regularly on this board. I suggest you search through it and read everything that's already been discussed. Here's a couple to start with: viewtopic.php?p=400630#p400630 and viewtopic.php?p=330369#p330369


There is also a current thread on the topic at https://lemonfool.co.uk/viewtopic.php?f=17&t=32441

DrFfybes
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Re: Needing an FCA to transfer

#464260

Postby DrFfybes » December 8th, 2021, 2:59 pm

stooz wrote:I have a dB pension that has a better transfer value than it does annual pension.
It's impossible to get decent information about it so I want to combine it with another one that is much more open with its facts.


Do you mean you want to transfer it to another DB scheme? Generally that option is only open when you join that scheme, and is done by applying via the new scheme and as it is DB to DB no IFA involvement is required.

TBH if you've found an IFA that will work for 1% one-off fee you are doing pretty well.

Paul

taken2often
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Re: Needing an FCA to transfer

#479879

Postby taken2often » February 10th, 2022, 6:00 pm

A bit late on this one. Suggest you check out my response 389371 Which IFA for a Pension Transfer 23/02/2021

scrumpyjack
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Re: Needing an FCA to transfer

#479886

Postby scrumpyjack » February 10th, 2022, 6:16 pm

It may be worth your considering first what are the sort of grounds on which an IFA might validly be able to decide it is in your interests.

The two that I have heard of are

1 You have substantial other pensions/financial resources so that you will not need the DB pension and you want to leave the money undrawn to your heirs so avoiding IHT

2 You have impaired life expectancy.

Other more knowledgeable fools may be able to give you better advice!

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Re: Needing an FCA to transfer

#479970

Postby Aegis » February 11th, 2022, 9:01 am

From an adviser's perspective, this is very hard indeed. Many firms have taken the view that they want to really tighten the requirements for recommending a transfer, and coupled with that you have many pension providers deciding not to accept insistent client transfers because they have decided to protect people from themselves (or themselves from huge fines if it all goes pear-shaped). As a result, even when it mathematically makes sense, it can be very difficult indeed to advise that a transfer should happen. As an example, back when I was advising (which I'm not currently, incidentally), I found that a client would be better off transferring even if he then achieved only 1% real return and suffered an immediate loss of 20% of the value of his pension scheme, which to me made it a "no brainer" when combined with the fact that this chap was unmarried and wanted to leave death benefits to his children. But the advice was refused by the central compliance team.

If anyone's wondering, I refused to advise that the client retained the scheme, and that led to a breakdown between me and the employer which ultimately led to me losing my job, so you can see where my principles lie here.


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