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Paying for IFA advice to transfer a 30k+ pension
srg751
Posted: 27 April 2015 12:03:07(UTC)
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I have received a transfer value for a deferred pension from BT. The value exceeds 30k so I have to take advice from an IFA.
Rules are rules so I accept this. However, when I contacted Hargreaves Lansdowne explaining my proposition to transfer this pension into my SIPP, I was shocked to be quoted £1250+vat for the obligatory advise.
I am a seasoned investor wishing to minimise this charge. Would the "qualified" members of this forum please advise. My instinct is to contact several advisors and just go with the lowest quote. Does this advise have to be face to face?
Thanks to anyone who takes their time to help.
3 users thanked srg751 for this post.
Guest on 05/06/2015(UTC), Thomas James on 20/08/2015(UTC), Geoffrey Walter on 19/06/2017(UTC)
srg751
Posted: 28 April 2015 18:09:00(UTC)
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Hmmmm. No one wanted to pick that dirty stick up then.
Peter O'Hara
Posted: 28 April 2015 18:28:07(UTC)
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I've always found the Inland Revenue (HMRC.Co.uk) to be very helpful with matters like this. They're advice is accurate and free and if you end up having to pay fees, at least you've done due diligence.
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Geoffrey Walter on 19/06/2017(UTC)
srg751
Posted: 28 April 2015 18:37:45(UTC)
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And how many times have you "found them helpful".
Not too sure you've landed on the right planet Peter Ohara.
Peter O'Hara
Posted: 28 April 2015 18:54:47(UTC)
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I use my real name, unlike you;SRG751 . I have dealt with the Inland Revenue & Customs over many years. I have been subjected to VAT and Income Tax investigations but whenever I've made an enquiry for information, I have been provided with the information (eventually).
I cannot understand why law-abiding tax-payers who need information don't contact the Revenue online/phone/letter. THEIR ADVICE IS ACCURATE AND FREE !
srg751
Posted: 28 April 2015 19:15:25(UTC)
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You're bored and lost, you have s chip on your shoulder and need help. Seriously. Please seek help.
You've obviously had a bad financial experience and are targeting people whom you perceive as the "bad guys" .
Poor you. Poor poor you. Bye Peter Ohara, we won't be meeting again.
Jack Daniels
Posted: 29 April 2015 10:32:09(UTC)
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Hi srg751

Advice is now mandatory on DB transfers >£30k and your scheme will insist on it being taken before they will offer a transfer away. Any receiving scheme should insist on the same.

Since a transfer of this kind involves a loss of guarantees and benefits, and essentially a transfer of risk to you, or your new provider, it is a decision that should be carefully considered.

Historically it has usually been a bad idea to forfeit DBs but new pension freedoms and inheritance rules have shifted the landscape somewhat.

Advisers need a specialist qualification to do this work; there is potentially serious liability on recommendations and in terms of charging, it should be seen as equivalent to any other area of complex advice.

I think you will struggle to find an adviser willing to do that kind of work for anything other than thousands I'm afraid.

HMRC may be able to help on tax matters, but certainly not in this case!
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srg751 on 29/04/2015(UTC)
srg751
Posted: 29 April 2015 17:29:04(UTC)
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Thank you for taking the time Jack.
I've done the sums. Hypothetically, for a 48k pot, I can leave it and take 6k tax free and a 2k per year pension, or, I can put the 48k in my SIPP, take 25% tax free and invest the balance in a cautious distribution trust paying 4% divi with obvious capital gain/loss.
The death benefit is lost and the transfer to spouse on death is lost ( this was £480 per year) Phuu.
Still a no brainier.
Anyway, back to my O.P., I'me advised, as you have stated Jack, that £1500 is about right, so I may as well go with HL as I feel that they will provide the easier route. Thanks again.

961
Posted: 03 May 2015 09:52:34(UTC)
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srg751;27291 wrote:
Thank you for taking the time Jack.
I've done the sums. Hypothetically, for a 48k pot, I can leave it and take 6k tax free and a 2k per year pension, or, I can put the 48k in my SIPP, take 25% tax free and invest the balance in a cautious distribution trust paying 4% divi with obvious capital gain/loss.
The death benefit is lost and the transfer to spouse on death is lost ( this was £480 per year) Phuu.
Still a no brainier.
Anyway, back to my O.P., I'me advised, as you have stated Jack, that £1500 is about right, so I may as well go with HL as I feel that they will provide the easier route. Thanks again.



Have you spoken to HL informally by phone? They often have offers as a cashback when transferring into a sipp which may help to offset their advice fee. Certainly their service and web site are outstanding and the ongoing fees are now much more competitive than they were even a short time ago
srg751
Posted: 03 May 2015 10:14:48(UTC)
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Hi 961,
yes, I telephoned Hargreaves Lansdowne in the first instance.. Actually, they gave a much higher price than is indicated on their website. I'm going to tackle them again because what I was quoted over the phone is far more expensive than is quoted on the web site.
We have an appointment with a local IFA on Tuesday so I will update for anyone interested as I'm sure that we are not alone in this situation.
I am aware that a fee of £1500 to access £48k is a charge of aprox 3.25%. In context, it makes sense to do it, but, if I can get the advice for less, then I will.
I have to say though that there are several people frequenting these threads who could have answered my question/ querie in a couple of sentences. They have chosen not to. Their silence is deafening.
So I give an even bigger thanks to anyone who HAS offered their thoughts/ideas.
3 users thanked srg751 for this post.
martyn of sheepy on 03/05/2015(UTC), FAIR DEAL on 03/05/2015(UTC), 961 on 03/05/2015(UTC)
David 111
Posted: 03 May 2015 12:07:19(UTC)
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Perhaps the reason 'people frequenting these threads' have not commented is because they tend not to use IFAs and therefore can offer little in the way of helpful advice.
srg751
Posted: 03 May 2015 12:59:06(UTC)
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Hi David,
Several people who populate these threads ARE IFAs. And not one has commented. It's lamentable really.

If one stuck his/ her head over the parapet, then they, by nature of the question, would end up having to substantiate the charges. Hence the deafening silence. Ha.
David 111
Posted: 03 May 2015 13:01:51(UTC)
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I can only agree that IFAs are lamentable.

961
Posted: 03 May 2015 13:02:52(UTC)
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srg751;27350 wrote:
Hi 961,

We have an appointment with a local IFA on Tuesday so I will update for anyone interested as I'm sure that we are not alone in this situation.
I am aware that a fee of £1500 to access £48k is a charge of aprox 3.25%. In context, it makes sense to do it, but, if I can get the advice for less, then I will.
I


I'd be interested to know how you get on, particularly if you reach a situation where, having being compelled to seek and pay for advice, you end up not agreeing with it

That may sound like putting a damper on the whole thing. I don't want it to do that because I have friends who have gone that route very successfully. Problem iis, all IFAs are not the same. So, take time to think it through using your own nouse

I've been via Equitable Life, and an IFA who advised me after that and eventually said he couldn't, economically, continue to look after my business. He advised me to go to HL and, frankly, it was the best advice he gave me

The advice available on the financial web these days is quite frankly amazing. If you can take the time to look and consider and think, the sipp route is inexpensive and safe
1 user thanked 961 for this post.
srg751 on 03/05/2015(UTC)
Alan Selwood
Posted: 03 May 2015 14:44:40(UTC)
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The real problem with moving from a Defined Benefit pension scheme to a defined contribution one such as a SIPP is that the maths are pretty complex and really only a pensions actuary is going to be qualified enough to make a judgment. Even then, any conclusion will depend largely on the assumptions made in the calculations, and the standard assumptions permitted by pension regulators in calculations may end up being far from the truth in reality, and are often behind the curve because they are based on old data.

I personally would not dream of taking on such calculations professionally, even if I were still qualified (mainly because I was qualified in investment, not pensions).

Any advice given by a suitable professional is going to be part box-ticking, part mathematics, part actuarial, part stab-in-the-dark. But that is the result of the law getting involved to protect the innocent.

I do think that any investor should be given the option of declining the need for advice, subject to signing that he/she accepts fully the consequences of not doing so, and waives any rights to recompense, court action, etc.

When it comes to the scale of fees being levied, it is not far removed from those charged by private medical consultants, and though these always strike me as pretty exhorbitant, you do have to accept that a lot of unbilled time will have preceded working for any individual client in terms of initial training, follow-up training, costs of insurance against claims by clients, etc., etc.
4 users thanked Alan Selwood for this post.
srg751 on 03/05/2015(UTC), Guest on 24/08/2015(UTC), Mickey on 28/09/2016(UTC), gillyann on 17/05/2017(UTC)
srg751
Posted: 03 May 2015 15:15:38(UTC)
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Thanks Alan,
total sense as usual. It's actually a deferred pension from BT employment 35 years ago. I'd forgotten about it.
The transfer value is £48k, or I can let them keep it and they'll give me 6k lump sum and £1900 annual pension. The death benefit to spouse is half the money back and £400 annual pension for the first five years and then nothing.
It needs to go in the SIPP. No contest, especially as we have other pensions and are not reliant on this one.
I am all for protecting the vulnerable and I think that the hurdles put in place by the government are correct. I just feel as though it's cost me £1500.
Perhaps I'm just a tight Git !! Thanks Alan.
Alan Selwood
Posted: 03 May 2015 15:33:46(UTC)
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Is there no possibility of getting the trustees of the BT scheme to offer an alternative set of benefits (within the rules of the Scheme, of course) that would give you and your spouse a more suitable set of payouts in your particular case?
srg751
Posted: 03 May 2015 15:49:36(UTC)
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Alan Selwood;27358 wrote:
Is there no possibility of getting the trustees of the BT scheme to offer an alternative set of benefits (within the rules of the Scheme, of course) that would give you and your spouse a more suitable set of payouts in your particular case?




I've read through accentures (trustee) offer and the 2 option are take the transfer value or terms on offer.
We've got options on several other pensions as we've wrote to them all, and, this is the only one that makes sense to cash in.
i was surprised just how generous some are, when in fact I was always under the assumption that ALL pension providers were milking the day lights out of clients. Not the case.
Jack Daniels
Posted: 05 May 2015 09:58:36(UTC)
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Sadly you will have no chance of persuading the scheme provider to alter the terms of the benefits on offer (and in fairness, why should they?)

I too will be interested to hear what the local IFA quotes as an advice fee for this kind of work, if they want to touch it at all.

As stated above, a major part of the exercise is the transfer value analysis (TVAS) which is the actuarial/maths part of the work. This will produce a 'critical yield' figure which shows you what sort of performance you would need in the DC scheme to effectively match the benefits you could guarantee in the DB. This works on the presumption that you want a guaranteed annuity which is in most cases not at all likely.

This will become an increasingly common theme I anticipate, as record-low annuity rates produce higher and higher transfer values, and more and more people seek access to more flexible pension arrangements.
1 user thanked Jack Daniels for this post.
961 on 05/05/2015(UTC)
Neil Simm
Posted: 06 May 2015 11:08:38(UTC)
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I'll likely have to take this option of paying an IFA so interested on developments. I have 2 pensions both defined benefit with attached AVC pots both of which are over £30k.

I dont necessarily want to affect the core pensions however I would like to access both of my AVC pots but both (occupational) schemes Trustees are in the process of defining what freedoms they will support.

Anyone else in this position and how likely would you say it will be possible for me to maintain the core plan benefits while taking a tax free lump sum from the AVC's element with drawdown? I'm thinking that if the Trustees finally make a decision on direction of their schemes its going to cost me lots of money to access my AVC pots.

Any thoughts?

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