Low value DB pension transfer? Please sign a petition

[Tinsey]

Having battled unsuccessfully the problem of my low value pension transfer, I have created a government petition to allow an opt-out of the financial advice for low value DB pensions transfers.

There has been something in the news they are trying to simplify consolidation in 2030 but not sure I will live long enough as I am in my 60s (my pension transfer is about £100k but I was also told that most providers don't accept new funds under £250k).

Can I please ask you to sign and share if possible. I will also post it on MSE at some point but any ideas where else to go with it gratefully received.

petition.parliament.uk/petitions/652230

Again demonstrating that you don't understand DB pensions.

@lolawasashowgirl I would like to transfer DB to DC to have it as a pot, b/c I don't need the money now but I will in the future so for flexible access.

@ Chewbecca transfer value changes but if I was to take the pension, it's based on my ancient salary and years of service etc.

Usually the pension amount is your ancient salary adjusted for inflation though. Are you really sure it's £1500py? It doesn't sound right. You might be pleasantly surprised! You could take it and stick it in a savings account or ISA if you don't need it right now. (Depending if the amount payable per year increases if you defer payment and how good the deferral rates are)

Yes, that was the pension quote

£1500 p.a. when? The date you left service, your normal retirement date (estimated), if you took it now with an early retirement reduction?

Those three annual figures would be quite different.

My retirement date.

Possibly the same as many of us with (relatively) trivial annual pensions from legacy DB schemes we were members of many years ago would like to achieve. The income will make little to no difference to our retirement income at 60/65/67 (choose your scheme's retirment age), but transferring out gives more flexbility and a better return for our needs. The spousal benefits included are, due to early widowhood, no longer required. The default retirement age of these schemes doesn't fit with our retirement plans, which have been funded by other investments / pensions. The investment decisons made by DB schemes are inherently conservative, driven by regulation, rightly, to protect the scheme. But for those of us retiring early, moving out of equities to soon is the wrong thing to do. And then there's the desire to leave any residual to beneficiaries of our choice ragtehr than being swalled up by the scheme.

The logic is that the government don't want people who don't understand pensions to transfer out of a DB pension and leave themselves worse off (which almost always happens) because then they will have to pay out more in benefits (pension credit etc) when it all goes tits up.

Seriously OP you are lucky to have a DB scheme. Most of us with DC schemes would happily trade. Take a look at how much you would have to put away in a DC to get out the equivalent to what you stand to get from your DB scheme.

When was that £1500py given on leaving or on your retirement date itself?

I appreciate it isn't what you are asking but I do think it is worth exploring the possibility that you have misunderstood your annual payment due as it is unlikely your CETV is £80k in exchange for a current annual pension of £1500py. You could have a happy surprise. It's more likely to be in excess of £3000py.

@Elphame I think you got gat a bit wrong, we need protection from profiteering advisors

that

I left in 2016.

Yes I earned a decent income but considerably less than you might imagine and the stress is enormous. Peoples financial futures depend on the decisions I made and events like the collapse of Lehman Bros which almost derailed the entire global economy kept me awake for many nights.

You also have no concept of the size of the insurance premiums for DB transfer advice!

What actually was the last straw for me was having to turn people away as they were unable to pay the fees. The regulatory burden and the banning of cross subsidies meant that giving any pro bono advice even when it was obvious and would have taken me 2 minutes, was no longer possible.

The true IFA is now an endangered species. The average age in increasing and those coming in are more salespeople than actual advisers. Most are tied to investment houses and just sell models.

Exactly my point and why the few that are left can charge an arm and a leg.

I for one minute don't expect FA paying PI out of their own pocket without charging it on.

I am not saying don't provide advice, if someone wants it then of course they can.

That's the problem though - without the mandatory requirement for financial advice thousands of people will potentially transfer products at great financial loss to themselves. The premise of your petition is totally wrong - you want to remove those protections so that people in your circumstances- who will most certainly be in the minority- can have their financial needs met.

You'd be better to petition for more reasonable charges. The requirement for advice was brought in for very good reasons.

😂 what a joke. As someone who works in the industry I’ve never read such nonsense

Such nonsense as the petition? (It has 29 signatures so far!!)

Yes the petition. Those 29 people are probably the same as those people who transferred out many years ago and then come crying back to DB schemes once they realise their mistake.

But a, probably uninintended, consequence is that those of us with 'orphaned' DB pensions from early on in our careers now find oursleves having to pay what might be 10% or 15% of the transfer value for advice to do what we want with our own money. I think that more people that started work just before these schemes start to collapse , probably a five year window, will realise they've been stitched up as they get closer to retirement. It's those of us from that cohort that are leaving the workplace earlier that are discovering how limiting the rules are.

In my case I was a member of 2 DB schemes when I first started work, each for less than 2 years and each of which will pay me a pension at 65 of £2 or £3k a year. That forms a relatively trivial part of my overall planned retirment income, but they have a combined transfer value of somewhat more than 6 figures. Now, I can get a better return than the DB schemes on that because I am happier to remain in equities for the long term, I don't need a spousal pension (my husband died) and want to access it from my planned retirment at 55 without an actuarial reduction.

It would seem more appropriate to lobby for a change along the lines of "freedom to transfer DB benefits as long as the transfer value in total for all DB transfers is less than (pick your own %) 20% of the value of all your pension funds at the time of transfer"

I resent having to pay £10k or so for someone to write a report that will be couched with so many caveats as to not really be worth the paper it's written on, even assuming you can find someone willing to take on the business, and a pension fund willing to accept the tranfer. This constant dumbing down to the lowest common denominator is very unhelpful

when I first started work, each for less than 2 years and each of which will pay me a pension at 65 of £2 or £3k a year.

Do you realise how amazing this is?

@Tryingtokeepgoing how do you propose that the provider of the receiving scheme ascertains that a customer's DB pension income is worth no more than a certain percentage of their overall retirement income at the point of transfer?

I imagine that it can be done for a lot less than £10k! All that's needed is a statement from your DC pensions scheme(s) and a transfer value from the DB scheme

Well yes, it's a great return on 3 or 4 years employment, which is broadly why these schemes are unaffordable for employers. But it's a worse than average return on the transfer value, and an appalling return if it's reduced by a third or more when taken early (assuming that the scheme even allows that). Added to which it disappears when I die