Advisor recommendation - CETV transfer from DCS

[AC2022]

I’ve already posted this in Investments. Not sure where it should be…

Hi

DH has a DCS pension due out in 2026. We requested a CETV in 2020 but the valuation was low and our FA advice was not to proceed. We have to take advice because the pot is worth over £30k. We have applied for another CETV but don’t want to use our FA because they declined before. We know that we want to cash it in and are happy to go against advice.

Can anyone recommend a FA they’ve used to transfer out of a DCS?

Thanks

Should be DBS. It’s a final salary pension. Sorry.

Have you checked with the pension provider as to what they’d need to enable you to proceed? They have to cover their backs before they let you give up a valuable benefit, so it depends on their risk appetite as to whether they let you proceed without advice or whether they’d accept something like evidence that you’ve had advice and for you to declare that you’re knowingly going against the advice.

Interesting. It’s a LGPS so I’m not sure if there’s a blanket policy. I’ll look into that. Thank you.

You also need to work out where you're transferring it to. Some providers wouldn't accept a DB transfer going against advice, so work that out alongside approaching the DB trustees. ^

By the way, a fresh piece of financial advice is likely to give you the same answer unless something has materially changed in your life. It's not a case of just pick a more amenable adviser, it's all very heavily regulated and the process and conclusions are likely to be the same.^

Wow, not sure where all the italics came from!

Can you even do that? I thought if your pots added up to more than £30k you weren't allowed to cash out?

The £30k cetv limit is the cut off where you are required to have financial advice before transferring a DB scheme to another scheme. Under £30k cetv you don't need it.

www.lgpsmember.org/your-pension/thinking-of-leaving/transferring-your-lgps-pension/

Ah I was reading it as "taking the cash" - 100% of the value as a lump sum, not transferring to another scheme.

Transferring out of the LGPS? You are nuts.

Guaranteed income for life.

If you really want ££ rather than a monthly pension, take the maximum cash value at state retirement age. If you want more than this, I believe this is possible but there will be a tax implication.

Thank you for the ideas. Just a bit of background-

The pot is worth what our mortgage is at the moment (approx 130k). If we take the max lump sum at 60 that will be £30k and £380 per month gross, likely £270 after tax. We have a high interest rate on the mortgage and we could save £105k in interest alone if we cash it all in to repay our mortgage. DH would need to live 25+ years to make that back at £270 per month.

We would be comfortable in retirement without this pension fund.

@GretaGarbled That’s my concern at the moment. When we took advice in 2020 the rules were slightly different in that there was no fee for the advice. Since Oct 2020 you have to pay a % of the value for the advice whether you proceed or not. For us that would be around £3k.

So you just want to take the entire value in cash, not transfer to another scheme? I honestly don't think that is possible without some hefty tax penalties

If you take a CETV and then take the entire pot as a single lump sum the tax bill will be enormous. Financial advisors know what they're talking about!

If you read the money supermarket forums, you will see that it is difficult to get financial advice on this type of transfer even for a percentage fee. Then, if you get such advice, it will say they don’t advise you to go ahead. You might think you can then insist on going ahead as an insistent client but no pension provider will accept these transfers now. Back in 2020, there were some providers who would accept but this is no longer the case. PPs are also correct that, if such a transfer was possible, the tax bill would take a huge chunk away.