Defined benefit pension transfers

WE CAN ONLY OFFER YOU DB PENSION TRANSFER ADVICE IF YOU HAVE EITHER ALREADY RETIRED OR YOU WILL BE RETIRING WITHIN THE NEXT TWO YEARS.

IF YOU HAVE MORE THAN TWO YEARS TO GO UNTIL RETIREMENT WE APOLOGISE FOR NOT BEING ABLE TO HELP AT THIS POINT.


As IFAs and Chartered Financial Planners based in Wetherby, near Leeds, York and Harrogate, we are specialists in offering advice on the transfer of a defined benefit (e.g. "final salary") pension to a personal pension or SIPP.

We can help clients with DB transfers wherever they are in the UK. No face-to-face meeting is required. No fee is charged if a transfer does not occur.

Please note that we are currently only advising on defined benefit pension transfer values worth more than £150,000.

Our initial advice charge

If a transfer occurs then our full transfer advice fee, deducted from the transfer value as it moves to the new personal pension, is as follows:

  • £3,950 for transfer values below £300,000
  • £4,450 for transfer values between £300,000 and £500,000
  • £4,950 for transfer values above £500,000

This covers the work involved in the transfer as well as the very significant compliance, regulatory and liability costs involved in advising on defined benefit transfers.

Please note that the above fees apply to a transfer into an "income drawdown" pension. Additional fees apply for the purchase of a lifetime annuity - please ask for details.

Ongoing charges

We will provide expert advice on how to invest your transfer value, in order to meet your financial goals while taking an appropriate level of risk.

The total annual cost of your new pension, including the provider charge, fund management charges, and our ongoing advice charge, will typically be between 0.5% and 1% of assets per year, which is highly competitive by industry standards (the total cost of a SIPP with Hargreaves Lansdown, including their provider charge and the cost of a typical "active" investment fund, can be as much as 2% per year, or even more).

We can only provide advice on a DB transfer if we are also going to be providing you with ongoing investment advice for at least the first year after the transfer. This is because we want to be sure that the investments you choose will be suitable for your circumstances and appetite for investment risk. We would therefore set up a new personal pension (SIPP), with a mainstream provider such as Aviva or AJ Bell, to receive the transfer proceeds.

Should you consider a transfer?

Final salary pensions used to be the norm, but are becoming increasingly rare. They are offered by employers to their employees, and guarantee a certain level of pension income for life once you retire, regardless of how long you live. Even better, this income is usually inflation-linked so it will rise each year, and also guarantees a (usually lower) level of guaranteed income for your spouse if you die before him or her.

A guaranteed income for life is a very attractive thing, and for 90% of people will be the best option. However, if you have a final salary pension then you have the option of giving up your right to this income in exchange for a one-off payment into a new personal pension in your name.

Why would you do this? Well, most people shouldn't, but here are some reasons why it makes sense for some people:

  1. A final salary pension dies with you (or with your spouse) - you cannot leave anything to your children. In contrast, money in a personal pension can be left to whoever you wish - your spouse could inherit it, use some of it, then pass the remainder to your children when they die - all completely free of inheritance tax. As such, if you are worried about how long you might live, or if your main focus is passing assets to your children rather then using them to provide a retirement income, transferring into a personal pension could work for you.
  2. A final salary pension pays you the same amount each year (increasing with inflation). You have no control over it. However, a personal pension allows you to take whatever income you like from it, and for some people this flexibility is very important. For example, you might want to be able to release large chunks of money in some years, but take nothing in other years. You can do that with a personal pension, but not a defined benefit pension.
  3. If the employer who promised you the final salary pension goes bust then the pension scheme will be taken over by the Pension Protection Fund. If this happens then you will still get a guaranteed pension, but you might get a lot less than you were promised, and the annual increases with inflation might be lower. As such, if you are seriously worried about the financial health of your previous employer you might want to consider a transfer, especially if you are expecting a large annual pension income (more than £37,000 per year).
  4. Part of the appeal of a final salary pension is that it promises an income for your spouse if you die (usually 50% of the income you were promised). However, if you are unmarried this isn't of much value to you. Your priority might be to ensure that your children, or someone else, benefits on your death. In this situation transferring benefits to a personal pension could make sense.
  5. If you are an experienced investor and are willing to take a degree of risk with your pension fund then moving it to a personal pension and investing it could deliver strong investment growth between now and when you reach retirement age.
  6. Final salary pension schemes will start to pay you an income on your "normal retirement age" (usually 60 or 65). Moving your pension money into a personal pension gives you the flexibility to start taking it when you wish, whether that is 65, 70, or never.

If you think that any of the above might apply to you then you might consider asking your pension scheme for a "transfer pack" to see what final salary transfer value they would offer you.

Our process

Stage 1: Initial analysis (no fee)
This involves an initial review of your circumstances, the pension offered by the scheme, the generosity of the transfer value, and your appetite for investment risk, to see if we may be able to recommend a transfer.

If we feel that a transfer is clearly not in your interests at this point, we will explain why, and part company at that stage, and you will of course be free to get a second opinion elsewhere.

If we feel that we may be able to recommend a transfer then we will present you with a detailed initial analysis of the transfer value being offered, and the attributes of your pension scheme. This will include a personalised list of the potential disadvantages of a transfer, for you to consider.

Once you have read and responded to this information you may decide to proceed no further, in which case no fee would be payable, or you may wish to proceed to Stage 2.

Stage 2: Full transfer analysis with recommendation report

(This stage is also free if you go on to transfer out of your DB pension. However, there is a £495 fee if you decide to cancel the transfer process after we have produced a recommendation report, to cover the cost of our time in producing it. As such you should only ask us to proceed to Stage 2 if you are sure that you want to transfer out of your pension.)

We will supply the following:

  • A full recommendation report explaining why we are recommending a transfer.
  • An illustration from our recommended pension provider, showing all costs involved.
  • A full Transfer Value Analysis report (if appropriate) generated using industry-standard software.
  • The cost of securing an equivalent guaranteed income via an annuity (if appropriate)
  • A cashflow forecast model to show how a transfer out could affect your household finances in various scenarios, over the rest of your life.
  • Discussion of how a transfer could meet your objectives, and what other approaches might meet those objectives in a cheaper and less risky way.
  • A comparison of death benefits under the current scheme and if you transfer out.
  • A full list of the pros and cons of a transfer in your particular case.
  • Details of the pension provider that we recommend the transfer value is moved to
  • Details of the portfolio of investment funds that we recommend the transfer value is invested in once it arrives with the new provider

If having read all that you still want to proceed, and we are happy that you understand the risks involved, and that a transfer is still suitable for your situation, then we proceed to the transfer itself.

Stage 3: The transfer itself

We will complete the documents required by the defined benefit scheme, and the personal pension provider receiving the transfer value. We will then troubleshoot the transfer as required, until it is complete. Our transfer advice fee is deducted from the transfer value as it moves to the new SIPP.

Stage 4: Ongoing advice on the investments within the new pension

Once the transfer is complete we provide ongoing advice on the investments held, including when to make changes to the funds you hold as market conditions and your circumstances and risk appetite change, as well as advice on how to withdraw money in the most tax efficient way when you reach retirement age. We will write to you regularly with performance reports, market updates, and investment advice, and will provide you with as much ad-hoc advice as you want. We will take care of all the administration of the new pension, although we will always get your permission before carrying out any dealing.

To discuss our service please get in touch.

For our main pension advice page please click here, or to read customer testimonials click here.

"Matthew advised me on transferring my DB pension to a SIPP. I was very pleased with his personal service - it was very efficient and thorough. Like many people I thought I knew what I wanted before the review started, but Matthew was very professional and raised all the issues that needed to be considered - making my decision much more informed and considered. This level of professional capability combined with administrative efficiency made the whole transfer smooth and painless"

Crispin Finn, London

"I asked Wendy Cochran to review the benefits of moving a final salary pension scheme. They provided a very quick response to my initial request, asking me to provide comprehensive details about the scheme and once I had done this they provided a detailed report on my circumstances within 2 days. The report was comprehensive, insightful and completely free. They recommended I take no action. Given this denied them an opportunity to earn a fee I genuinely believe they acted in my best interests."

Andrew Pattinson, Leeds

Final salary pension transfer advice, Wetherby, near Leeds, York and Harrogate, IFA

Chartered Financial Planners. Regulated by the Financial Conduct Authority (FCA no. 603653).