Principle 3 Understand Our Fees Charges for Pension Transfers

We quote fees for Defined Benefit/Safeguarded Rights Advice in two stages:

• Stage 1 is the analysis as to whether it is in your best interests and wellbeing as well as meeting your needs and objectives and is advisable for you to transfer or remain in your scheme
• Stage 2 is the implementation of the transfer (if it is agreed that the transfer is to proceed).

Stage 1: Fixed Fee Element – Feasibility and Analysis.

To gather detailed pension scheme benefits information from existing scheme trustees.  To conduct a full, FCA (regulatory) prescribed, pension scheme and comparison analysis, where applicable:

These are known as an Appropriate Pension Transfer Analysis (APTA) and a Transfer Value Comparator (TVC).  Where we will conduct an initial review of your pension, secure all information from scheme trustees and establish the feasibility/suitability of the scheme for retention or using Pension Transfers as a solution and then advise whether it is in your interests to transfer or not. 

This will include transfer value and replacement annuity cost comparison, critical yields/growth returns needed, a scheme funding review, scheme rules, revaluation rules whilst 'frozen', increases when pension income being paid, any history of discretionary benefit improvements or not, your health, longevity, marital status, future projected income, expenses, cash flow needs and other overriding factors that may influence the decision to transfer or not. 

All documented in a full written report.  

If the final decision is to retain the pension as is then works stop at Stage 1 and concluded.  If the final decision is to transfer out to another pension scheme then we move to Stage 2.

Stage 2: % Risk Fee Element – Pension Transfer Application (if transfer proceeds). 

RISK FEE:  We charge a risk fee to reflect the high risk nature of defined benefit and safeguarded rights pension transfer advice.  You may have already struggled to find a financial adviser that still offers advice in this area.  This is because many simply cannot secure insurance cover or perhaps their standards have not been as they should be as there have been many ‘mis-selling’ complaints and much compensation.  Indeed, MPs are calling for some rogue advisers to face criminal proceedings.    You will note in these Pension Transfer Gold Standard Education videos that there is a huge liability on the few firms, like us, that are still able to offer advice on pension transfers in terms of research, reports, record keeping, reporting each and every pension transfer individually to insurers and then the costs of maintaining Professional Indemnity Insurance to protect both you and ourselves, not just for this year but for the coming years and each time we take on a new pension transfer client, these costs will likely increase.  The premiums for our firm are currently the equivalent of two full time administrator salaries in addition to a policy excess of £20,000 for each every claim.  This is huge cost for a 2 person practice.  Our risk fee charge reflects and covers those costs and risks not just for today but also future years.

If the advice is to transfer, we conduct in depth research, advice and analysis for pension transfer to various types of pension scheme depending upon your needs, requirements and objectives.  It will include research and reports on suggested pension portfolio including pension transfer recommendations plus HMRC liaison (where applicable) and including fund sector recommendations and provider/installation and application to completion.  Including transfer application documentation and paperwork for the proposed applications, including implementation will be handled by us to completion and acceptance of terms.  Stage 2 can be paid directly by you or from the pension fund.

Why is the stage 2 risk fee a % of the Transfer Value?

In very simple terms, the liability we take on for a £500,000 transfer is lower than that for a £50,000.  The higher the transfer value, the greater the impact on professional insurance premiums and excesses, the greater the potential impact on regulatory costs, ombudsman costs and compensation scheme levies.

Both Stage 1 and Stage 2 fees are 'ONE OFF' fees.  There is NO ONGOING % adviser charge paid to us, unlike many other advisers who take an ongoing % each year meaning more of your investment and growth stays in your fund.