Confused about uk pension transfer offer.

[sunnywalk]

I recently recieved a transfer value from a uk private deferred defined benefit pension that I had when I worked in uk many years ago. I am back in Ireland over 10 years.
They outlined my options which are all uk options.
Ie transfer out and avail of flexible benefits at 55. Do nothing until retirement age ( I am 51)
The company is offering free financial advice to help with decision making.
I told them I am in the republic of Ireland so I am awaiting on outcome of that. Either way I understand I must avail of financial advice if I do decide to take transfer option.
The transfer value is 368 sterling. Guaranteed annual pension currently stands at 10660 sterling and will rise 5% every year until retirement.
I am confused as in all the literature I have researched it states due to uk rules any flexible benefits ie drawdown, tax free lump sum 25% are only available at age 55. Looking at irish sites I am reading in roi it is age 50 that flexible benefits can be assessed and the taxfree lump sum is 30% or €200k.

I know I need advice. Could any of you experts on here clarify what my irish options are if i did decide to take transfer value?
I am considering my options particularly in light of brexit.

 

[jpd]

Presumably the 368 sterling is £ 386,000.
Taxfree lump sums in Ireland are usually 25% not 30%

It is unlikely that Brexit will have an impact on the defined benefit pension fund obligations - other than any fall in sterling, if any
It may be difficult to get a transfer to an Irish Pension product but not impossible.
An important criteria is the status of the defined benefit fund - is it well funded? will the company stand behind it in case of future problems?

I had a similar experience some years ago, but the fund was reasonably well funded, and the company was making good on its promise to continue funding so I stuck with the fund and now draw a pension monthly. A guaranteed 5% rise every year to retirement is not to be sneezed at

 

[sunnywalk]

Presumably the 368 sterling is £ 386,000.
Taxfree lump sums in Ireland are usually 25% not 30%

It is unlikely that Brexit will have an impact on the defined benefit pension fund obligations - other than any fall in sterling, if any
It may be difficult to get a transfer to an Irish Pension product but not impossible.
An important criteria is the status of the defined benefit fund - is it well funded? will the company stand behind it in case of future problems?

I had a similar experience some years ago, but the fund was reasonably well funded, and the company was making good on its promise to continue funding so I stuck with the fund and now draw a pension monthly. A guaranteed 5% rise every year to retirement is not to be sneezed at

Thank you for letting me know your experience. I am aware and fully understand there is significant value in just leaving pension as is.
I do want to fully understand my options regarding a possible transfer to Ireland as I am coming across conflicting and confusing information.
You stated it could be difficult but not impossible to get a transfer back and that is what I would like to understand better. I would also like a recommendation for an financial advisor knowledeable on uk pension transfers. I can see there are loads of companies when I google, but would like recommendations.
Good to hear brexit will have no impact if I decide to keep my existing benefits in the UK.

I would also like to have full understanding of my irish options....if there are any.

 

[Marc]

Part of the confusion comes from being "offered" a transfer value.

Imagine if they hadn't sent you a cash equivalent transfer value and at normal retirement age you just received the guaranteed inflation protected pension for the rest of your life and 50% to your partner for the rest of their life - would you even have asked the question I wonder?

The default should almost always be this. You should remain in the scheme unless there are very good reasons for coming out.

If you do decide to consider your options under UK law you are required to obtain an analysis from a suitably qualified UK adviser.

There is a reasonable amount of complexity to consider here which is made slightly more complex by the cross-border nature of the issue.

Certainly worth getting extremely specialist advice on this.

Marc Westlake CFP, TEP, APFS, EFP, QFA

Chartered, European and Certified Financial Planning Professional and Registered Trust and Estate Practitioner
www.globalwealth.ie

 

[sunnywalk]

Part of the confusion comes from being "offered" a transfer value.

Imagine if they hadn't sent you a cash equivalent transfer value and at normal retirement age you just received the guaranteed inflation protected pension for the rest of your life and 50% to your partner for the rest of their life - would you even have asked the question I wonder?

Thanks Marc.


I had been considering this before the company offered this recent transfer. I requested a transfer statement over a year ago to consider my options as I was reviewing my whole retirement planning ( I have an Irish company pension too) the company have offered me a transfer that is around 30k more then it was a year ago.
They have provided free uk financial advice who told me as I was based in republic of Ireland they could not advise me. I went back to company that looks after pension and they confirmed I need Irish advice.
Before I look into getting irish advice I did a little research and thats where I found it all very confusing possibly due to the complexities you mentioned.
Is it possible to get a transfer to ireland at this stage that avoids high uk tax as I understand this is a risk? And if so is it possible to avail of lump sum from age 50 ( irish rules)or would that fall under uk rules of age 55?
Many thanks

 

[Marc]

We are currently advising another client in a very similar situation.
UK defined benefit already transferred to Ireland. Now considering early retirement and needs to consider all of the issues around UK tax exposure and Irish Pension rules. We are currently awaiting an answer from HMRC.

Its a very complex area and yes you do need both UK and Irish specific advice on this. Unfortunately, an unregulated mostly anonymous board isn't really the place to do it.

Our minimum fee is €2,500 plus VAT and you might also need to pay a UK Defined benefit transfer specialist. Their fee is £2,000 inclusive of VAT.

So, you would potentially be looking at around €5000+ in fees with a high probability that the advice would be to remain in the current scheme.

This is why in the UK the regulator, the FCA, has introduced a "triage process" whereby people considering their options are given access to the facts and are able to consider their options without necessarily getting a "full advice" service.

I think you have convinced me there is a need to introduce such a service in Ireland.

I forgot to say: The "free" advice probably costs £11,500 when you are encouraged to take the transfer! That's 3% of your pension fund!

 

[sunnywalk]

We are currently advising another client in a very similar situation.
UK defined benefit already transferred to Ireland. Now considering early retirement and needs to consider all of the issues around UK tax exposure and Irish Pension rules. We are currently awaiting an answer from HMRC.

Its a very complex area and yes you do need both UK and Irish specific advice on this. Unfortunately, an unregulated mostly anonymous board isn't really the place to do it.

Our minimum fee is €2,500 plus VAT and you might also need to pay a UK Defined benefit transfer specialist. Their fee is £2,000 inclusive of VAT.

So, you would potentially be looking at around €5000+ in fees with a high probability that the advice would be to remain in the current scheme.

This is why in the UK the regulator, the FCA, has introduced a "triage process" whereby people considering their options are given access to the facts and are able to consider their options without necessarily getting a "full advice" service.

I think you have convinced me there is a need to introduce such as service in Ireland.

I forgot to say: The "free" advice probably costs £11,500 when you are encouraged to take the transfer! That's 3% of your pension fund!

Thanks Marc for your comprehensive detailed reply and potential costs for formal advice. Its a starting point for me to support me making a decision as I didnt know what advice costs would involve.
The uk advice "may"be paid for by the company in question.

 

[sunnywalk]

I have since found out ( If I was able to get a transfer back to Ireland) that I would not be able to access flexible benefits until 55 regardless of Irish Rules.
That was one of the main things I wanted to know.

Thanks again Marc for your insights and information of potential costs for advice/ transfers.