Why Use Tideway s Final Salary Pension Transfer Advice

Transcription

1 Tideway Why Use Tideway s Final Salary Pension Transfer Advice June 2015

2 Why Use Tideway Specialist Final Salary Transfer Advisers Taking a final salary pension transfer is a complex irreversible transaction and as with most complex transactions it makes sense to seek help from a specialist. Tideway s advisers have handled over 500 final salary transfer enquiries from more than 70 different schemes in 2015 so far. They understand the pros and cons of taking the transfer route and how to optimise the transfer flexibility without taking too much risk with your transfer funds. Conservatively Managed Investment Strategy Taking a transfer offer now cashes in on ultra-low interest rates. Having secured this low interest rate bonus it makes no sense to lose it again by investing in rate sensitive investments, which will fall when interest rates rise. Tideway s Target Return Portfolio is specifically designed for pension drawdown investors and is acutely focused on protecting capital and generating conservative returns without putting funds at risk to rising interest rates. Click the link to download the latest factsheet. Secure Flexible Pension Provider Choices Tideway are advisers and investment managers and as such we don t provide pension contracts, nor handle your transfer funds or pension investments. Tideway will select a cost efficient provider solution for you based on your transfer size, planned investments and investment management process. Our providers are selected from the whole market based on their competiveness, quality of service and security. Tideway receives no commissions from any provider and has no commercial links with any provider. Our pension providers are generally big brands supported by other advisers such that if you ever feel you want to change your adviser service or investment strategy you will have options and choices that won t require you to immediately change pension provider. 1 Why Use Tideway s Final Salary Pension Transfer Advice

3 Third Party Investment Fund Choices Recognising that some clients will be more comfortable investing some of their funds with alternative fund managers, Tideway can recommend a selection of funds from leading managers and insurance companies that can be used as an alternative, or alongside Tideway s Target Return Portfolio. A Selection of Tideway s Pension and Investment Account Providers Insurance Companies Online SIPP Providers Trustee Investment Accounts for Discretionary Management Specialist SIPP Providers 2 Why Use Tideway s Final Salary Pension Transfer Advice

4 Final salary transfers explained Competitive Fees 1% Initial Advice Fee Tideway s initial advice fee is 1% of the transfer value, which is billed against your pension fund after the transfer has completed. We don t charge for an initial appraisal and any meetings or discussions prior to the transfer advice process and we don t charge if you decide not to proceed. The fee is for handling the transfer and setting up your new pension arrangements as well as for the advice and as such is not subject to VAT. If you are taking your tax free cash straight away Tideway will take its initial fee from your drawdown account once the cash sum has been paid to you. This maximises your tax free cash sum and makes our fee tax deductible against the income tax paid on withdrawals. 1% p.a. Ongoing Advice and Tideway Investment Management Taking a transfer is an ongoing commitment to invest your fund sensibly and optimise your ongoing withdrawals. The majority of clients appoint Tideway as ongoing advisers and investment managers, however we are also happy to help more experienced investors who don t want ongoing advice and want to manage their own investments. Tideway s standard ongoing fee is 1.35% p.a. for ongoing advice and investment management. A loyalty discount reducing this to 1% is available for loyal clients who stay with Tideway for 3 years. You can opt to get this loyalty discount from day 1, so please ask your adviser. Ongoing fees are deducted from your account on a monthly basis and as with the initial fee, are not subject to VAT. 3 Why Use Tideway s Final Salary Pension Transfer Advice

5 Third Party Fees Target 0.5% p.a. Total Costs Target 1.5% p.a. The level of third party costs you have will depend on your chosen pension solution and the extent to which you invest in third party funds. Third party fees will be detailed in your initial advice report. A solution that is fully managed by Tideway will usually be cheapest for larger accounts above 250,000. Below 250,000 a simpler solution with funds managed by an insurance company which also acts as the pension provider will be more cost effective. Our target is to keep total costs at 1.5% or less for a Tideway managed account or insurance company plan. This will cover advice, investment management and the pension plan costs. 4 Why Use Tideway s Final Salary Pension Transfer Advice

6 Tideway s Final Salary Transfer Advice The advice process can be seen as a 5 step process with the first 4 steps effectively constituting the initial advice process and step 5 the ongoing advice and investment management. Step 1 Confirm the Suitability of the Transaction We are happy to do this on a free of charge basis before you formerly engage us as advisers and it s a great way to find out how Tideway works and for you to get to know us. Tideway s advisers will take a rounded view as to the suitability of a transfer for you based on the following four factors: 1. The relative size of your transfer offer compared to the pension you will leave behind 2. Your ability to withstand any drop in income below the guaranteed scheme pension in retirement 3. Your objectives and desire to use the funds differently than to create a fixed lifetime income similar to the scheme benefit options 4. Your confidence and competence to deal with the extra responsibilities that come with an invested fund We provide the relative size guidance in our initial appraisal and we can discuss the other three points by , in telephone conversations, or in a face to face meeting if you would like to come to our office and meet us. Step 2 Establish a Plan Having agreed that the transfer makes sense for you, the next step is to work out what to do with the funds. In the first instance they will need to be transferred to another UK registered pension scheme, the planning stage will therefore include: 1. Looking at what withdrawals you will want to make and when 2. Deciding how you want to invest the transfer funds 3. Deciding on the best provider solution to meet your requirements 5 Why Use Tideway s Final Salary Pension Transfer Advice

7 It s all about a good plan There is a common misconception that the initial advice on the transfer is simply a yes or no issue. Should I transfer or not? Whilst in practice, the key to a successful transfer is to have a sound plan. How do I make maximum use of the transfer value in terms of the withdrawals I make? How do I control my investment risks so I don t lose the money I want to save whilst making enough return to be better off than staying in the scheme? This is where Tideway s experience and expertise can add enormous value to the transfer process. Do I take my tax free cash in one go or spread over time? Can I make ongoing contributions if I take the cash sum, and would it be worth it? How do I minimise the impact of the Lifetime Allowance? What investments should I hold in my pensions versus in my ISA? How do we optimise our tax position as a couple and as a family? Should I use a SIPP or an insurance company plan and which SIPP would be best for me? Should I invest in equities and if so how much and which ones? What happens if interest rates start to rise, isn t it risky to be in bonds if they do? Tideway thinks deeply about all these issues on a daily basis and has helped hundreds of clients work through these choices and decisions. It s not uncommon for us to recover our fees several times over, in terms of tax savings alone, by helping clients finesse these and many other decisions. Many clients will remember the stresses caused by the equity market crashes of 2008/9 and 2002/3. The nature of investment markets is such that its almost inevitable similar events will occur again in the next 20 years, which will be devastating to the unprepared and over exposed drawdown investor. 6 Why Use Tideway s Final Salary Pension Transfer Advice

8 Step 3 Create a Report and Review Tideway s adviser team will write up your transaction in a comprehensive report covering: A full explanation of the scheme benefits that you will leave behind; How the transfer will work, how your benefits will change and timing considerations; A more detailed assessment of the transfer option comparing what you might get from the transfer route versus staying in the scheme and based around your specific withdrawal plans; A description of your pension provider solution and the associated third party costs, and A full description of the risks of the transfer and reasons to take it in your position. Once the report is complete and we have answered any questions it creates, we will ask you and your spouse or partner (if applicable) to sign off a due diligence questionnaire to confirm you have understood all the key aspects of the transaction. Step 4 Implementation Tideway s adviser team will help you: With paperwork, or online applications to establish the pension that will receive your transfer value; To complete the discharge papers to release the transfer value from the final salary scheme, making sure you meet the deadline to receive your guaranteed transfer offer; Apply for any immediate withdrawals of tax free cash or taxable income, and Arrange for the investment of your saved pension funds. During the initial advice process Tideway will ask you for a letter of authority from you to enable us to speak to your pension scheme on your behalf. This enables us to check any details missing from the transfer offer that we need for our advice and also to liaise with the scheme to make sure your transfer request paper work is complete and on time. 7 Why Use Tideway s Final Salary Pension Transfer Advice

9 Step 5 Ongoing Investment Management and Review Completing the transfer is the start of a lifetime process of looking after your personal pension fund. Tideway s advisers and asset management team can help you look after your irreplaceable pension savings by keeping them properly invested and working out and processing your most efficient withdrawals. Throughout the initial and ongoing advice process Tideway advisers are available for phones calls, exchanges and for face to face meetings at our offices to answer any questions you have and discuss your position and objectives. 8 Why Use Tideway s Final Salary Pension Transfer Advice

10 Common Questions and Answers Q What happens if you tell me I can t take the transfer? A Firstly it s not for us to tell you that you can t take the transfer. Ultimately is your choice, your money and your decision. However regulators are concerned on two fronts. Firstly that members might make bad decisions, attracted by the promise of cash in hand now and failing to put the right value on long term income security. Secondly that members will fall foul of scams and fraudulent advisers. Hence the introduction of a legal requirement for you to obtain advice from a properly qualified and authorised adviser, the evidence for which will be checked by both your old scheme and your new plan before the transfer will complete. If we don t think it s a good idea for you to take the transfer we will tell you as quickly as we can and will explain why in writing, based on one or more of our four suitability points laid out in step 1 of the initial advice. There will be no fee for this advice from Tideway as we don t think it s reasonable to charge a fee for telling someone to stay in their scheme. However, this does not stop you taking the transfer. Our advice note telling you why we think you should not transfer is sufficient evidence to prove that you have had advice and this should satisfy both your old and new scheme providers. Please note in this situation Tideway will not arrange the transfer transaction or provide any ongoing advice services. This decision is Tideway s. We are not obliged to arrange transfers on demand. Q I have a small transfer offer but over the 30,000 limit where I must take advice and I want to take my transfer and cash up my pension straight away. Can Tideway help me with this? A Unfortunately this is not something we can help with right now. We can see perfectly good reasons why people will want to do this but it s not something Tideway, or Tideway s preferred pension providers are geared up to facilitate commercially at present. Our costs for taking you on as a client and giving you the advice coupled with the provider s costs of setting up a new scheme for you, accepting in the transfer money, working through the tax deductions and paying you the net funds is too high bearing in mind the sums involved. The new pension rules are only a few months old and our stong advice if you are in this situation is to wait a while. We believe that new providers will emerge to process these transfers and withdrawals more cost effectively. Please feel free to register your details with us and as and when a solution emerges we will let you know. Q What will the transfer advice cost be if I decide not to go ahead with the transfer? A We don t make any charge if at any stage you decide you want to stay in the scheme. 9 Why Use Tideway s Final Salary Pension Transfer Advice

11 Q I have heard of some big brand pension companies but I have not heard of Tideway. Will my money be save with a smaller company? A Tideway is an intermediary adviser and an investment manager and as such we don t provide pension contracts, handle your funds or investments. This is all done by our third party providers who we vet for security and quality of service. All these firms are FCA authorised and keep your funds and investments ring fenced from their own capital in separate nominee and client accounts. So unlike a deposit investor in a bank your money is never at risk to the failure of either Tideway or one of our product providers. Where funds are held on deposit these will be with the largest high street clearing banks and larger balances are spread over more than one deposit taker. Importantly having more than one firm involved in the custody and care of your pension funds creates a number of independent checks and balances to ensure your funds are looked after correctly. You will always have access to at least two valuations and contact points in respect of your investments, those being Tideway and your product provider. Q I have been to see other IFAs who won t advise on final salary transfers. Why is this? A. Final salary pension transfers are specialist transactions requiring specialist advice from appropriately qualified advisers. Not all firms employ these specialist advisers or are geared up to provide this advice. Q Is my transfer offer bad if it s lower than the calculator on your website suggests? A Not always. To keep the calculator simple it has to be a simplification of the transfer value calculation. So sometimes the transfer offer is lower it can still be generous. This can be for younger ages, for schemes where benefits are not all linked to inflation and for older normal retirement dates. Q How long does the advice and process take? A Schemes have two months to provide you with a transfer offer when you request one. The offer when it arrives should be guaranteed for three months to give you time to get your advice and arrange the receiving plan. Assuming Tideway has all the information it needs to complete the advice the initial advice process can usually be completed in around two to four weeks. Having applied to take your transfer some schemes are taking anything up to six weeks to pay out the transfer sum. If you are taking immediate tax free cash this can usually be processed within a week of the funds arriving at the new scheme. So to be conservative you should allow six months, from asking for your transfer offer to having access to the funds, but it can be quicker. Q I rarely travel to London. Do we need to meet? A No, the whole process can be completed by and telephone. However we are always delighted to meet our clients and many find it very helpful to have at least one face to face meeting and often more. 10 Why Use Tideway s Final Salary Pension Transfer Advice