Actual costs. We measured the time spent on an average DB case by the adviser and support staff and the external costs as a third party is used to prepare something called a “Transfer Value Analysis”.
Typically the cases we advised on were £500k plus so as a percentage the costs were not disproportionate. However, as mentioned above, fees are no longer contingent on the transfer proceeding so clients can face a hefty fee for being told not to do anything. Whilst the reasoning is understandable (i.e. advisers not being incentivised to advise clients to transfer just to generate a fee) the result is fewer people prepared to take advice in this area.
It remains the case that the starting point is “it is not in your interest to transfer out of a DB scheme” so perhaps it’s not a bad thing that less people are considering doing so.
Taking the OP’s sister in law’s case for example, £2k p.a or £63k transfer sounds like a no brainer. If, however, she wanted to use her personal pension to buy annuity of £2k pa (to match the DB scheme it would have a spouses pension and probably RPI increases) it would probably cost c£90k so is it such a clear cut decision? Without any extenuating circumstances the advice would almost certainly be don’t transfer it.
