Transfer at NRD but not crystallising immediately - TVAS?

Navigator

This is probably a stupid question, but I can't find a definitive and clear answer anywhere.

A client's NRD is in October - age 60. The scheme issued a retirement illustration, which includes a transfer value. Having done the initial analysis, including cash flow, there is mileage in exploring a potential transfer. The question is: do we need a TVAS?

The adviser thinks not because we're close to NRD. However, the client is not planning to crystallise immediately on transfer to DC (hypothetical at this stage) and is likely to work for at least another 5 years to age 65. So I'm thinking that we do need one based on age 65 and taking into account late retirement factors, etc.

The COBS rules seem to only refer to TVAS not being required when the transfer at NRD is followed by immediate crystallisation. I also know it is required if the transfer is before NRD, even if crystallising straight away. But I can't find anything that confirms requirements for transfers at NRD without an immediate crystallisation.

Am I overanalysing this? Can anyone help? Many thanks.

arongunningham

You're right, a TVAS is required.

The only time it's not is a transfer at NRD AND immediate crystallisation (and that's because the information you receive from a TVAS is for a future retirement date)

Suse1969

Agree with @arongunningham

richallum

We'd do a TVA in this case. Not sure about the exact COBS position on this but @benjaminfabi will know.

benjaminfabi

What Aron said.

Both criteria in COBS 19.1.2a need to be met for a TVAS not to be required. In this case, the client doesn't intend to retire immediately, even if you wait until post-NRD in a couple of months. Is the adviser a PTS?

This particular scenario also requires a non-standard analysis. Here's what I'd do:

TVAS to age 60 and 65 (or whatever is the proposed late retirement date). Ignore the figures to age 60 but explain why you've ignored it in the file - NOT THE REPORT. You've ignored it for three reasons: it's nonsense because it's a term of less than one year, it's not when the client is going to retire, it's an anomaly in the rules and you have actual scheme figures to compare to the actual current market given the very short term.

Then, I'd do a real world comparison at NRD, just to show the client what would happen if he drew down the same income the scheme could provide but from FAD instead. compare PCLS merits, death benefit changes, etc etc.

I'd do the usual full comparison, but to the projected age (65), taking account of the TVAS data.

I'd look at taking the benefits from the scheme at age 60 and recycling the income back into a pension. This could easily offer the best of both worlds without a transfer. Without knowing a lot more, it's not possible to say. But as a suggestion of how:

a client could invest 5 years' scheme income tax neutrally, or the balance less any WOL premium to fund insurance equal to the CETV, retain the DB whilst building up additional uncrystallised funds and using this in retirement for the extra 'flexibility' they might want now.

Navigator

@benjaminfabi this is amazing. I was quietly counting on your COBS knowledge. Thank you. And thank you, @arongunningham, @Suse1969 and @richallum for confirming I wasn't going crazy and was interpreting the rules correctly.

richallum

Told you he'd know :-)

benjaminfabi

@richallum said:
Told you he'd know :-)

*turns off email alerts for @mentions

Suse1969

And some - top man @benjaminfabi - sorry, had to tag :-)