Final Salary Pension scheme - leave or not?

[rotarymazda]

If you are under 55 then this looks like one of the well known scams where HMRC will treat this as an unauthorised withdrawal and charge you penalties.

So the company gets it fees, you get the penalties and lose more than half your pension.

[basherX]

We have had a number of firms, invariably unregulated, approach our expats on a similar basis and pull all sorts of stunts. Do listen to the advice here, definitely get professional (insured) advice if you're considering leaving the scheme and do check with the scheme itself for confirmation of any figures you get quoted about the "health" of the plan: we've had loads of people quoted a "scary" global group deficit when the fund they're in is actually very well funded.

[Simpo Two]

K12beano said:

So - even ignoring all the great comments from those in the know above - the litmus test is always "so....who will benefit from this..........." my betting money knows whether it will be the approachers or the approachees in every case!

This. Whether or not your pension is good bad or indifferent, don't work with cold callers. If they were any good they wouldn't be cold calling.

[Ginge R]

basherX said:

We have had a number of firms, invariably unregulated, approach our expats on a similar basis and pull all sorts of stunts. Do listen to the advice here, definitely get professional (insured) advice if you're considering leaving the scheme and do check with the scheme itself for confirmation of any figures you get quoted about the "health" of the plan: we've had loads of people quoted a "scary" global group deficit when the fund they're in is actually very well funded.

I spoke with someone a couple of months back ago, recently returned to the UK. I flipped through his correspondence file, he had considered something similar just before the law changed to prevent Armed Forces Pension Scheme deferred benefits being transferred. The shark had fiddled the Transfer Value figure to reflect no charges, thereby suggesting a lower critical yield (a far easier 'sell').

Then they put the onus on the client as if it was he who wanted to move his AFPS benefits to an awful, utterly, utterly awful offshore bond and a hideously poorly performing and cripplingly expensive QROPS and then, then.. their resident 'Chartered Financial Planner' poodle asks the client to sign this disclaimer within a swathe of other documentation so he could sign off the DB transfer. Pasted verbatim, with the exception of my anonymisation.

"I confirm that I have read this advice letter and understand that it does not take into account my personal circumstances, specific and detailed objectives or attitude to risk, and is not a personal recommendation to pursue any specific course of action, but provides information only. I also confirm that before taking any action in relation to the matter discussed in this letter; any such action is on the basis informed by this letter, and I confirm that if I do not understand the costs, tax omplications and associated investment risks I will contact a qualified financial advisor for further clarification, and the certificate will not be released to the scheme trustees until **** have a copy of this which acknowledges my understang of the above.

Signature:"

[K12beano]

^^^ ^^^

[Jader1973]

They rang back today but I missed their call and didn't have time to call back.

I'll see if they bother to try again.

Without naming names, they share a name with a hotel group that sounds a bit like "The Beers".

[Ginge R]

I had it down to two, and that was one of them.

https://m.youtube.com/watch?v=JIzqcfTHVbM

I've got to bleach my iPad now.

[Zigster]

K12beano said:

So - even ignoring all the great comments from those in the know above - the litmus test is always "so....who will benefit from this..........." my betting money knows whether it will be the approachers or the approachees in every case!

Or "cui bono?" if you want to get all fancy and use Latin.

[DibblyDobbler]

I work in Finance - the Final Salary Scheme closed to new members in 2000 but there are a fair few old timers like me still lurking around who are at or nearing retirement age. There's been a fair old frenzy lately of people leaving the scheme, getting a monster TV and sticking it into a SIPP. The multiplier being offered when you take the money out has gone ballistic in the strange (or are they the new normal?) economic conditions with ultra low interest rates. Even fairly modest pension can get you a lump sum which would be considered a decent lottery win! I'm not for or against it as a matter of principle - it's purely down to the offer IMHO. A few people did it just before Brexit and promptly saw their funds take a hefty dive - maybe not significant in the longer term but a good test to see if they could cope ... not sure I could!

[Simpo Two]

DibblyDobbler said:

The multiplier being offered when you take the money out has gone ballistic in the strange (or are they the new normal?) economic conditions with ultra low interest rates.

My antennae just twitched. Explain 'multiplier'?

DibblyDobbler said:

A few people did it just before Brexit and promptly saw their funds take a hefty dive - maybe not significant in the longer term but a good test to see if they could cope ... not sure I could!

IIRC the markets fell for a few days then recovered and carried on regardless.

Still, we have the Trump/Clinton election next and that will make bigger ripples!

[DibblyDobbler]

Simpo Two said:

DibblyDobbler said:

The multiplier being offered when you take the money out has gone ballistic in the strange (or are they the new normal?) economic conditions with ultra low interest rates.

My antennae just twitched. Explain 'multiplier'?

Basically for every 1,000 per year of pension you get a lump sum instead if you come out of the scheme - eg a 20k pa pension might get you £800k as the multiplier is around 40 (a historic high and also depends on age).

[Ginge R]

Ironically, the government has just announced its intent to consult on refining the current regulations to allow DB transfer to non U.K. overseas schemes. The sharks will be delirious.

https://www.gov.uk/government/uploads/system/uploa...

[Simpo Two]

DibblyDobbler said:

Basically for every 1,000 per year of pension you get a lump sum instead if you come out of the scheme - eg a 20k pa pension might get you £800k as the multiplier is around 40 (a historic high and also depends on age).

Ah right, that's working the figures backwards. I look at the size of the fund and what it would pay out pa.

[Ozzie Osmond]

DibblyDobbler said:

Basically ... the multiplier is around 40 (a historic high and also depends on age).

Bloody Nora! What have you got, a two thirds index-linked pension payable from age 50?!?!?!

[bompey]

Hope I read it properly but if I have a DB scheme and want to calculate the figure for LTA purposes do I use annual pension amount per annum x 20, or some other multiplier, or can I rely on the scheme's value of my pot?

[Ozzie Osmond]

bompey said:

Hope I read it properly but if I have a DB scheme and want to calculate the figure for LTA purposes do I use annual pension amount per annum x 20, or some other multiplier, or can I rely on the scheme's value of my pot?

If it's a DB scheme,

• There's no "pot"
• LTA (Lifetime Allowance) value is x20

[Note that x20 is an artifiacially low figure, a more realistic figure being around x30. However, the x20 figure enables MPs, Civil Servants and others of their ilk to collect nice fat pensions from the taxpayer. Note also the massive difference between both of these figures and DibblyDobbler's extraordinarily fortunate situation at x40.]

[Ginge R]

Why is a 'more realistic figure', times thirty? A lifetime allowance valuation would ordinarily be a multiplication of the income, times twenty, and add the tax free cash on top. I know, I did one three days ago and applied Individual Protection just under £1,250,000.

DB pensioners are tax payers too.

[Ginge R]

Ozzie Osmond said:

Bloody Nora! What have you got, a two thirds index-linked pension payable from age 50?!?!?!

The government is now looking to allow DB schemes to break an indexation promise.

https://www.ft.com/content/55579acc-855b-11e6-a29c...

[Ozzie Osmond]

Ginge R said:

Why is a 'more realistic figure', times thirty? A lifetime allowance valuation would ordinarily be a multiplication of the income, times twenty, and add the tax free cash on top. I know, I did one three days ago and applied Individual Protection just under £1,250,000.

As I said above, LTA figure is x20. But the point is the real cost of buying pension is massively bigger than that. If you know where to find an annuity that will pay the equivalent of a good DB pension from age 65 at 20:1 I think you'll have customers forming an orderly queue at your door!

[DibblyDobbler]

Ozzie Osmond said:

DibblyDobbler said:

Basically ... the multiplier is around 40 (a historic high and also depends on age).

Bloody Nora! What have you got, a two thirds index-linked pension payable from age 50?!?!?!

Well it's two thirds + index linked from 60 - there are dependant's benefits also (eg wife and kids get something if/when you go belly up). A chum of mine is a consulting actuary and he could not believe what was being offered - may not last of course!