Final Salary Transfer

[CAH706]

I know the standard advice is to not transfer out of a final salary scheme but I’ve made a decision to do this.

I have a protected retirement age of 50 in the final salary scheme and have been advised that providing I transfer out with a buddy ( one other person) I can start to take my pension from 50.

Has anyone done this?

Thanks

[timberman]

We have the same protection in our deferred Db pension and lots of people from our scheme are going through the process of transferring out using the buddy system, which I believe is being sorted by their IFA.

It was mentioned to me by one of my colleagues who was looking to transfer to the same scheme I am and to retire early,
I'm quite happy to be nominated as a buddy but have no need for the benefit myself as I'm fast closing on 55 already and don't intend retiring for at least a couple of years yet.

I'm sure if you mention this to your IFA they will be able to explain how it's achieved,

afaik it's fairly easy to sort out as long as you're not the only one in the process of transferring out, and whoever you're buddied with is transferring to the same scheme as you are and hasn't been with that scheme for over a year.

[CAH706]

Thanks Timber an. That sounds the same as my scheme and mirrors the advice I have seen to date

[The Leaper]

CAH706 said:

I know the standard advice is to not transfer out of a final salary scheme but I’ve made a decision to do this.

I have a protected retirement age of 50 in the final salary scheme and have been advised that providing I transfer out with a buddy ( one other person) I can start to take my pension from 50.

Thanks

Just a question for clarification regarding your "protected retirement age of 50". Is this

1. your stated normal retirement age when you can get your full benefits without any reduction, or

2. is it the earliest date that you can take your benefits accrued to that date and then reduced for early payment, or

3. is it something else?

R.

[rigga]

The Leaper said:

CAH706 said:

I know the standard advice is to not transfer out of a final salary scheme but I’ve made a decision to do this.

I have a protected retirement age of 50 in the final salary scheme and have been advised that providing I transfer out with a buddy ( one other person) I can start to take my pension from 50.

Thanks

Just a question for clarification regarding your "protected retirement age of 50". Is this

1. your stated normal retirement age when you can get your full benefits without any reduction, or

2. is it the earliest date that you can take your benefits accrued to that date and then reduced for early payment, or

3. is it something else?

R.

If its anything like my protected pension (railway) its reduced due to number if years taken early.

[CAH706]

Hi

Yes it is reduced for retiring early

[granville997]

good morning,
Has your DB closed and you are now a member of your company's new DC scheme? If so did you have AVC 's in the DB scheme which are now held in the new DC if so this new DC should have your protected rights transferred check with DC/DB scheme?

[CAH706]

Morning

No the scheme is still open and I am still in it. There is a pensionable salary cap in place which hits the final salary a lot.

The scheme conditions continually worsen and ideally I want to retire at 50. Taking the final salary pension at 50 doesn't leaf to a great pension. If I take the money out, it leaves me with a big enough pot to play with....assuming no massive disasters with the investment. That is a chance I will take though.

[The Leaper]

CAH706 said:

Morning

No the scheme is still open and I am still in it. There is a pensionable salary cap in place which hits the final salary a lot.

The scheme conditions continually worsen and ideally I want to retire at 50. Taking the final salary pension at 50 doesn't leaf to a great pension. If I take the money out, it leaves me with a big enough pot to play with....assuming no massive disasters with the investment. That is a chance I will take though.

The issue that you are facing is a common one.

1.You want to retire early at age 50,
2. in the DB scheme your normal retirement age is much later, say age 65,
3. this means that at age 50 you will be entitled to your accrued pension but reduced for early payment.
4. If the reduction is, say, 4% pa, that means the accrued pension at 50 will be reduced by 60% (4 x 15 years).
5. in return, the early retirement pension will be paid for much longer.

Note that if you have been contracted out of SERPS via this DB scheme then the resulting reduced pension must be at least equal to what you would have got from SERPS at age 65 for the same period of being contracted out on the basis that you had not been contracted out. In other words, there's a minimum guarantee equal to the same benefits as what you would have got from SERPS.

Hope the above can be understood!

You may think that you are losing out, but the capital value of the accrued pension if it was paid at 65 is about the same as the capital value of that accrued pension paid from age 50.

R.

[CAH706]

Hi

Yes that makes sense. Thanks for the reply.