Accessing my deferred FS Pension - Good Idea?

[pauljdh]

I have 2 off FS pensions with the the same employer. My service was split by an international job which meant I had to leave the scheme and rejoined an equivalent scheme on return to UK
I'm 60 next birthday

The CETV is currently £555K. My other is approx £430K and AVCS total £50K

One is deferred, one is active. Because the defered one is not link to my current employment, I am allowed to transfer it out to another provider.

(I've asked my employer if I could draw my pension as a pension, the only confirmation so far is that I can transfer it out at any time, just waiting on the answer)

My plan is to take my 25%Tax-free lump sum and invest the rest.

I have access to regulated, paid for finance advice but before I go into bat I would appreciate any independent advice.

My thoughts are to pay the mortgage off (£60K) and as Im continuing in employment intend to hammer my AVC's with another 7-800 a month (old mortgage repayment)

I intend to retire within 2 years and the defered pension is not accruing apart from discetionary cost of living rises

Can anyone see any pitfalls?

Many thanks

[Cheib]

I’ve just done this with a pension but there are a lot of things to consider

- what are you other sources of income in retirement
- what happens to that pension on death if you have a wife/partner
- how confident you are with investing
- what the terms of the pension scheme are (index linked etc)
- what multiple you are being paid to cash in your chips (varies massively between schemes)

Just a few !

I worked in finance for thirty years with decent experience as a fund manager for part of that and took a long time to come to the decision

[JulianPH]

pauljdh said:

I have 2 off FS pensions with the the same employer. My service was split by an international job which meant I had to leave the scheme and rejoined an equivalent scheme on return to UK
I'm 60 next birthday

The CETV is currently £555K. My other is approx £430K and AVCS total £50K

One is deferred, one is active. Because the defered one is not link to my current employment, I am allowed to transfer it out to another provider.

(I've asked my employer if I could draw my pension as a pension, the only confirmation so far is that I can transfer it out at any time, just waiting on the answer)

My plan is to take my 25%Tax-free lump sum and invest the rest.

I have access to regulated, paid for finance advice but before I go into bat I would appreciate any independent advice.

My thoughts are to pay the mortgage off (£60K) and as Im continuing in employment intend to hammer my AVC's with another 7-800 a month (old mortgage repayment)

I intend to retire within 2 years and the defered pension is not accruing apart from discetionary cost of living rises

Can anyone see any pitfalls?

Many thanks

Hi Paul

This is a difficult question to answer at the best of times, but without further information it is impossible.

What is missing is what you want from this. If this is greater flexibility, a potentially greater (equivalent to yours) level of income for your wife (should you walk under a bus) and an IHT free inheritance for your kids, then a transfer may be very much worthwhile.

If you do not need the above and value a (hopefully) guaranteed income, then you should consider staying where you are.

You have to look in detail at what you currently have, verses what you could switch to. This will give you the answer.

Your financial adviser should have already done this with you before you posted here, TBH. This is part of what you are paying them for.

If you would like a second opinion (for free), give me a shout and I would be happy to help. Disclaimer - I own a pension company, this is why I can provide you with a free assessment, but we don't offer financial advice, so are not trying to sell you anything!

[phope]

Tread very carefully and get detailed expert advice from a pension transfer specialist - the combination of the three values you mention (£1.035 million) are within spitting distance of the overall lifetime allowance, presently £1.055 million

You mention a plan to hammer money into AVCs...these contributions and anticipated growth over the next couple of years on top of the £1.035m will likely see you breach the pension lifetime allowance with tax charges to pay on the excess

[DSLiverpool]

The financial guys are professional and give proper advice but not life advice.

I cashed in all my pensions at 55 took the tax free and bought stuff we wanted (all required house work, Bentley, potentially a holiday home) life’s too short.

Also as you get older you spend less on stuff (maybe more on medical) and I worked out maintaining lifestyle until 65 then we sell the house and release cash to help our twilight.

Just another view

[TwigtheWonderkid]

DSLiverpool said:

I cashed in all my pensions at 55 took the tax free and bought stuff we wanted (all required house work, Bentley, potentially a holiday home) life’s too short.

Well it isn't always, and that's the problem. At 55, you could live another 40+ years.

I have enough money to live like a king for the rest of my life.....providing I die next Thursday.

[DSLiverpool]

TwigtheWonderkid said:

DSLiverpool said:

I cashed in all my pensions at 55 took the tax free and bought stuff we wanted (all required house work, Bentley, potentially a holiday home) life’s too short.

Well it isn't always, and that's the problem. At 55, you could live another 40+ years.

I have enough money to live like a king for the rest of my life.....providing I die next Thursday.

I think you spend less as you get older, medical bills aside I worked out what we spend a year now and how long our cash and house would last - I’ll be past caring once it runs out

[chip*]

Cheib said:

- how confident you are with investing

Do not under-estimate this point.
I am currently undergoing a DB transfer and am awaiting the suitability report. I have been mulling over this exact point for some time now. If I hang around, all should be ok'ish as I am pretty au fait with financial matters e.g. managing the investment, withdrawal options FAD/UFPLS, and impact to personal taxation, but I realise I would still need advice to deal with the complexity of exceeding the LTA. However, if I suddenly drop dead, is my wife capable of managing the portfolio taking in account the withdrawal options and tax matters? Does she really want to manage the portfolio whilst maintaining the family home and raising 2 young girls? When I started this process, I was adamant I would self manage if the transfer goes through, but it quickly dawned on me that I had to factor in the worse scenario and my wife's wishes too. From preliminary discussion with an IFA, I was offered regulated advice and financial planner for an all-in rate sub 1% (advisor, platform, fund) which I thought was pretty competitive. Not made any decision yet, but an important issue to address if the transfer is accepted.

[pauljdh]

very good points made there - I have thought of most of these points but dont have all the answers. Mt trustees will only release when a reuglated IFA has reviewd my reasoning and strategy. Im a contract manager and my wife an accountant so not too naive but this is unchartered territory for us both. I work for a very large firm and I have lots of folk who have gone before me and done all sorts of things, dependant on individual circumstances etc.

Im hoping there is still a state pension when I get to 67.......focus is on bridging years 60-67 primarily. I acknowledge comments about longevity and having fun now too......