another pension question - trf from a DB scheme or not?
Discussion
Apologies if this has been asked before.
After a bit of advice
I worked for a large organisation for 4 years (approx 20 years ago) and am still in their pension scheme.
I had a letter about transferring benefits to a defined contribution scheme and the figures are as follows;
accrued pension per annum £1,762 with an estimated pension at retirement age which i think is 60 of £3,670 per annum
fund transfer value is £92,574
should i just leave it in there or trf it to a defined contribution one?
Thanks
After a bit of advice
I worked for a large organisation for 4 years (approx 20 years ago) and am still in their pension scheme.
I had a letter about transferring benefits to a defined contribution scheme and the figures are as follows;
accrued pension per annum £1,762 with an estimated pension at retirement age which i think is 60 of £3,670 per annum
fund transfer value is £92,574
should i just leave it in there or trf it to a defined contribution one?
Thanks
Maverick007 said:
Apologies if this has been asked before.
After a bit of advice
I worked for a large organisation for 4 years (approx 20 years ago) and am still in their pension scheme.
I had a letter about transferring benefits to a defined contribution scheme and the figures are as follows;
accrued pension per annum £1,762 with an estimated pension at retirement age which i think is 60 of £3,670 per annum
fund transfer value is £92,574
should i just leave it in there or trf it to a defined contribution one?
Thanks
If your current accrued pension is £1,762 this represents a 1.9% annual payment, or a Cash Equivalent Transfer Value (CETV) of 52.53 times. This is incredibly high offering to you today, but not the full picture.After a bit of advice
I worked for a large organisation for 4 years (approx 20 years ago) and am still in their pension scheme.
I had a letter about transferring benefits to a defined contribution scheme and the figures are as follows;
accrued pension per annum £1,762 with an estimated pension at retirement age which i think is 60 of £3,670 per annum
fund transfer value is £92,574
should i just leave it in there or trf it to a defined contribution one?
Thanks
A CETV should always be looked at from the pension payment commencement date. Yours appears to be £3,670 a year. This gives a CETV of 25 - not so exciting.
It is often the best to assume stay with a final salary pension scheme is the safest option (as it usually is), but other factors need to be involved:
Is this your only pension provision or just part of it?
What level of risk are you prepared to take in order to achieve higher returns, or is complete security a more important factor to you?
What is the importance of you being able to pass this money tax free to your wife/partner?
What is the importance of you being able to pass this money IHT free to your children?
As it is over £30k (by a factor of 3!) then you are going to have to use a financial adviser who is qualified to deal with this in any case. If you would like a simple heads up on the numbers and options I can provide this for free.
This will ensure you are better armed and informed when speaking to a financial adviser.
So the short answer is that based upon the information provided, it is absolutely impossible to give a meaningful response.
I hope the above has been of some help though.
that's very helpful actually i appreciate that.
i have answered the questions. so it looks like there isn't really a right or wrong answer. is this transfer value likely to go up much then? and if i did put it into a DB scheme how does that new scheme work? can you try to top it up monthly etc and get tax relief, so a good savings plan?
Is this your only pension provision or just part of it? i only have 2 other very small pensions unfortunately which total 3 years service. i was self employed for most of my career to date and stupidly didn't pay into a pension
What level of risk are you prepared to take in order to achieve higher returns, or is complete security a more important factor to you? don't mind some risk
What is the importance of you being able to pass this money tax free to your wife/partner? important but not really aware of how it works etc.
What is the importance of you being able to pass this money IHT free to your children? not an issue
i have answered the questions. so it looks like there isn't really a right or wrong answer. is this transfer value likely to go up much then? and if i did put it into a DB scheme how does that new scheme work? can you try to top it up monthly etc and get tax relief, so a good savings plan?
Is this your only pension provision or just part of it? i only have 2 other very small pensions unfortunately which total 3 years service. i was self employed for most of my career to date and stupidly didn't pay into a pension
What level of risk are you prepared to take in order to achieve higher returns, or is complete security a more important factor to you? don't mind some risk
What is the importance of you being able to pass this money tax free to your wife/partner? important but not really aware of how it works etc.
What is the importance of you being able to pass this money IHT free to your children? not an issue
Maverick007 said:
that's very helpful actually i appreciate that.
i have answered the questions. so it looks like there isn't really a right or wrong answer. is this transfer value likely to go up much then? and if i did put it into a DB scheme how does that new scheme work? can you try to top it up monthly etc and get tax relief, so a good savings plan?
Is this your only pension provision or just part of it? i only have 2 other very small pensions unfortunately which total 3 years service. i was self employed for most of my career to date and stupidly didn't pay into a pension
What level of risk are you prepared to take in order to achieve higher returns, or is complete security a more important factor to you? don't mind some risk
What is the importance of you being able to pass this money tax free to your wife/partner? important but not really aware of how it works etc.
What is the importance of you being able to pass this money IHT free to your children? not an issue
No problem. i have answered the questions. so it looks like there isn't really a right or wrong answer. is this transfer value likely to go up much then? and if i did put it into a DB scheme how does that new scheme work? can you try to top it up monthly etc and get tax relief, so a good savings plan?
Is this your only pension provision or just part of it? i only have 2 other very small pensions unfortunately which total 3 years service. i was self employed for most of my career to date and stupidly didn't pay into a pension
What level of risk are you prepared to take in order to achieve higher returns, or is complete security a more important factor to you? don't mind some risk
What is the importance of you being able to pass this money tax free to your wife/partner? important but not really aware of how it works etc.
What is the importance of you being able to pass this money IHT free to your children? not an issue
You are right in that for some people there is no right or wrong answer, but for others it strongly leans in one direction or another.
If you transferred this DB scheme into a DC scheme then the money will go up (or down) in value based on the markets/funds you have invested in.
Yes, you can make regular monthly contributions (or ad hoc lump sum payments) and receive full tax relief on these, but you don't need to transfer the DB scheme to do this as you can open up a DC scheme along side your DB scheme.
With DB schemes you wife will usually receive a 50% spouse pension upon your death. with a DC scheme they get 100% of its value and can either take this as a lump sum or continue to use it to provide a 100% spouse pension of her own.
As I mentioned, you are going to have to use (which of course means pay for) a financial adviser if you want to look at doing this.
So if you would like to chat it through and have some numbers run before spending any money please feel free to send me a PM and I would be happy to help.
I asked this a few weeks ago, if you search my history there were quite a few useful posts from people. altho julian has already provided good information.
I struggled to get anywhere because of my age, at 35 it’s deemed too big a risk to take me away from a guaranteed amount and invest myself. Which I completely understand as if i had access to the balance after transfer there is nothing to stop me gambling it all away chasing the next greatest AIM shares!
anyway, I actually got very straight forward advice from hargreaves lansdown. they were upfront and charge £1,250 (plus vat) for the advice/ report to confirm/ reject the transfer, then 2% of any transfer value up to £250k. from all the companies I spoke to these were some of the most competitive. Although bear in mind that the upfront fee may report that you shouldn’t transfer the funds!
I struggled to get anywhere because of my age, at 35 it’s deemed too big a risk to take me away from a guaranteed amount and invest myself. Which I completely understand as if i had access to the balance after transfer there is nothing to stop me gambling it all away chasing the next greatest AIM shares!
anyway, I actually got very straight forward advice from hargreaves lansdown. they were upfront and charge £1,250 (plus vat) for the advice/ report to confirm/ reject the transfer, then 2% of any transfer value up to £250k. from all the companies I spoke to these were some of the most competitive. Although bear in mind that the upfront fee may report that you shouldn’t transfer the funds!
malks222 said:
I asked this a few weeks ago, if you search my history there were quite a few useful posts from people. altho julian has already provided good information.
I struggled to get anywhere because of my age, at 35 it’s deemed too big a risk to take me away from a guaranteed amount and invest myself. Which I completely understand as if i had access to the balance after transfer there is nothing to stop me gambling it all away chasing the next greatest AIM shares!
anyway, I actually got very straight forward advice from hargreaves lansdown. they were upfront and charge £1,250 (plus vat) for the advice/ report to confirm/ reject the transfer, then 2% of any transfer value up to £250k. from all the companies I spoke to these were some of the most competitive. Although bear in mind that the upfront fee may report that you shouldn’t transfer the funds!
As I understand things, even if the report recommends NOT moving the DB funds, that doesn't prevent you doing so, provided your destination DC fund provider accepts an "insistent client". Might be a time window for it to be done as well....I struggled to get anywhere because of my age, at 35 it’s deemed too big a risk to take me away from a guaranteed amount and invest myself. Which I completely understand as if i had access to the balance after transfer there is nothing to stop me gambling it all away chasing the next greatest AIM shares!
anyway, I actually got very straight forward advice from hargreaves lansdown. they were upfront and charge £1,250 (plus vat) for the advice/ report to confirm/ reject the transfer, then 2% of any transfer value up to £250k. from all the companies I spoke to these were some of the most competitive. Although bear in mind that the upfront fee may report that you shouldn’t transfer the funds!
No idea whether IM fall into that category.
malks222 said:
I asked this a few weeks ago, if you search my history there were quite a few useful posts from people. altho julian has already provided good information.
I struggled to get anywhere because of my age, at 35 it’s deemed too big a risk to take me away from a guaranteed amount and invest myself. Which I completely understand as if i had access to the balance after transfer there is nothing to stop me gambling it all away chasing the next greatest AIM shares!
anyway, I actually got very straight forward advice from hargreaves lansdown. they were upfront and charge £1,250 (plus vat) for the advice/ report to confirm/ reject the transfer, then 2% of any transfer value up to £250k. from all the companies I spoke to these were some of the most competitive. Although bear in mind that the upfront fee may report that you shouldn’t transfer the funds!
I paid 1% which wasn't upfront but came out of the money after transfer. The FCA are going to stop advisors only charging if they recommend the transfer (contingent charging) and force people to pay up front, this is probably the right way to do it but will mean many people won't be able to afford the advice. If you are interested I'd recommend a chat with Tideway, I found them very efficient. I struggled to get anywhere because of my age, at 35 it’s deemed too big a risk to take me away from a guaranteed amount and invest myself. Which I completely understand as if i had access to the balance after transfer there is nothing to stop me gambling it all away chasing the next greatest AIM shares!
anyway, I actually got very straight forward advice from hargreaves lansdown. they were upfront and charge £1,250 (plus vat) for the advice/ report to confirm/ reject the transfer, then 2% of any transfer value up to £250k. from all the companies I spoke to these were some of the most competitive. Although bear in mind that the upfront fee may report that you shouldn’t transfer the funds!
So if HL refuse to offer advice to transfer does this mean that you then cannot do it?, I have paid into a Final Salary for 19 years and am 39 I also wish to take mine out and invest it myself in a sipp. Is this a non starter?.
Is the only alternative waiting until 55 then taking the lot out with 75% of it being taxable?.
Is the only alternative waiting until 55 then taking the lot out with 75% of it being taxable?.
malks222 said:
I asked this a few weeks ago, if you search my history there were quite a few useful posts from people. altho julian has already provided good information.
I struggled to get anywhere because of my age, at 35 it’s deemed too big a risk to take me away from a guaranteed amount and invest myself. Which I completely understand as if i had access to the balance after transfer there is nothing to stop me gambling it all away chasing the next greatest AIM shares!
anyway, I actually got very straight forward advice from hargreaves lansdown. they were upfront and charge £1,250 (plus vat) for the advice/ report to confirm/ reject the transfer, then 2% of any transfer value up to £250k. from all the companies I spoke to these were some of the most competitive. Although bear in mind that the upfront fee may report that you shouldn’t transfer the funds!
I struggled to get anywhere because of my age, at 35 it’s deemed too big a risk to take me away from a guaranteed amount and invest myself. Which I completely understand as if i had access to the balance after transfer there is nothing to stop me gambling it all away chasing the next greatest AIM shares!
anyway, I actually got very straight forward advice from hargreaves lansdown. they were upfront and charge £1,250 (plus vat) for the advice/ report to confirm/ reject the transfer, then 2% of any transfer value up to £250k. from all the companies I spoke to these were some of the most competitive. Although bear in mind that the upfront fee may report that you shouldn’t transfer the funds!
Hi all
The answer is that the rules only require you to seek regulated financial advice. Having done so you can freely make you own decision, regardless of the advice given.
This is, quite frankly, laughable.
Most people who should have stayed in have moved out, and most people who should have moved out (estate planning) have been priced out of being able to do so.
Every single case of DB pension scams had, by law, involved a financial adviser (or IFA) at the wheel.
I believe that what is needed is a separate body that can advise on this without receiving a cash payment if you that is dependent on your actions having received such advice.
To address the final part of this thread, some providers will not accept pension transfers when the advice was not to do so, and others will take anything.
IM has some common sense middle ground. We certainly will not accept a transfer that has been advised against, but we will look into the circumstances and are prepared to change our position when the initial advice had missed out on important factor (which it often does).
What we won't do. however, is bend or test FCA rules.
I would like to imagine many other providers also take a similar approach.
The answer is that the rules only require you to seek regulated financial advice. Having done so you can freely make you own decision, regardless of the advice given.
This is, quite frankly, laughable.
Most people who should have stayed in have moved out, and most people who should have moved out (estate planning) have been priced out of being able to do so.
Every single case of DB pension scams had, by law, involved a financial adviser (or IFA) at the wheel.
I believe that what is needed is a separate body that can advise on this without receiving a cash payment if you that is dependent on your actions having received such advice.
To address the final part of this thread, some providers will not accept pension transfers when the advice was not to do so, and others will take anything.
IM has some common sense middle ground. We certainly will not accept a transfer that has been advised against, but we will look into the circumstances and are prepared to change our position when the initial advice had missed out on important factor (which it often does).
What we won't do. however, is bend or test FCA rules.
I would like to imagine many other providers also take a similar approach.
moles said:
So if HL refuse to offer advice to transfer does this mean that you then cannot do it?, I have paid into a Final Salary for 19 years and am 39 I also wish to take mine out and invest it myself in a sipp. Is this a non starter?.
Is the only alternative waiting until 55 then taking the lot out with 75% of it being taxable?
I struggled to find anyone who would be able to advise on this, mainly because of my age and pension pot size (£45k or 36 times annual benefit). Is the only alternative waiting until 55 then taking the lot out with 75% of it being taxable?
It looks like you can still transfer even if you get advised this is not the best option. But I think you may struggle to get the advice in the first place.
also I think you will be waiting until 58, as the private pension is 10yrs before the state pension and I imagine you are the same as me and now have a state pension age of 68, and realistically that’s only going to go higher!
Yes my age will be 58 at least going by the new rules coming into force which is a bit of a s
tter tbh. I want to get as much out as soon as I can I’m not interested in planning for a long retirement. What did HL say they wouldn’t even advise on it?, if so why don’t they just take your money advise against it and they’ve done their job???.
tter tbh. I want to get as much out as soon as I can I’m not interested in planning for a long retirement. What did HL say they wouldn’t even advise on it?, if so why don’t they just take your money advise against it and they’ve done their job???.Any reputable IFA will not proceed with the transfer if the report & figures suggest it’s not in the best interests of the client.
For what it’s worth & as I’ve said before, there are many people that can make their own decisions & manage their own pension funds. The regulator takes a different view however.
Locally (Guernsey) our regulator has announced that the pension value of 30k will be raised to 50k before written advice/reports are required. This is a step in the right direction.
For what it’s worth & as I’ve said before, there are many people that can make their own decisions & manage their own pension funds. The regulator takes a different view however.
Locally (Guernsey) our regulator has announced that the pension value of 30k will be raised to 50k before written advice/reports are required. This is a step in the right direction.
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