Ignoring financial advisor advice
Discussion
I've been looking at cashing in a final salary pension from my existing employer (they dropped it in 2009) and despite most of my colleagues receiving advice that it would fine, my IFA has advised against it - am I able to listen but ignore his advice and instruct him accordingly (an IFA has to sign this off).
AlRaven said:
I've been looking at cashing in a final salary pension from my existing employer (they dropped it in 2009) and despite most of my colleagues receiving advice that it would fine, my IFA has advised against it - am I able to listen but ignore his advice and instruct him accordingly (an IFA has to sign this off).
Not my area of expertise, but I thought the requirements were that you had to take appropriate advice, not that you had to listen to that advice!Why are they advising you against it, and why do you think this important?
Welshbeef said:
Any reason why you want to do this?
Recent thread IIRC about a transfer being viable because of enhanced spouse guarantees on a DC scheme.Ginge countered (added?) that this could be circumvented through use of life assurance policy.
I passed out after that. Information overload.
Welshbeef said:
Personally I cannot envisage a situation where taking out of a DB is the best option.
There are plenty of situations where this could be a sensible option.Welshbeef said:
Well acutllay if you think the company is underfunding it’s scheme and may go bust so you’d lose 10% of the pension + CPI v RPI.
But if the scheme was underfunded, the transfer value would normally be adjusted for that underfunding!Sorry for delay, wasn't sure whether to elaborate or not as I'm more focussing on whether I can proceed without my current IFA being in agreement.
So a bit more info, the DB pot I'm looking at represents 14 years from 1995 to 2009 before my current employer closed it. Although I'm fully aware that transferring a DB pot isn't the conventional wisdom and that on a whole long life basis DB will always be the best financially.
However my personal reasons are - I'm nearly 58 and see it as the only way to finance retiring at 60, my family aren't long lived, no male relative has lived past 60 for heart reasons (I have angina), I also have a painful back which isn't helped driving and sitting all day. I'm looking to be able to spend money in my sixties/seventies rather than guarantee the same income into my nineties, which I'll never see anyway.
Mortgage paid off last year, both kids left (for now!) Wife same age has a small £6k teacher's pension coming and I have reasonable amount in DC scheme and miscellaneous others.
The advice I've received seems to focus on buying an annuity with the cash (never considered obviously)or the investment risk of putting it into a pension like Royal London, as the market may be due a correction.
So a bit more info, the DB pot I'm looking at represents 14 years from 1995 to 2009 before my current employer closed it. Although I'm fully aware that transferring a DB pot isn't the conventional wisdom and that on a whole long life basis DB will always be the best financially.
However my personal reasons are - I'm nearly 58 and see it as the only way to finance retiring at 60, my family aren't long lived, no male relative has lived past 60 for heart reasons (I have angina), I also have a painful back which isn't helped driving and sitting all day. I'm looking to be able to spend money in my sixties/seventies rather than guarantee the same income into my nineties, which I'll never see anyway.
Mortgage paid off last year, both kids left (for now!) Wife same age has a small £6k teacher's pension coming and I have reasonable amount in DC scheme and miscellaneous others.
The advice I've received seems to focus on buying an annuity with the cash (never considered obviously)or the investment risk of putting it into a pension like Royal London, as the market may be due a correction.
AlRaven said:
Sorry for delay, wasn't sure whether to elaborate or not as I'm more focussing on whether I can proceed without my current IFA being in agreement.
So a bit more info, the DB pot I'm looking at represents 14 years from 1995 to 2009 before my current employer closed it. Although I'm fully aware that transferring a DB pot isn't the conventional wisdom and that on a whole long life basis DB will always be the best financially.
However my personal reasons are - I'm nearly 58 and see it as the only way to finance retiring at 60, my family aren't long lived, no male relative has lived past 60 for heart reasons (I have angina), I also have a painful back which isn't helped driving and sitting all day. I'm looking to be able to spend money in my sixties/seventies rather than guarantee the same income into my nineties, which I'll never see anyway.
Mortgage paid off last year, both kids left (for now!) Wife same age has a small £6k teacher's pension coming and I have reasonable amount in DC scheme and miscellaneous others.
The advice I've received seems to focus on buying an annuity with the cash (never considered obviously)or the investment risk of putting it into a pension like Royal London, as the market may be due a correction.
Why have you not considered buying an annuity? With your medical history, an impaired annuity could provide a significantly higher income than your DB pension?So a bit more info, the DB pot I'm looking at represents 14 years from 1995 to 2009 before my current employer closed it. Although I'm fully aware that transferring a DB pot isn't the conventional wisdom and that on a whole long life basis DB will always be the best financially.
However my personal reasons are - I'm nearly 58 and see it as the only way to finance retiring at 60, my family aren't long lived, no male relative has lived past 60 for heart reasons (I have angina), I also have a painful back which isn't helped driving and sitting all day. I'm looking to be able to spend money in my sixties/seventies rather than guarantee the same income into my nineties, which I'll never see anyway.
Mortgage paid off last year, both kids left (for now!) Wife same age has a small £6k teacher's pension coming and I have reasonable amount in DC scheme and miscellaneous others.
The advice I've received seems to focus on buying an annuity with the cash (never considered obviously)or the investment risk of putting it into a pension like Royal London, as the market may be due a correction.
You do realise with DB schemes in a scenario whereby you passed before your wife and she lived long after you that it will carry on paying @50% until she passes.
Remember too you have the 25% tax free lump sum to take too which will reduce the ongoing annual pension but give you some added comfort upfront.
However a question is what do you intend to do?
I always really encourage those who are retiring to do all the big holidays all those dreams they have had do it now / soon as before you know it 70yo is reached and doing more of those dream holidays are now just that a dream health comes into question. Plus you only live once kids can look after themselves (unless of course you and he Mrs receiveda decent Inheritance IMHO it would only be right and just to pass on a similar sort of windfall to them rather than spend it all yourself but hey that’s just an opinion I have on it).
You say you have to wait until 60yo? Is that the contractual minimum start point of the DB? Or could you have started at 55yo and hen ease back to part time to boost income and then go full retired or simply go early - as you highlighted family history may or may not play a factor.
I recall one neighbour she worked all her life to 65yo for the council and was looking forward to selling up and moving up north to be with her only son and see their family grow and enjoy the grandchildren. She died barely 2 weeks after her last day at work.
She could have retired a decade before then and seen them grow up and enjoyed her well earns freedom (house worth a decent amount v the big downgrade she had up north).
Remember too you have the 25% tax free lump sum to take too which will reduce the ongoing annual pension but give you some added comfort upfront.
However a question is what do you intend to do?
I always really encourage those who are retiring to do all the big holidays all those dreams they have had do it now / soon as before you know it 70yo is reached and doing more of those dream holidays are now just that a dream health comes into question. Plus you only live once kids can look after themselves (unless of course you and he Mrs receiveda decent Inheritance IMHO it would only be right and just to pass on a similar sort of windfall to them rather than spend it all yourself but hey that’s just an opinion I have on it).
You say you have to wait until 60yo? Is that the contractual minimum start point of the DB? Or could you have started at 55yo and hen ease back to part time to boost income and then go full retired or simply go early - as you highlighted family history may or may not play a factor.
I recall one neighbour she worked all her life to 65yo for the council and was looking forward to selling up and moving up north to be with her only son and see their family grow and enjoy the grandchildren. She died barely 2 weeks after her last day at work.
She could have retired a decade before then and seen them grow up and enjoyed her well earns freedom (house worth a decent amount v the big downgrade she had up north).
AlRaven said:
I've been looking at cashing in a final salary pension from my existing employer (they dropped it in 2009) and despite most of my colleagues receiving advice that it would fine, my IFA has advised against it - am I able to listen but ignore his advice and instruct him accordingly (an IFA has to sign this off).
Other colleagues received advice 'that it would fine' and your IFA 'advised against it'. These are not mutually incompatible.You've also failed to post why he was against and then you ask for advice here. Do you not see the problem there?
AlRaven said:
I've been looking at cashing in a final salary pension from my existing employer (they dropped it in 2009) and despite most of my colleagues receiving advice that it would fine, my IFA has advised against it - am I able to listen but ignore his advice and instruct him accordingly (an IFA has to sign this off).
Most IFA won't touch an insistent client with a barge pole - the process itself is a distinct one, and cost and labour intensive. More and more schemes are disregarding the £30,000 threshold too, and insisting that advice is sought for transfers of any value.I take onboard your hereditary points, but isn't that a case for your partner to have more certainty for the next forty years, not less? You have a DB scheme and, from the sounds of it, a half decent DC one. Look on the DB scheme as putting bread and jam on your table, and the DC scheme putting Prosecco in the fridge.
The time to aspire to be the richest man in the graveyard isn't when you're sixty.. but thirty.
Let's take a peek from the other side.
Why do you think there is an offer.?
It's possible, because it's DB, they see a funding problem down the road, maybe the number or current employees, the number of furue employees and the number of retirees don't equate.
Let's dangle a carrot infront of them to see if they'll bite, maybe we can reduce the number of future retirees which could reduce the amount we have to pay to bring funding up to the required level.
The carrot has to be decent....and will be more attractive to employees of different ages or circumstance.
Inversely it will be less atractive to some.
To the OP, you may be taking a short term view, (that's a nice lump, I can buy a XXXXX)
Your advisor has to look at it from a different perspective, he will see the long term value in a DB.
I would give some serious thought to taking his advice, maybe ask him why he came to that opinion.
Why do you think there is an offer.?
It's possible, because it's DB, they see a funding problem down the road, maybe the number or current employees, the number of furue employees and the number of retirees don't equate.
Let's dangle a carrot infront of them to see if they'll bite, maybe we can reduce the number of future retirees which could reduce the amount we have to pay to bring funding up to the required level.
The carrot has to be decent....and will be more attractive to employees of different ages or circumstance.
Inversely it will be less atractive to some.
To the OP, you may be taking a short term view, (that's a nice lump, I can buy a XXXXX)
Your advisor has to look at it from a different perspective, he will see the long term value in a DB.
I would give some serious thought to taking his advice, maybe ask him why he came to that opinion.
sidicks said:
Not my area of expertise, but I thought the requirements were that you had to take appropriate advice, not that you had to listen to that advice!
If you are contemplating transferring to a SIPP, the practical reality is that most (all?) SIPP providers will refuse a transfer in unless it is accompanied by a positive recommendation from a qualified adviser.So even if you wish to ignore the advice you’ve received, you may still not be able to do what you contemplate.
Edited by WindyCommon on Wednesday 31st January 22:11
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