Pension transfer from final salary
Discussion
So, I just dug out a pension from my first job as an apprentice, it’s final salary, and the amount that it pays out a year is very low, sub £5k, I think that goes up 5% a year.
But…the interesting bit is the transfer value is nearly £250k, if I move out of the final salary into another pension. Now, the 250k looks like it’s worth more in the pension I’m currently paying into with my current employer.
So a few questions:
Thé 250 figure is the transfer value, not the about I have paid in (I was an apprentice ffs I was paid peanuts and hence paid in peanuts), so does is that figure going to change, will it be worth them paying my more to pull out now or when I’m older? Should I wait on it or bite their hand off? The paperwork does say that figure is valid for a set period and not guaranteed after that date.
Am I stupid to consider pulling out of a final salary scheme?
But…the interesting bit is the transfer value is nearly £250k, if I move out of the final salary into another pension. Now, the 250k looks like it’s worth more in the pension I’m currently paying into with my current employer.
So a few questions:
Thé 250 figure is the transfer value, not the about I have paid in (I was an apprentice ffs I was paid peanuts and hence paid in peanuts), so does is that figure going to change, will it be worth them paying my more to pull out now or when I’m older? Should I wait on it or bite their hand off? The paperwork does say that figure is valid for a set period and not guaranteed after that date.
Am I stupid to consider pulling out of a final salary scheme?
On the Pension part of the Moneysavingexpert forum this gets brought up quite often it seems (I’m a relative newbie on there).
Looks like nowadays it’s quite difficult to do (but not impossible) but it does cost quite a bit (I’ve seen 1-2% of the pot mentioned for the FA charge and they may say they don’t agree in moving it!) plus getting somewhere to accept the transfer can be difficult.
Looks like nowadays it’s quite difficult to do (but not impossible) but it does cost quite a bit (I’ve seen 1-2% of the pot mentioned for the FA charge and they may say they don’t agree in moving it!) plus getting somewhere to accept the transfer can be difficult.
duckson said:
On the Pension part of the Moneysavingexpert forum this gets brought up quite often it seems (I’m a relative newbie on there).
Looks like nowadays it’s quite difficult to do (but not impossible) but it does cost quite a bit (I’ve seen 1-2% of the pot mentioned for the FA charge and they may say they don’t agree in moving it!) plus getting somewhere to accept the transfer can be difficult.
Getting a positive recommendation from the FA and finding somewhere to accept the transfer are not two separate things nowadays. The FA will embed the destination of the funds into the advice and you won’t find anyone else to accept the funds other than who the FA has decided upon.Looks like nowadays it’s quite difficult to do (but not impossible) but it does cost quite a bit (I’ve seen 1-2% of the pot mentioned for the FA charge and they may say they don’t agree in moving it!) plus getting somewhere to accept the transfer can be difficult.
For what it’s worth royal London accepted my transfer I then transferred to a sipp a day after it cleared and closed the account.
I did feel a little guilty for their paperwork and admin.
My understanding is they could advise not to do it but you still could.
In the fact finding interview then my answers were very high risk and adventurous with regards investment. Which is true, the bloke I used advised in favour.
I did feel a little guilty for their paperwork and admin.
My understanding is they could advise not to do it but you still could.
In the fact finding interview then my answers were very high risk and adventurous with regards investment. Which is true, the bloke I used advised in favour.
vindaloo79 said:
For what it’s worth royal London accepted my transfer I then transferred to a sipp a day after it cleared and closed the account.
That’s about the only way to get your db into a sipp nowadays. You just need to be careful that the FA doesn’t get even a hint that you plan to do that or they will stop the transfer as a condition of their PI insurance. You need to play along until the money is cleared.(This is not advice to anyone of course).
duckson said:
On the Pension part of the Moneysavingexpert forum this gets brought up quite often it seems (I’m a relative newbie on there).
Looks like nowadays it’s quite difficult to do (but not impossible) but it does cost quite a bit (I’ve seen 1-2% of the pot mentioned for the FA charge and they may say they don’t agree in moving it!) plus getting somewhere to accept the transfer can be difficult.
Isn’t it the case that even with negative advice you can still go ahead and move it where you want? As long as you have seen and taken the advice you can still go ahead. Looks like nowadays it’s quite difficult to do (but not impossible) but it does cost quite a bit (I’ve seen 1-2% of the pot mentioned for the FA charge and they may say they don’t agree in moving it!) plus getting somewhere to accept the transfer can be difficult.
sugerbear said:
Isn’t it the case that even with negative advice you can still go ahead and move it where you want? As long as you have seen and taken the advice you can still go ahead.
I am in the process of doing just this and what I am being told is that it would be incredibly difficult to do if the advice says not to. There are very few IFAs in this market now due to their risk of bad advice and the firms willing to take the transfer is also limited.I’ve not used this, nor know the facts, but after a casual glance :One angle that may help your cause is if you wanted you pension to be transferred to specific persons upon your death (not spouse), after retirement.
If a defined benefit scheme was not able to allow you to make the transfer to your intended recipient but a SIPP would then I would be curious to see how making that one of the most important factors would play out.
If a defined benefit scheme was not able to allow you to make the transfer to your intended recipient but a SIPP would then I would be curious to see how making that one of the most important factors would play out.
skeeterm5 said:
sugerbear said:
Isn’t it the case that even with negative advice you can still go ahead and move it where you want? As long as you have seen and taken the advice you can still go ahead.
I am in the process of doing just this and what I am being told is that it would be incredibly difficult to do if the advice says not to. There are very few IFAs in this market now due to their risk of bad advice and the firms willing to take the transfer is also limited.There has been sufficient mis-selling that most firms are running scared. The FCA has said that in the vast majority of cases they expect people to be better off retaining their DB scheme. It's a very high risk piece of advice to provide, so the costs have excavated accordingly.
Whilst the numbers sound very attractive, you do have to with up the advice of the FCA - and consider that on the other side of this trade is a pension professional tho is happy to provide those multiples to buy you out of their pension.....
Hang On said:
Just by way of update, it is worth considering in some circumstances the DC pension associated with your current employment. Apparently, some of these will happily accept a transfer against the FA’s advice.
This is exactly what we did with my wife's pensionshe was given a negative recommendation by the IFA, so we approached the current DC pension providers through work and asked if they would accept her as an insistent client which they were happy to do,
I then informed the IFA that I wanted to transfer my DB pension to them as well and not to Scottish widows as per their recommendation for me,
this pushed my transfer back a bit due to having to wait for the IFA to carry out due diligence on my new choice but I was happy to wait.
Hang On said:
Just by way of update, it is worth considering in some circumstances the DC pension associated with your current employment. Apparently, some of these will happily accept a transfer against the FA’s advice.
That really interesting, I have a very good DC provider with my current employer and having messaged them they seemed willing to accept a DB transfer even against the IFA advice. I transferred mine out about 5 years ago - my ex-employer provided and paid for the IFA advice and he recommended not to move it, but I rejected that advice and still moved it with no problems.
Mine was a very simialr scenario to the OP's in terms of multiplier (and the low paid job that had earnt me the nice transfer figure)
Mine was a very simialr scenario to the OP's in terms of multiplier (and the low paid job that had earnt me the nice transfer figure)
Liokault said:
So, I just dug out a pension from my first job as an apprentice, it’s final salary, and the amount that it pays out a year is very low, sub £5k, I think that goes up 5% a year.
But…the interesting bit is the transfer value is nearly £250k, if I move out of the final salary into another pension. Now, the 250k looks like it’s worth more in the pension I’m currently paying into with my current employer.
So a few questions:
Thé 250 figure is the transfer value, not the about I have paid in (I was an apprentice ffs I was paid peanuts and hence paid in peanuts), so does is that figure going to change, will it be worth them paying my more to pull out now or when I’m older? Should I wait on it or bite their hand off? The paperwork does say that figure is valid for a set period and not guaranteed after that date.
Am I stupid to consider pulling out of a final salary scheme?
I just turned 65 - I started an apprenticeship at 16 but couldn't join the pension fund until my apprenticeship finished at 21 and then I left 4yrs later.But…the interesting bit is the transfer value is nearly £250k, if I move out of the final salary into another pension. Now, the 250k looks like it’s worth more in the pension I’m currently paying into with my current employer.
So a few questions:
Thé 250 figure is the transfer value, not the about I have paid in (I was an apprentice ffs I was paid peanuts and hence paid in peanuts), so does is that figure going to change, will it be worth them paying my more to pull out now or when I’m older? Should I wait on it or bite their hand off? The paperwork does say that figure is valid for a set period and not guaranteed after that date.
Am I stupid to consider pulling out of a final salary scheme?
Bearing in mind the short time I was in the scheme I was surprised to be told my pension is £5K/yr, but there was no option to do anything other than take the pension. There was a value for tax purposes against LTA of around £100K, which fits with what I'd understood to be normal at 20x (I might be thinking of public sector pensions though).
I feel robbed now reading your post that I couldn't get £200K or so out of it!
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