I heard a rumour that Advisers wouldn't recommend a transfer with a value of less than 400k but the one or two I've spoken to on the phone have definitely not advised against transferOriginally Posted by Devonian
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Have to take issue with these comments. Given that most advisers do not employ contingent charging on defined benefit transfers (so our fee gets paid whether client transfers or not), I can’t see your “advisers persuading you” comment’s validity.
Also “almost never” is a very bold phrase. Around 40% of our enquiries result in a recommendation to transfer so not quite the rarity you mention.
Ignore the big figures - without context they are meaningless. Also it’s not strictly true that you couldn’t move your pension and still receive guaranteed inflation protected income. You can transfer and buy an annuity which provides just that. Having said that it’s highly unlikely currently that an annuity would be better than the defined pension from your scheme, BUT there are circumstances such as ill health which can mean an impaired life annuity might become a viable option.
Bottom line is - don’t be pestered by advisers. Pick one (or none) and tell the rest politely you don’t want contacted again.
Advisers will vary but transfer value size should not be a determining factor. I’ve seen transfers done for £40k.
Re comments on the phone I’d be staggered if ANY gave definitive advice so quickly. Process is a full fact-gathering and discussion then assessing and discussing your attitude to risk and capacity for loss, and only THEN starting to look at the pensions involved. It’s prob best you use a local IFA but if you want me to cast my eyes over any advice given by them you can drop me a PM.
I read a lot of pension and financial press. The comments are theirs. A whole industry has grown on transferring people out of DB schemes and I have no doubt people are attracted by impressive looking CETVs without considering what 30 years of inflation might look like.
Defined benefit pension transfers : ‘don’t do it’ is the best advice - Money Marketing
I took lots of advice before deciding to do a partial transfer of mine, so I have, for me, the best of both worlds for when I retire shortly. A drawdown scheme offering flexibility and a final salary, which will offer security of income. That will also be boosted (provided it's not means tested in the next 4 years) by a state pension of nearly £9k a year.
I wouldn't be surprised if transfers became the next PPI. In these times of low returns, advisor, wrap and product fees can make a heck of a difference to returns.
A lot of advisors are pulling out of this market as their insurance premiums to cover transfer advice are being hiked.
Last edited by broxie; 30th August 2019 at 11:31.
I compared a joint escalation annuity with my final salaries and the only advantage to transferring out and into an annuity was that I'd get the full 25% tfls.
Usually I rush into things but this is about the future so obviously a lot of thought needed
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They didn't give a definitive answer as such but the figures they mentioned for drawdown seemed a bit fanciful.
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Indeed, and hiked due to idiotic adviser firms (transfers suggest, agreed to and processed inside a day ffs) around the British Steel debacle, so all firms suffer.
I’ve not given a recommendation to transfer earlier than 3 weeks into the advice process
Lol
Yes very rarely will an annuity be better. People transfer to go into drawdown generally rather than to buy an annuity.
Fanciful in what way. Quite strict rules exist around what assumptions etc can be made, and often erring on the cautious side.
He kept stressing that he wasn't trying to steer me towards drawdown and said he wasn't qualified to deal with final salary pensions
But, he was definitely pushing drawdown.
What I thought would be a safe drawdown figure was about 2/3 of his and he didn't mention inflation.
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What rate do you think is safe? It used to be 4%, but earlier this year reduced to 3.5%. I use 3%. That is inflation proof.
https://www.ftadviser.com/pensions/2...drawdown-rate/
Rule #1 - when talking about your DB scheme only do so with someone qualified to discuss it - sounds like the person was a bit clueless sadly
Again it’s impossible to generalize like that - depending on your attitude to risk and subsequent fund selection then the low mid high projection rates will differ. What is “realistic” will vary from fund type to fund type. After all 3% in a cash fund for example sounds a tad optimistic
It was higher than 5% and I was thinking around 3%
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You're probably right.
He was talking about the final salary scheme as though it was some sort of handicap.
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One part of the pension pack that I received recently that really has me stumped is re 'GMP Equalisation'
anybody any ideas ?
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In short European courts decided that GMP (guaranteed minimum pension) entitlement under defined benefit schemes were actually “deferred pay” and therefore men and women’s entitlements have to be treated the same. In reality what it meant was pension schemes had to equalize the NRDs to (normally) 65 for both when prev it was typically 60 F and 65 M.
Also the perception that drawdown funds should be treated as an annuity at retirement age, whereas if one were planning a 30 year retirement, given that 2/3rds of the income won’t be required for at least ten years, even the most conservative investor could afford to be more risky with investments based on market recovery periods over a long period of history.Again it’s impossible to generalize like that - depending on your attitude to risk and subsequent fund selection then the low mid high projection rates will differ. What is “realistic” will vary from fund type to fund type. After all 3% in a cash fund for example sounds a tad optimistic
That’s my philosophy and I make sure my next ten years (ie 1/3rd of my pot) is invested safely, further out, I’m willing to take more risk.
Some of the “lifestrategy” funds appear to be built like this. My own employers default DC funds (with Aviva) are built to trend towards 100% cash/safe securities over the last 5-10 years of one’s career. I think this is criminal as it assumes the employee will purchase an annuity on retirement rather than move forward with a drawdown plan over the decades ahead.
Last edited by broxie; 31st August 2019 at 07:24. Reason: spelling
I took a transfer from a FS scheme that I had been a member of for about 25 years before it closed and a DC scheme set up. It was a large figure and a big multiple of what pension I could take at age 60. It has enabled me to retire over two years early and given me a lot of flexibility in taking income. I have moved from a higher rate tax payer to not paying any tax on a not too dissimilar net income (monthly income is mixture of TFC and taxable income to my personal allowance.
As some have already mentioned it won’t be best for most people but it will be for some. Unfortunately there have been a number of advisors taking advantage and not only facilitating transfers but putting them in inappropriate investments with high charges.
Mine went into a straightforward personal pension and reflect the fact that most of the money won’t be required for 10,20 or 30 years.
As said a transfer isn’t for most people but it has changed my life for the better!
Bu**er!!!!! I thought I was in for some money
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The total transfer value is irrelevant except that the adviser will not get enough fee. The important figure is the CETV (cash equivalent transfer value) divided by the annual pension. For some reason mine has gone from 25x (not worth transferring) to 36x (definitely worth considering) in a year.
Transferring out gives you the flexibility to take a larger initial withdrawal and reduce it when the state pension (Corbyn permitting) kicks in. When you die it also gives your other half 100% pension as opposed to 50% for a DB and enables you to pass on your hard earned with no IHT liability.
Drawdown calc here - https://www.finalsalarytransfer.com/...own-calculator
Last edited by Maris; 6th September 2019 at 22:25.
Not quite. most advisers do not do contingent charging. So the fee gets levied regardless of tv size. The reason (the main one anyway) that TVs have been consistently rising recently is that annuity rates have been falling steadily which means DB scheme trustees and actuaries have to use a bigger conversion factor to capitalize the revalued benefit into a CETV. 25x is worth considering for many people / equally 36x is not worth considering for others. It’s simply impossible to generalize like that since there can be so many different reasons for wanting to transfer (or not).
I think I feel better now! Was more like £300 - but then went onto a company sports and social session at the Hard Rock Café - at least there was some nibbles to soak up the beers.£400 session. Wonder how his head is this morning
Went into work on Friday to pick up some presents (both liquid form - they knew me well) and say last goodbyes. Signed out of some WhatsApp groups. Handed in the company phone and laptop.
Walked out and no regrets at all!!
Cheers!
Been busy this week with a lot of stuff put off by work. Busy looking at houses at various places uk side. Eastbourne is looking interesting (no jokes please!!).
Martyn
Enjoy the next stage in your life
That is almost impossible to answer. It is something you need to calculate based on your lifestyle.
I need to pay for my yacht upkeep and second home in Milan. Your lifestyle may be different?? (Joking mate).
Ballpark - £1K/month disposable would be nice (after paying the bills). But if you want to finance for new car HP maybe add extra £250/month. All depends on your outgoings and income! Also depends where you live. Money goes a lot further depending on what country (or county) you live in.
You may have dependents who need financial support. - young or old.
Martyn.
Last edited by MartynJC (UK); 7th September 2019 at 08:36.
https://www.ftadviser.com/pensions/2...ues-being-cut/
According to our illustrious leader seeking a no deal
won't be a good move for us.
He certainly has the SADIM touch at the moment.
I'm into countdown mode now - a few years to go.
Fortunately I have reasonable time in a State scheme so have a decent accrued benefit in a generous final salary scheme that pays out at 60yrs. It's still longer than I'd prefer to work but earlier than that would mean a much smaller income until the rest of the pension in the scheme comes on line at 67 - not desirable given I have a young son to look after who's only going to get pricier as he gets older!
Despite the awful exchange rate and uncertain conditions, we're almost certain to go to Spain - my wife can qualify for the generous State pension on top of her small Occupational/State ones here if she works another 5 years there so we need to do that before her age becomes too much of a barrier to finding a job. The drastically reduced cost of living there is also a major factor but we'll have to find a good tax/financial planner as there's quite a few unpleasant quirks to the Spanish taxation system.
From a personal perspective a little sad that the son won't be able to grow up here but he'll have dual citizenship and the choice of residence later on.
I'd heard 30k per couple but don't quote me and of course if you retired in 5 years you'd have to add on inflation
Good luck and well done on having plans for finishing plus having a good financial adviser
I don't blame you at all for wanting to leave the country.
I've got 14 weeks and 6 days to go till I finish on the 20th December plus I've got a week in the lakes from the 18th of this month and another 41 hours holiday to use up.
Hear hear
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I know a couple who retired a year ago both age 60, went into drawdown crystallising enough to give them around £1,200 per month and a year on they’ve saved money! Said £1,000 per month is comfortable for their lifestyle as they just aren’t spenders. I also know another couple that spend £100,000 just on holidays a year, let alone anything else. So the answer to your question is there isn’t an answer, everyone is different. I’d say at least £20,000 as a minimum and £30,000 for a good lifestyle. Anything above even better. Location, lifestyle, hobbies/toys, holidays, children, grand children all important components to consider which will be different for everyone.
Those couples currently earning say £150,000 pa between them, might think differently.
I agree.
And there are people who earn double that but spend like misers and are always saving for that rainy day..........
Have a look on MSE under pensions.
Some admit they'll never get out of the habit of being tight.
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Just under 10 months then i retire.
I cant wait!!!!!
As for how much money do you need? How long is a piece of string!?
Everybody is entirelydifferent in lifestyle/ in their outgoings etc...I wont be getting anywhere near what some people on here will be getting...But I will be more than happy, I plan to spend the winters in Thailand ..and the summers over here..
Roll on July 2020!!
Technically the answer is twice the distance from the middle to one end but I’m sure that’s not going to be helpful
I can remember a kid in school in the late 60's saying 'twice as long as half of it'Technically the answer is twice the distance from the middle to one end but I’m sure that’s not going to be helpful
which amounts to the same
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That sounds about right. I'm planning my retirement and spoken to a few single mates (mortgage free) who are retired and they all seem to agree on around £2k a month in your hand. So £30k for a couple would be right. Assuming a single income for one couple, you'd need a pension of £48k before tax. Assuming a drawdown pot with a safe rate of 3%, then you'd need a pot of £1.6m.
That amount keeps you nicely out of the high rate tax band.
If the couple have a pension each, then you'll benefit from individual tax codes, so financial advice would be essential.
There are other ways of getting income. Buy to Let is still quite fruitful even though the .gov gives penalties. Say get £1K from a 2 bed flat - maybe 800 nett/month goes along way to the £2K with little hassles.
Last edited by MartynJC (UK); 7th September 2019 at 12:55.
How did you get from £48k gross to £30k net?
If you are saying 30k for a couple you must include state pension - circa 2x £8k so that’s 16k before you start. Leaves a shortfall of only 14k which a fund of circa 470k has a sporting chance of achieving based on your 3%
470k must have a very good chance.
When I mentioned 30k I included 2 state pensions which is 2 x £8,7000ish plus whatever works pensions.
I've been drawing one final salary since 2008 but I'm still undecided on the other two.
I'm waiting to see what effect Boris Johnson's brexit or no deal has before going either final salary or drawsown
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Guys as an IFA I feel I must highlight something to those thinking about looking into a transfer of their DB scheme to a SIPP or PP. Be very careful re the timing of it-the trustees have NO requirement to give you a CETV if you are within 12 months of the NRD of the scheme. First CETV is free so if you are curious and approaching 12 months to retirement you should get the figures so at least you know what they are.
Are you including maintenance and upkeep of your house in your budget? An observation I have of pensioners in my sphere is the number with valuable houses that let them go to rat shit. Undecorated, threadbare flooring, grim, dingy furniture, grotty bathrooms and kitchens, weedy, overgrown gardens. I couldn’t bare that, psychologically it’s like letting the dusk or autumn of life take over.
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Cheers.
My NRD is 2023 so plenty of time.
I asked Willis Towers Watson if I could get another CETV at xmas (6 months from last one) and was surprised when I was told yes and it would be free.
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Small world. I exited the WTW DB scheme six months ago. They were very efficient in the transfer. And bonus, my CETV went up by £60k in the six months between initial and final valuations.
Jesus 60k is a lot.
Mine went up 46k but that was over 12 months.
WTW have a lot of knockers but I've had no problems
When I got the last one, there was one of the forms to send back which had afigure on it but it was about 34k more than the written quote itself.
They emailed back more or less straight away.
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CETVs are definitely on the up - a reflection of gilt prices. My wife is looking to exit her scheme. The valuation increased £100,000 in a twelve month period. I do not expect this to be an indefinite state of affairs.
Mine has gone up 189k in a year! From 25x pension to 36x. Hoping I don’t miss the boat.
Better keep an eye on your lifetime allowance. This is becoming increasingly easy to exceed with the level of transfer values being quoted.
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