Should I commute my pension?

It's not that I am anti-IFA.Dunstonh is a special kind of "New model" IFA who has a modern attitude to charges - and also a good grasp of investment issues.

Thank you. However Ed, anti IFA is how you come across when you post.

Most IFAs do not follow this charging model and many of them appear to have very little more knowledge about investment than the more intelligent members of the public.

Cannot disagree with that. It is estimated that around 2/3rds of IFAs are more like mortgage advisers than investment advisers. They refuse to give up the investment authorisation for the odd investment case that comes their way.

This issue is being addressed by the FSA but wont be in place for a few more years yet. To give balance though, I go to meetings and seminars where I feel like a dumbo to some of the IFAs in the room. There are a large number of highly qualified advisers out there who are very skilled at their job.

You are less likely to find the most qualified and experienced advisers working for someone else and certainly not in a salesforce. Salesforce would include firms linked to unions etc. The commission rebating is likely to be non existent or very limited with these as well as a number of people take their cut. Including the union, trade association or professional body.

Advisors also have an appalling record on the misselling front

Most of which comes from salesforces. Nearly 2/3rds of complaints come from just 12 companies (source FOS). Over 80% of advisers authorised today have never had a complaint (source FOS). 2/3rds of complaints are rejected. (source FOS). That suggests a failure to understand which could actually be an advisers fault but can also be a lack of interest taken by the individual in what is being said to them. I have certainly come across people who want to be told what they should do but not interested in the why.

Endowments and pensions were the big issues historically. Many of the troubles with these were caused by the Govt saying one thing and then changing its mind and moving the goalposts later. Long term fixed contracts like those are a !!!!!! as you can find yourself stuck in them unlike more modern easy to move around investments.

Investment bonds are the second worse product after endowments for misselling complaints.

Investment bonds had under 5000 complaints at the last FOS report. That is out of over 700,000 complaints received. The title investment bond covers a wide range of "versions" of this product. It would include with profit bonds, SCARPs, guaranteed equity bonds and single premium unit linked bonds. If you look at the number of complaints with ISAs and PEPs, it is possible there were more on those than unit linked investment bonds.

The unit linked investment bond is no different to unit trusts with the exception of taxation and charging structure.

I am sure there are bonds mis-sold mainly as the technical knowledge on the taxation isnt there with a good many but it is wrong to rule out a product because some are not capable of researching and using it in the correct manner.

This is a moneysaving website.I make no apology for explaining to people ways they can save money and increase their wealth by being a more hands-on investor.

Money saving doesnt mean going DIY on everything. Sorting out the mess some people get themselves into costs more than getting it right first time.

Advice doesnt need to be expensive. If an IFA can come in with the advice product that fits the requirement cheaper than a non-advice product that doesnt fit exactly then its money well spent.

Replies keep mentioning the limited info I have posted. Whats needed?

We cannot give advice on the forums. The area you are looking at is regulated so we can only discuss and comment. We can give concepts and ideas but we wont know enough to know whats best. We dont know your long term plans, your assets, liabilities, other savings and investments.

Taking the lump sum is fairly obvious in this case. What you do with the lump is more complicated. Some of that may not involve best financial advice technically but more like best advice to suit you and how you work and think. The best advice today may not be the best advice in 5 years or 10 years. Certainly, when your state pension kicks in, the investment bond will almost certainly be the best option due to top slicing relief (from a tax wrapper point of view). At the moment, you could be borderline between unit trust and investment bond and the differences may be so neglible that it really does matter. However, the UT option does involve more work.

It is quite possible that a combination is a good option. Enough in unit trusts to bed and ISA each tax year and use CGT allowance at the same time with the rest in investment bond to make sure you dont enter higher rate tax banding.