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Final salary transfer
elantan
Posts: 21,022 Forumite
Hi people, had a guy out tonight to talk about transferring hubby''s final salary, I'm sure a few of you may remember me asking before about this, it appears just now that his old deferred pension company are paying out 35 times the yearly pension so a £10k pension they would give you £350k as a transfer value, this is meant to be quite good value
The gentleman also suggests that hubby should consider his other pension that is currently up and running ( over £1k personal and company input into this per month) his reason ... gilts are at their lowest so he would be getting the best transfer deal and also he can join another pension scheme his employer provides ( money purchase scheme)
The man estimated hubby should get somewhere in the region of £500k or there abouts and should then invest this
His company are taking a fee of £3k to perform the transfer which is OK Imo and I am not complaining about this just providing info
I spose my question is : does this transferring both pensions ( especially one that is having £1k a month pumped into it) seem like a good idea ? Are the gilts likely to rise again causing the transfer rate to go down ?
The gentleman also suggests that hubby should consider his other pension that is currently up and running ( over £1k personal and company input into this per month) his reason ... gilts are at their lowest so he would be getting the best transfer deal and also he can join another pension scheme his employer provides ( money purchase scheme)
The man estimated hubby should get somewhere in the region of £500k or there abouts and should then invest this
His company are taking a fee of £3k to perform the transfer which is OK Imo and I am not complaining about this just providing info
I spose my question is : does this transferring both pensions ( especially one that is having £1k a month pumped into it) seem like a good idea ? Are the gilts likely to rise again causing the transfer rate to go down ?
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Comments
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Are the gilts likely to rise again causing the transfer rate to go down ?
Yes they are. When is the big unknown.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I did think this ... I understand his transfer rates are really good, just trying to decide if it's worth transferring the pension he is currently paying into ... the great unknowns I spose lol0
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one good way to cope with financial unknowns is to diversify. As you know, DB pensions are cast-iron for life, having the protection of the PPF even if the original company goes belly-up. If I were you I'd be keeping a goodly chunk of pension provision in DB, only [STRIKE]gambling[/STRIKE] investing a smaller proportion.
Being poor in old age is no laughing matter.The questions that get the best answers are the questions that give most detail....0 -
one good way to cope with financial unknowns is to diversify. As you know, DB pensions are cast-iron for life, having the protection of the PPF even if the original company goes belly-up. If I were you I'd be keeping a goodly chunk of pension provision in DB, only [STRIKE]gambling[/STRIKE] investing a smaller proportion.
Being poor in old age is no laughing matter.
How secured are they though? E.g. Tata Steel? Doesn't seem like those individuals will get 100% of their DB pensions?0 -
How secured are they though? E.g. Tata Steel? Doesn't seem like those individuals will get 100% of their DB pensions?
Seems like they will get better than PPF terms which are already AIUI 90% of the DB figure.
http://www.bbc.co.uk/news/business-39936564
It is always easy to trot out the one or two bad examples (Maxwell etc) to scare-monger against DB pensions but this can divert attention from the real risk that DC-style investments won't produce the projected income consistently in old age. Especially if people use a SIPP and are 'unlucky'.
Both types have their part to play, diversity is the key.The questions that get the best answers are the questions that give most detail....0 -
The gentleman also suggests that hubby should consider his other pension that is currently up and running ( over £1k personal and company input into this per month) his reason ... gilts are at their lowest so he would be getting the best transfer deal and also he can join another pension scheme his employer provides ( money purchase scheme)
Woah woah woah. Opting out of a final salary (?) pension and moving into a DC scheme is a huge decision and one not to made lightly. Most DC schemes are vastly inferior to the DB schemes they replaced, so what you gain on the transfer could easily be outweighed by the loss on future service - "cutting your nose off to spite your face" springs to mind. It depends on an awful lot of factors that any reputable advisor should be considering (length of service, potential length of future service, expected salary increases, etc).
If "the gentleman" hasn't factored this into his advice, he's not worth the wasting of your time.0 -
The gentleman also suggests
A few questions- Who exactly is "the gentleman"?
- Is he managing any other investments for you, and if so how are they performing?
- What sort of investments is he proposing?
- Do you have other assets that you can fall back on if you reinvested pension doesn't perform well?
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The gentleman is an IFA that has been used by several of my husbands co-worders, he is not managing any other investments for us, and tbh I wasn't exactly enthralled when he stated he provides the service but he doesn't really know much about it ( basically he would be a middle man creaming off his commission on top of the person that would be managing the fund)
He was proposing standard life, prudential and Royal London ... can't exactly remember what funds but would recognise them if I heard them, he was suggesting we could make approx 5% after fees ( but not inflation being taken into account) per year on average, I'm thinking this would put the fund somewhere along the lines of cautious/ balanced ?
We have some asset's, a home and my own pension
I have my own wee pension that I have in Vanguard life strategy funds, however I have not looked at funds or anything for over 3 years as I have been studying so have just let them do their thing ... the idea of both my husband and myself being responsible for 500k in a SIPP scares me, and I certainly don't think it is an easy thing to decide where to put the money ... but I am also aware of the belief that putting your money in a tracker is relatively cheap and performs roughly the same as a managed fund
Not that I am suggesting this is what we should do
Just now we are kicking ideas about and trying to decide what to do0 -
Thanks everyone for your input so far0
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The gentleman is an IFA that has been used by several of my husbands co-worders, he is not managing any other investments for us, and tbh I wasn't exactly enthralled when he stated he provides the service but he doesn't really know much about it ( basically he would be a middle man creaming off his commission on top of the person that would be managing the fund)
There is no commission. That was banned on new business from the end of 2012.
It sounds like the IFA is not a pension transfer specialist and is acting as an introducer to one that is. However, in those cases, the IFA that does the transfer will usually hand back to the original IFA once the transfer is complete. Your comments suggest that is not happening.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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