Final Salary Pension Transfers Mis-Selling Scandal No. 2?

GDB2222 wrote: »

You say the average of those FTAS figures is 11%, but my calculation is 6.8%.

But that's a straight arithmetic average, which is wrong for this purpose. (It's wrong because -30% one year needs +43% the next year to get back to the original level.)

The correct approach is a geometric average, which is 5.7%. Not a million miles from the 4% that GSP is mentioning.

Fair enough, when i dragged down in a spreadsheet it gave 10.79 but as you point out thats the wrong thing to do.

davieg11 wrote: »

I took a note of those percentages when I logged into the account on February so that I can keep track every year and compare them to my Royal London pension. As far as I know it's the raw performance figures for that particular fund. I'll be expecting my IFA to get better returns for me over the long term in my Royal London pension or there will be no point in paying for him.

...and that may well be the case.

It will be the respective fund manager who will try to get those superior returns, although I think most of them struggle to beat the general market.

Hence the burgeoning market in low cost tracker funds.

Choosing a good fund manager is like taking a punt on someone taking a punt.

Marco's dilemma at age 37 with such a sizeable CETV value looks very tempting , given presumably another 20 years plus before he can get his hands on it.

I had similar experience recently, older (57) witha CETV of over £400k ....a TVAS analysis didn't to me seem very convincing but the IFA who produced it would have readily agreed to proceed.

What concerned me was that the analysis avoided any comment on whether it was a good idea ...the numbers in themselves weren't particularly convincing.

Whilst it would have been tempting to combine the transfer with an existing accumulating sipp, i sought a second opinion from another IFA who essentially thought it was very much not a good idea to give up a db scheme when no other signficant funding source was in place. That point appeared not to have been given much weighting from my first consultation.

However, have seen colleagues with much larger CETV values, and cash savings, spouse in db scheme, where it appears to make a better case.

For my part to transfer would have involved all eggs in one basket, with insufficient cash outside to allow for any recovery period. And decided not to proceed.

sandsy wrote: »

The TVAS analysis is nothing more than a numeric analysis of the rate of growth needed to match the estimated benefits of the DB scheme, using a load of assumptions. It's not supposed to have any comment.

The suitability letter from the adviser is where you should find commentary which takes into account both the TVAS and other factors, such as your attitude to risk, any other assets etc, and ultimately should provide a clear recommendation of whether it's likely to be in your best interests to transfer or not.

Does the suitability letter from an IFA cost money or is it only when you go ahead that you pay??

marco_79 wrote: »

Does the suitability letter from an IFA cost money or is it only when you go ahead that you pay??

Depends on what you agree with the IFA. Realistically, if you walk into an IFA's office as a stranger and say you want advice on whether to transfer out of DB, they will charge you for the advice and the suitability letter even if it says "do nothing". And in fact they *should* charge you for the advice, as if they only charged you if you transferred out, they are biased towards telling you to transfer out.