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  • FIRST POST
    • ArchaeoNeo
    • By ArchaeoNeo 12th Jan 17, 12:13 PM
    • 8Posts
    • 1Thanks
    ArchaeoNeo
    Defined Benefit Transfer Values
    • #1
    • 12th Jan 17, 12:13 PM
    Defined Benefit Transfer Values 12th Jan 17 at 12:13 PM
    Hi to all, as a newbie poster I would appreciate some thoughts/advice on what to do with my deferred Defined Benefit pension. Apologies if this has been discussed before.

    A little background: I took voluntary redundancy from Barclays in 1999 after 13 years and deferred my 1964 DB pension scheme. I then jobbed around for five or so years collecting various pension schemes along the way until I re-joined Barclays in 2004. I transferred three Defined Contribution pots into my new Barclays Afterwork DC scheme (the 1964 scheme was closed to new employees, and I believe closed full-stop in 2010), just to keep things simple. I was then made redundant (again - no choice this time!) by Barclays in 2009 and deferred my Afterwork pension.

    I decided to go back to 'big school' and do another degree; I ended up staying to the point where I'm now doing a part-time PhD, so I have not looked at my pensions for six years. I decided recently to log on and have a peep at how things were going in the Barclays UK Retirement Fund as there seems to be some reported activity regarding DB pensions and the high transfer values currently on offer. I was (pleasantly) surprised at the value on offer to me from the 1964 scheme and I am now considering transferring this value into my Afterwork, or possibly other, scheme - especially as the former pensions minister appears to be doing something similar.

    My instinct tells me to leave the DB well alone - this was what I was always told by fellow Barclays employees as it was 'gold dust' and not to be tampered with. However, I would hate to miss out on a great opportunity as I understand the values being offered are at an all-time high (based on 15 year yields?) and are unlikely to be offered again. I understand IFA advice has to be sought where the transfer value is above £30K, I have asked if I still need to do this if I simply transfer into my Afterwork DC fund, and remain within the UKRF - Towers Watson, who are the administrators, have so far failed to come back with an answer after a week. I wonder if anyone knows the answer to this?

    I appreciate I will probably need to sit down face-to-face with an IFA to discuss the implications of transferring, etc. However, if anyone has found themselves, or advised someone, in a similar situation I would appreciate some feedback. Thank you in advance.
Page 1
    • PensionTech
    • By PensionTech 12th Jan 17, 12:29 PM
    • 690 Posts
    • 878 Thanks
    PensionTech
    • #2
    • 12th Jan 17, 12:29 PM
    • #2
    • 12th Jan 17, 12:29 PM
    You do still have to take advice even if the administrators are the same. It is the loss of the guarantees that come with a DB pension that triggers the requirement for advice.

    You've understood the issues pretty well so far. What you have to consider is what kind of income you want in retirement. If you want a guaranteed, index-linked income with provision for your spouse, then a DB pension is the way to go. If you want more flexibility over your retirement income and are willing to take some risk, it could be worth transferring, but it very much depends on what kind of income you would realistically (given your own attitude to risk, and your ability to tolerate downswings - e.g. other sources of income) be able to generate from a DC pot compared to the DB.

    The IFA will go through all these issues with you.
    I am a Technical Analyst at a third-party pension administration company. My job is to interpret rules and legislation and provide technical guidance, but I am not a lawyer or a qualified advisor of any kind and anything I say on these boards is my opinion only.
    • xylophone
    • By xylophone 12th Jan 17, 1:01 PM
    • 20,641 Posts
    • 11,815 Thanks
    xylophone
    • #3
    • 12th Jan 17, 1:01 PM
    • #3
    • 12th Jan 17, 1:01 PM
    https://www.moneyadviceservice.org.uk/en/articles/transferring-out-of-a-defined-benefit-pension-scheme

    http://www.royallondon.com/Global/documents/GoodWithYourMoney/COMPANY-PENSIONS-FIVE-REASONS-TO-TRANSFER-OUT-AND-FIVE-REASONS-NOT-TO.pdf

    http://www.pruadviser.co.uk/content/knowledge/technical-centre/pension_switches_transfers/

    Have you obtained a new state pension statement?

    https://www.gov.uk/check-state-pension
    • mgdavid
    • By mgdavid 12th Jan 17, 1:13 PM
    • 5,070 Posts
    • 4,229 Thanks
    mgdavid
    • #4
    • 12th Jan 17, 1:13 PM
    • #4
    • 12th Jan 17, 1:13 PM
    as with investing, an important part of pensions provision is diversification. Although you haven't quoted any figures it sounds as if you have a useful guaranteed DB pension and a useful DC pot too, so you are there already.
    But I fear you are approaching this from the wrong direction, ie thoughts of a large lump sum to play with, rather than 'this is how much income I will need in retirement, how best to achieve it?'
    A salary slave no more.....
    • ArchaeoNeo
    • By ArchaeoNeo 12th Jan 17, 1:58 PM
    • 8 Posts
    • 1 Thanks
    ArchaeoNeo
    • #5
    • 12th Jan 17, 1:58 PM
    • #5
    • 12th Jan 17, 1:58 PM
    Thank you for these prompt and clearly well-informed replies; I am in the right place.

    I am (a very young) 52 and although I worked for Barclays I was in IT; my PhD is in Archaeology so under no circumstances am I to be left alone with my finances! Although new rules say I can walk at 55 I would prefer to wait until my NRD of 60, especially if I keep the DB pension. I am therefore committed to at least another eight years of working.

    I did check my State Pension, thanks for the link - I have worked all my life but have 7 years that are 'not full' which are all down to higher education. I have to work 4 more years to get the full state pension in 2037 but I know I was opted out of SERPS for most of the time I spent with Barclays so the £155 is unlikely. I don't really understand my statements from TW but it looks like a GMP gets revalued at 65 and the pension goes up, only for it to go down again at 67 when I get my SP! I need a lie down now.

    You are correct in that I am looking at lump sums when I should be looking at income, in mitigation I am a self-funded researcher who has had an eye-watering (to me) sum flashed at me. I have also been quietly content over the years knowing I have spread my investments over DB and DC schemes - perhaps I should stick with what I've got.

    I'm a bit nervous at posting figures up but happy to discuss these if anyone wants to PM me
    • xylophone
    • By xylophone 12th Jan 17, 3:22 PM
    • 20,641 Posts
    • 11,815 Thanks
    xylophone
    • #6
    • 12th Jan 17, 3:22 PM
    • #6
    • 12th Jan 17, 3:22 PM
    http://forums.moneysavingexpert.com/showthread.php?t=5583351

    post 8 onwards.


    http://forums.moneysavingexpert.com/showthread.php?p=63517441#post63517441

    Only the mention of Barclays and GMP is enough to send shivers down the spine.....

    Bind the cold towels round the head and make your way through the above thread - I'm sure that Mike would be delighted to explain all...
    • MikeFloutier
    • By MikeFloutier 12th Jan 17, 4:08 PM
    • 142 Posts
    • 62 Thanks
    MikeFloutier
    • #7
    • 12th Jan 17, 4:08 PM
    • #7
    • 12th Jan 17, 4:08 PM
    Hi ArchaeoNeo, I'd be happy to comment on your DB offer figures privately if you think it might help; I've no experience of DC.

    I think my main advice regarding dealing with Barclays/TW is to make sure you understand relevant pension law - via this forum & the Fund's scheme rules. Having started there and applied them to your figures/circumstances you need the perseverance to follow through in negotiations with TW.

    The process is:

    1. Understanding and applying the above.
    2. Putting it firmly to TW
    3. Applying to TPAS if TW reject your assertions
    4. Finally the Ombudsman if all else fails

    My experience and research indicate that TPAS and the Ombudsman are both reasonable whereas TW have a, not unnatural, self-interest.

    Talking to other Barclays folk in similar positions has shown me that TW do need encouraging to pay up.
    • MikeFloutier
    • By MikeFloutier 12th Jan 17, 4:13 PM
    • 142 Posts
    • 62 Thanks
    MikeFloutier
    • #8
    • 12th Jan 17, 4:13 PM
    • #8
    • 12th Jan 17, 4:13 PM
    Also, I'd encourage you to walk through each step with the forum.

    I find that the process of describing everything accurately and in detail is a great help in understanding it all.

    In addition to this you also get the benefits of knowledge, safeguarding and encouragement from many highly experienced and supportive forum members.

    I found it a very helpful and uplifting process.
    • xylophone
    • By xylophone 12th Jan 17, 5:16 PM
    • 20,641 Posts
    • 11,815 Thanks
    xylophone
    • #9
    • 12th Jan 17, 5:16 PM
    • #9
    • 12th Jan 17, 5:16 PM
    I found it a very helpful and uplifting process.
    Almost transcendental?
    • ArchaeoNeo
    • By ArchaeoNeo 12th Jan 17, 5:52 PM
    • 8 Posts
    • 1 Thanks
    ArchaeoNeo
    Fantastic - didn't think I'd be sending a LOL! out on this forum today, but there you go!

    Thanks all for your thoughts, links and wisdom. I'd like to mull over my offer with you Mike, that's very kind of you; I'll PM you either later or tomorrow. You've mentioned pension law which I know next to nothing about. I also understand that TW are actuaries and therefore have the trustees and shareholders best interests at heart, not mine.
    • ex-pat scot
    • By ex-pat scot 13th Jan 17, 8:32 AM
    • 162 Posts
    • 183 Thanks
    ex-pat scot
    Fantastic - didn't think I'd be sending a LOL! out on this forum today, but there you go!

    Thanks all for your thoughts, links and wisdom. I'd like to mull over my offer with you Mike, that's very kind of you; I'll PM you either later or tomorrow. You've mentioned pension law which I know next to nothing about. I also understand that TW are actuaries and therefore have the trustees and shareholders best interests at heart, not mine.
    Originally posted by ArchaeoNeo
    The trustees should be acting in the interests of all members of the scheme, whether active, deferred or pensioner.


    WTW are appointed scheme actuaries and administrator. Their duties are set out in the service contract. If you receive poor performance from them, then your escalation is to the trustees.
    • ArchaeoNeo
    • By ArchaeoNeo 15th Mar 17, 2:29 PM
    • 8 Posts
    • 1 Thanks
    ArchaeoNeo
    Hi to all, it has been a while since my original post but I would like to share my continuing journey with you and much has happened since January.
    Firstly I contacted a good IFA and discussed the DB transfer - things were put in motion and he is still waiting to hear from Towers Watson.
    I also contacted Towers Watson to ask a few questions of my own regarding the DC pot and whether my DB CETV might be transferred into it, if indeed that were the best option - it can't. The story would have ended there but for the extra information supplied, namely I could have taken retirement at 50 and would I like a quotation! I said OK.
    In short I received a pack from TOMAS thicker than War and Peace stating a fund value of £133k and all the various options therein (25% tax-free, all manner of annuity scenarios, drawdown, etc. - great reading).
    Now I have a question for you good people, does the following stack up as a reasonable plan or am I completely mad?
    I want to buy a house with my partner and young family as we have rented for nearly 10 years and have nothing to show for it. Our landlord is selling the property and has given us notice. We have about £100k to put down as a deposit on a £250k new-build property. I believe we would be eligible for a Help to Buy equity loan of 20% (£50k) leaving £100k to finance. What I would like to do is take my DC pot as cash to provide the balance of the property and be mortgage-free. I have made a very rough calculation on the tax I would have to pay and believe I would end up with just over £100k.
    I have only taken temporary work this last year as I was working on my PhD, I have now put this on hold and been offered a job with the Civil Service, as has my partner - we both start in April. My partner does have 14 hours/week part-time work but piles most of what she earns into her pension. The point here is that I don't believe we would be considered for a mortgage for at least 6 months, hence the desire to use my DC pot.
    Please could I have your thoughts? Particularly if there is a cunning plan to use my DC cash and not get hammered for £30k+ tax - I have heard of businesses being invested in pensions, presumably as a tax-efficient mechanism? Is it possible to do this with a property?
    Apologies if this crosses into the realms of house buying but it is ostensibly a pension question.
    Thanks for reading.
    • xylophone
    • By xylophone 15th Mar 17, 3:06 PM
    • 20,641 Posts
    • 11,815 Thanks
    xylophone
    I have to work 4 more years to get the full state pension in 2037 but I know I was opted out of SERPS for most of the time I spent with Barclays so the £155 is unlikely.
    I am not sure that you quite understand the new system.

    What is your "starting amount" as at 6/4/16?

    Has your wife also obtained a new state pension statement?
    • xylophone
    • By xylophone 15th Mar 17, 3:12 PM
    • 20,641 Posts
    • 11,815 Thanks
    xylophone
    What I would like to do is take my DC pot as cash
    You are able to access the Afterwork deferred pension before age 55?

    If you can and do, are you aware of how much you will pay in tax?

    http://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/
    • ArchaeoNeo
    • By ArchaeoNeo 15th Mar 17, 3:29 PM
    • 8 Posts
    • 1 Thanks
    ArchaeoNeo
    My SP is £139.31/week, forecast of £155.65/week if I contribute another 4 years before 2031.
    My partner's is almost identical even though she is 6 years younger.

    Yes I could have taken my Afterwork pension any time from 50; I'm aware I will pay tax on 75% but am short on options in order to buy a house.
    • xylophone
    • By xylophone 15th Mar 17, 3:38 PM
    • 20,641 Posts
    • 11,815 Thanks
    xylophone
    My SP is £139.31/week, forecast of £155.65/week if I contribute another 4 years before 2031.
    Which presumably you will do......
    • ArchaeoNeo
    • By ArchaeoNeo 15th Mar 17, 3:43 PM
    • 8 Posts
    • 1 Thanks
    ArchaeoNeo
    Yes, although on my Gateway account it mentions a COPE amount of £31.11 as I was contracted out. Will this not be deducted from my SP?
    • kidmugsy
    • By kidmugsy 15th Mar 17, 3:47 PM
    • 9,015 Posts
    • 5,872 Thanks
    kidmugsy
    Yes I could have taken my Afterwork pension any time from 50; I'm aware I will pay tax on 75% but am short on options in order to buy a house.
    Originally posted by ArchaeoNeo
    You are really prepared to pay 40% income tax just to avoid taking on a mortgage loan? When interest rates are at their lowest in history? Good grief: such folly.

    All you need to do is take out the £33k TFLS, transfer the investments inside the fund from equities or whatever to cash, and drawdown at a rate that means you need never pay more than 20% tax. A mortgage broker will find you a loan to suit your circs. Now go and lie down until your entirely fatuous idea has departed your brain.
    • xylophone
    • By xylophone 15th Mar 17, 3:53 PM
    • 20,641 Posts
    • 11,815 Thanks
    xylophone
    Yes, although on my Gateway account it mentions a COPE amount of £31.11 as I was contracted out. Will this not be deducted from my SP?
    Your "starting amount" has already had a deduction for your contracted out years applied to it.
    • ArchaeoNeo
    • By ArchaeoNeo 15th Mar 17, 5:51 PM
    • 8 Posts
    • 1 Thanks
    ArchaeoNeo
    OK Kidmugsy, so that's a 'no' then!?
    I'll arrange to see a broker and see what our options are.
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