Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • GDB2222
    • By GDB2222 17th Apr 17, 11:47 AM
    • 13,675Posts
    • 72,608Thanks
    GDB2222
    Final Salary Pension Transfers Mis-Selling Scandal No. 2?
    • #1
    • 17th Apr 17, 11:47 AM
    Final Salary Pension Transfers Mis-Selling Scandal No. 2? 17th Apr 17 at 11:47 AM
    https://uk.yahoo.com/finance/news/apos-swap-pension-1m-apos-063732409.html

    I won't quote the whole thing, but :

    "The City watchdog, the Financial Conduct Authority, has intervened and blocked over 50 advice firms from performing pension transfers.

    A spokesman for the FCA would not say what the firms had done wrong, but pension experts say today’s environment is reminiscent of the pension mis-selling scandal of the Eighties and Nineties when millions were wrongly advised to opt out of generous workplace pensions.

    Billions of pounds of compensation were paid out as a result.

    Tom McPhail, of Hargreaves Lansdown, the pension and investment firm, said: “There is a lot of inappropriate advice being given. Some investors will lose their money, and I expect the regulator to come down hard. We’ve seen this before.”"
    No reliance should be placed on the above! Absolutely none, do you hear?
Page 1
    • dunstonh
    • By dunstonh 17th Apr 17, 12:27 PM
    • 87,325 Posts
    • 52,508 Thanks
    dunstonh
    • #2
    • 17th Apr 17, 12:27 PM
    • #2
    • 17th Apr 17, 12:27 PM
    It's funny because you see plenty of posts on this board moaning about advisers being cautious and not recommending transfers out yet you get articles like that in the media predicting a scandal. It should also be noted that the article contains a number of errors.

    I think the important thing is that you should approach the advice firm of your choosing and never employ one that has contacted you. If the advice is to use unregulated investments and goes off the mainstream then be on guard (i.e. dont do it). Finally, if you are the type of person that is going to panic when their final salary transfer value of say £500,000 drops to £400,000 then you need to be thinking whether it is the right thing for you or not. A drop from £500k to £400k will likely happen at some point (possibly more). The more you have, the more the volatility will be noticeable with very high amounts lost. Equally, it does mean the more it goes up too during growth periods but some people find it hard to average out the ups and downs and will panic on the downs.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • robin61
    • By robin61 17th Apr 17, 5:06 PM
    • 524 Posts
    • 427 Thanks
    robin61
    • #3
    • 17th Apr 17, 5:06 PM
    • #3
    • 17th Apr 17, 5:06 PM
    The more you have, the more the volatility will be noticeable with very high amounts lost. Equally, it does mean the more it goes up too during growth periods but some people find it hard to average out the ups and downs and will panic on the downs.
    Originally posted by dunstonh
    I can really relate to this. I have been investing in a DC scheme and my Wife also has a DC scheme. Really the only thing that allows me to feel comfortable about these investments is that i also have a DB scheme which will be enough to get by on should other investments go pear shaped. This allows me to be braver than i would otherwise be with other investments.
    The problem with socialism is that you eventually run out of other people's money.
    • RickyB2000
    • By RickyB2000 17th Apr 17, 5:39 PM
    • 273 Posts
    • 165 Thanks
    RickyB2000
    • #4
    • 17th Apr 17, 5:39 PM
    • #4
    • 17th Apr 17, 5:39 PM
    I can really relate to this. I have been investing in a DC scheme and my Wife also has a DC scheme. Really the only thing that allows me to feel comfortable about these investments is that i also have a DB scheme which will be enough to get by on should other investments go pear shaped. This allows me to be braver than i would otherwise be with other investments.
    Originally posted by robin61
    Of course many people will know nothing other than a DC scheme going forward. I suggest everyone does a stint in the public sector just to get some diversification with a DB scheme (or get very well paying jobs).
    • ischofie1
    • By ischofie1 17th Apr 17, 5:48 PM
    • 133 Posts
    • 105 Thanks
    ischofie1
    • #5
    • 17th Apr 17, 5:48 PM
    • #5
    • 17th Apr 17, 5:48 PM
    I can really relate to this. I have been investing in a DC scheme and my Wife also has a DC scheme. Really the only thing that allows me to feel comfortable about these investments is that i also have a DB scheme which will be enough to get by on should other investments go pear shaped. This allows me to be braver than i would otherwise be with other investments.
    Originally posted by robin61
    I think I fall into the same boat in that my DB allows me to stay quite high on the risk scale for my DC.
    I also think it's wise to have contingency plans.
    My DC is on target to let me finish at 55 in 5 years time. If it's not there at 55 I'll carry on working.
    I also intend to hold 3 years worth of cash at 55 and draw on this in a downturn but top up in an upturn.
    This should allow me to stay reasonably up on the risk scale during retirement.
    It helps that by nature I don't panic during a downturn.

    Other than that... everything else is in the lap of the gods.
    • marco_79
    • By marco_79 17th Apr 17, 5:50 PM
    • 187 Posts
    • 122 Thanks
    marco_79
    • #6
    • 17th Apr 17, 5:50 PM
    • #6
    • 17th Apr 17, 5:50 PM
    I'm in the considering coming out of a DB due to the multiplier being so high (x37-x39 £800k min, age 37). I'm also very nervous about having nothing to fall back on. The growth rate I would like is only about 3-4% so can afford to go low risk. Going to take the advice of several IFAs that I will approach before making any decisions. Half of me is saying leave well alone other half doesn't want to miss out on the opportunity of a life time.
    Smile and be happy, things can usually get worse!
    • RickyB2000
    • By RickyB2000 17th Apr 17, 6:10 PM
    • 273 Posts
    • 165 Thanks
    RickyB2000
    • #7
    • 17th Apr 17, 6:10 PM
    • #7
    • 17th Apr 17, 6:10 PM
    I'm in the considering coming out of a DB due to the multiplier being so high (x37-x39 £800k min, age 37). I'm also very nervous about having nothing to fall back on. The growth rate I would like is only about 3-4% so can afford to go low risk. Going to take the advice of several IFAs that I will approach before making any decisions. Half of me is saying leave well alone other half doesn't want to miss out on the opportunity of a life time.
    Originally posted by marco_79
    Based on this you should probably just take it, spend the money and then claim the compensation for miss selling. You will be kicking yourself when you are claiming your measly DB pension while everyone else is living it up on their miss-selling compensation!
    Obviously this is not advice.
    • GSP
    • By GSP 18th Apr 17, 7:12 AM
    • 64 Posts
    • 8 Thanks
    GSP
    • #8
    • 18th Apr 17, 7:12 AM
    • #8
    • 18th Apr 17, 7:12 AM
    Hi dunstonh,
    Drawn to your post about the value likely to drop 25% or more and being able to absorb, and having the character not to panic.
    Are these falls you have seen in the more riskier higher return higher loss investments?
    When I start mine off was looking to be in the middle range of investments. Can the fall you have mentioned be seen here as well over time.
    Thanks
    • davieg11
    • By davieg11 18th Apr 17, 8:22 AM
    • 197 Posts
    • 84 Thanks
    davieg11
    • #9
    • 18th Apr 17, 8:22 AM
    • #9
    • 18th Apr 17, 8:22 AM
    Hi dunstonh,
    Drawn to your post about the value likely to drop 25% or more and being able to absorb, and having the character not to panic.
    Are these falls you have seen in the more riskier higher return higher loss investments?
    When I start mine off was looking to be in the middle range of investments. Can the fall you have mentioned be seen here as well over time.
    Thanks
    Originally posted by GSP
    Read post number 33 about drops
    http://forums.moneysavingexpert.com/showthread.php?t=5632529
    • GSP
    • By GSP 18th Apr 17, 9:13 AM
    • 64 Posts
    • 8 Thanks
    GSP
    Thanks davieg,
    If reading right, the relatively safer investments can fall by 10-20% gilts, government and corporate bonds.

    Saw an illustration not on here but suggested middle range risk investments move from anything from 5% loss to 10% gain and was used to see my risk appetite.
    • GDB2222
    • By GDB2222 18th Apr 17, 9:17 AM
    • 13,675 Posts
    • 72,608 Thanks
    GDB2222
    Hi dunstonh,
    Drawn to your post about the value likely to drop 25% or more and being able to absorb, and having the character not to panic.
    Are these falls you have seen in the more riskier higher return higher loss investments?
    When I start mine off was looking to be in the middle range of investments. Can the fall you have mentioned be seen here as well over time.
    Thanks
    Originally posted by GSP
    In terms of risk, bear in mind that investors who got into Japanese shares at the peak of the index (40 years ago) saw a 70% drop very quickly, and the index has never recovered. It's still hovering about half of its peak level.

    I'm not saying that is what will happen to UK shares, but it's an indication of what can happen. The Japanese market was vastly overvalued at the time, but it's easy to see that with hindsight and people were still investing new money at the peak.

    The uk market isn't so overvalued, but bear in mind the PE ratio on the FTSE is currently 30, with a dividend yield of 3% and dividend cover of 1. That's partly justified by last year's losses in the mining sector being included in the earnings part of the PE ratio, but it's still a challenging rating.
    No reliance should be placed on the above! Absolutely none, do you hear?
    • dunstonh
    • By dunstonh 18th Apr 17, 9:49 AM
    • 87,325 Posts
    • 52,508 Thanks
    dunstonh
    Hi dunstonh,
    Drawn to your post about the value likely to drop 25% or more and being able to absorb, and having the character not to panic.
    Are these falls you have seen in the more riskier higher return higher loss investments?
    When I start mine off was looking to be in the middle range of investments. Can the fall you have mentioned be seen here as well over time.
    Thanks
    Originally posted by GSP
    The greater the risk you take (within mainstream), historically, the greater the returns have been over the long term. This assumes you have had a structured portfolio which is will diversified. However, the greater risk means that when short term losses occur, those will be greater too.

    Think about lower risk being more like a wavy line and as you take more risk, that wavy line becomes sharper zig zags where the peaks are higher and the troughs lower.

    When you invest, you have to consider your capacity for loss and your behaviour when losses occur as well as what you believe your tolerance to losses are.

    As mentioned with Japan, that is a possibility. Its an unlikely one at this time but a possible one. It would also need to happen to every market if you are well diversified. However, the point is that it can happen and you need to be prepared to what can happen. Can you afford it if that happens?

    Back on to behaviour, some people can get cold feet seeing their value drop by £1000. Others shrug off £200,000 drops with no problem. Its a very personal thing. Partly comes from experience of investing. Your first crash can be nerve wrecking but each one after that gets easier until you eventually end up saying "here we go again" and actually see it as an opportunity.

    If you have ever come across someone who says they will not invest on the stockmarket as they lost money, this usually means they invested above their risk profile and pulled out when a loss period came along and couldnt handle it. Had they waited 3-18 months, they would likely have been back in profit again. Their behaviour turned a paper loss into a real loss.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • GSP
    • By GSP 18th Apr 17, 9:50 AM
    • 64 Posts
    • 8 Thanks
    GSP
    Been seeing an average rate of 4% quoted over time given the rises and falls. What kind of %'s do we see each year up and down to achieve this average figure?
    Thanks
    • AnotherJoe
    • By AnotherJoe 18th Apr 17, 10:07 AM
    • 6,071 Posts
    • 6,400 Thanks
    AnotherJoe
    Been seeing an average rate of 4% quoted over time given the rises and falls. What kind of %'s do we see each year up and down to achieve this average figure?
    Thanks
    Originally posted by GSP
    Could easily be between minus and plus 25%
    • GSP
    • By GSP 18th Apr 17, 10:31 AM
    • 64 Posts
    • 8 Thanks
    GSP
    Hi Joe,
    Understand there are negative and positive years. The positives must outweigh the negatives over time otherwise we wouldn't be here.
    If anyone could provide some real numbers for a run of years given an average figure of 4% has been quoted. Must be true facts behind this.
    Thanks
    • AnotherJoe
    • By AnotherJoe 18th Apr 17, 10:52 AM
    • 6,071 Posts
    • 6,400 Thanks
    AnotherJoe
    Hi Joe,
    Understand there are negative and positive years. The positives must outweigh the negatives over time otherwise we wouldn't be here.
    If anyone could provide some real numbers for a run of years given an average figure of 4% has been quoted. Must be true facts behind this.
    Thanks
    Originally posted by GSP
    That was an example of the ranges you asked about.

    The actual ranges would depend exactly what you were invested in within your pension.

    Here's the FTSE All share for the past 30+ years total return (including dividends) each year separately compared with the previous.

    12.5
    -2.5
    -2.1
    16.7
    8.2
    -6.7
    10.9
    25.0
    -32.8
    2.0
    13.2
    18.1
    9.2
    16.6
    -25.0
    -15.4
    -8.0
    21.2
    10.9
    19.7
    11.7
    18.5
    -9.6
    23.3
    14.8
    15.1
    -14.3
    30.0
    6.5
    4.5
    22.1
    12.5
    -2.5

    Average is about 11% but then deduct inflation,whatever that was for each year, good luck with that but that could make a big difference in some years, eg if it shows a rise of 5% but inflation was 10% in that year thats actually a loss of 5%. So all these figures need decrementing by a certain amount.

    AND - its HUGELY unlikely your pension would have been invested wholly in that. It would have had several other constituents which would in some years have mitigated decreases and in others emphasized them. The only way to know what is was would be to take what your pension would have been invested in and work it out. Add on top currency fluctuations if you had overseas funds.

    And, since past performance is no guide to the future, even if you could work all that out, it wouldn't help you anyway.

    So, back to my original point, I think plus or minus 25% is a fair approximation of what you might expect.
    Last edited by AnotherJoe; 18-04-2017 at 11:02 AM.
    • GSP
    • By GSP 18th Apr 17, 11:29 AM
    • 64 Posts
    • 8 Thanks
    GSP
    Thanks for all this Joe,
    Thinking about it I should have put a different question.
    My figure is from the calculators you see which can range from -1% to +5%. How much attention should we pay to these? Are they based on a view of results over time? And if so what are these annually just to see the swings.
    Thanks
    • AnotherJoe
    • By AnotherJoe 18th Apr 17, 12:35 PM
    • 6,071 Posts
    • 6,400 Thanks
    AnotherJoe
    Thanks for all this Joe,
    Thinking about it I should have put a different question.
    My figure is from the calculators you see which can range from -1% to +5%.
    Originally posted by GSP
    What calculators are those? Any reputable company that gives numbers is just giving government mandated figures that dont really relate to anything except perhaps a lowball guesstimate of long term growth..

    This is because in the past one company would give an estimate of (say) 10% and another (say) 15% when in reality no one knew, but many would inevitably see the 15% and say "oh thats better than 10% so I'll pick that one" so now everyone now has to give the exact same range of figures to stop those false comparisons, but these figures arent based on much.

    And if so what are these annually just to see the swings.
    Originally posted by GSP
    I suspect you are looking for far more certainty than its possible to get. If you want to really minimise the swings see an IFA and get them to put together a portfolio that will limit the downside which will also limit the upside. No free lunches.
    • davieg11
    • By davieg11 18th Apr 17, 1:07 PM
    • 197 Posts
    • 84 Thanks
    davieg11
    Thanks for all this Joe,
    Thinking about it I should have put a different question.
    My figure is from the calculators you see which can range from -1% to +5%. How much attention should we pay to these? Are they based on a view of results over time? And if so what are these annually just to see the swings.
    Thanks
    Originally posted by GSP
    An example of my works pension for last 5 years as of 10th February is
    +24.96
    -7.77
    +7.30
    +10.22
    +10.13
    That is Standard Life Managed Pension Fund. I joined in 2009 so I've not experienced a major correction yet but over 20 years it has a yield of 5%.
    • AnotherJoe
    • By AnotherJoe 18th Apr 17, 1:29 PM
    • 6,071 Posts
    • 6,400 Thanks
    AnotherJoe
    Davieg are those the 'raw' performance figures of that fund or do they include your contributions?
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

303Posts Today

1,138Users online

Martin's Twitter