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  • FIRST POST
    • elantan
    • By elantan 16th May 17, 9:14 PM
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    elantan
    Final salary transfer
    • #1
    • 16th May 17, 9:14 PM
    Final salary transfer 16th May 17 at 9:14 PM
    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 ?
    Last edited by elantan; 16-05-2017 at 9:28 PM.
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
Page 1
    • dunstonh
    • By dunstonh 16th May 17, 9:30 PM
    • 88,112 Posts
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    dunstonh
    • #2
    • 16th May 17, 9:30 PM
    • #2
    • 16th May 17, 9:30 PM
    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). 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.
    • elantan
    • By elantan 16th May 17, 9:35 PM
    • 19,425 Posts
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    elantan
    • #3
    • 16th May 17, 9:35 PM
    • #3
    • 16th May 17, 9:35 PM
    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 lol
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
    • mgdavid
    • By mgdavid 16th May 17, 10:07 PM
    • 5,159 Posts
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    mgdavid
    • #4
    • 16th May 17, 10:07 PM
    • #4
    • 16th May 17, 10:07 PM
    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 gambling investing a smaller proportion.
    Being poor in old age is no laughing matter.
    A salary slave no more.....
    • hennerz
    • By hennerz 16th May 17, 10:31 PM
    • 171 Posts
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    hennerz
    • #5
    • 16th May 17, 10:31 PM
    • #5
    • 16th May 17, 10:31 PM
    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 gambling investing a smaller proportion.
    Being poor in old age is no laughing matter.
    Originally posted by mgdavid
    How secured are they though? E.g. Tata Steel? Doesn't seem like those individuals will get 100% of their DB pensions?
    • mgdavid
    • By mgdavid 17th May 17, 10:47 AM
    • 5,159 Posts
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    mgdavid
    • #6
    • 17th May 17, 10:47 AM
    • #6
    • 17th May 17, 10:47 AM
    How secured are they though? E.g. Tata Steel? Doesn't seem like those individuals will get 100% of their DB pensions?
    Originally posted by hennerz
    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.
    A salary slave no more.....
    • Finst
    • By Finst 17th May 17, 12:55 PM
    • 131 Posts
    • 118 Thanks
    Finst
    • #7
    • 17th May 17, 12:55 PM
    • #7
    • 17th May 17, 12:55 PM
    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)
    Originally posted by elantan

    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.
    • woolly_wombat
    • By woolly_wombat 17th May 17, 3:55 PM
    • 467 Posts
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    woolly_wombat
    • #8
    • 17th May 17, 3:55 PM
    • #8
    • 17th May 17, 3:55 PM
    The gentleman also suggests
    Originally posted by elantan
    A few questions
    1. Who exactly is "the gentleman"?
    2. Is he managing any other investments for you, and if so how are they performing?
    3. What sort of investments is he proposing?
    4. Do you have other assets that you can fall back on if you reinvested pension doesn't perform well?
    Last edited by woolly_wombat; 17-05-2017 at 4:10 PM. Reason: grammar
    • elantan
    • By elantan 17th May 17, 10:02 PM
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    elantan
    • #9
    • 17th May 17, 10:02 PM
    • #9
    • 17th May 17, 10:02 PM
    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 do
    Last edited by elantan; 17-05-2017 at 10:08 PM.
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
    • elantan
    • By elantan 17th May 17, 10:03 PM
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    elantan
    Thanks everyone for your input so far
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
    • dunstonh
    • By dunstonh 18th May 17, 1:31 AM
    • 88,112 Posts
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    dunstonh
    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). 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.
    • elantan
    • By elantan 18th May 17, 5:33 AM
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    elantan
    Sorry I think I didn't quite make myself clear ... for doing the transfer he is charging a fee ... the commission is for the managing of the pension (I'm almost positive he said they take a % for running it every year as he said the more money we make the more he earns ?) I should have also made clear the bit where he says he doesn't know too much about it was fund managing, basically what he wants us to do is transafer the two pensions ( for which he charges a fee) into a managed pension for which he will be middle man and charge an ongoing fee every year ... Does that sound about right ?

    But deffinately did say he charges a flat rate for the transfer ... he did also say he was qualified to level 6 and that other companies used themselves to get work done..
    Last edited by elantan; 18-05-2017 at 6:38 AM.
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
    • dunstonh
    • By dunstonh 18th May 17, 10:44 AM
    • 88,112 Posts
    • 53,344 Thanks
    dunstonh
    the commission is for the managing of the pension (I'm almost positive he said they take a % for running it every year as he said the more money we make the more he earns ?)
    That will be an explicit fee. Not a commission.

    I should have also made clear the bit where he says he doesn't know too much about it was fund managing,
    Context is needed there. For example, on this site, I have said a number of times that IFAs are not investment managers. We do not have the knowledge or information available to do that. So, the IFAs will usually buy in the data and analysis. The IFA will structure the portfolio to the allocations based on the data they buy in. The IFA will pick the funds to fill the allocations but the investments will be managed by the fund house/fund manager. Not the IFA.
    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.
    • hyperhypo
    • By hyperhypo 18th May 17, 11:28 AM
    • 42 Posts
    • 5 Thanks
    hyperhypo
    i was in very similar recent postion to OP's case....offered a transfer value of £422k (pension of £14k in today's money, due in 5 years time).... and had saved £100k in SIPP , still saving.

    Whilst the numbers in themselves looked enticing on the £422k (x 30 on present day valuation)...the fee requested was 1% ....i declined as had insufficient external savings/provision to the db scheme ...this was the defining point for me.

    Also i had a sense that my overall situation had not been fully taken into account, that the willingness to effect the transfer was based on numerical analysis of the valuation, with little weighting for lifestyle, addition savings , rental income and so on.

    And no explicit written advice to proceed accompanied the analysis, which also put me on alert.

    So i'm sticking with my deferred DB scheme with all its inflation linking and dependant's provisions...and treat my separate DC savings separately, perhaps allow myself to be a little more adventurous , and happy to stick to a mixed approach.
    • dunstonh
    • By dunstonh 18th May 17, 12:39 PM
    • 88,112 Posts
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    dunstonh
    And no explicit written advice to proceed accompanied the analysis, which also put me on alert.
    There are concerns within the industry that some pension transfer businesses have been set up to do these transfers relatively cheaply and by the bucket load and then close down before it goes wrong and allowing them to dump their liabilities onto the FSCS.
    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.
    • elantan
    • By elantan 18th May 17, 8:32 PM
    • 19,425 Posts
    • 52,308 Thanks
    elantan
    Thanks everyone for the continued help ... it appears it may be a bit of a minefield to get through, the guy that came out has been working in this company for over 20 years, hopefully that will make it slightly more safe ?
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
    • sandsy
    • By sandsy 18th May 17, 8:47 PM
    • 1,105 Posts
    • 635 Thanks
    sandsy
    Thanks everyone for the continued help ... it appears it may be a bit of a minefield to get through, the guy that came out has been working in this company for over 20 years, hopefully that will make it slightly more safe ?
    Originally posted by elantan
    That's no guarantee he's doing them well. The regulator has stopped around 50 advice firms from doing pension transfer advice in recent months. I'm sure some of them thought they had it all worked out too.
    • elantan
    • By elantan 18th May 17, 8:58 PM
    • 19,425 Posts
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    elantan
    I don't doubt it
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
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