Transfering Fire brigade pension to buy a property

jamesd

makki1 wrote: »

I cannot say too much about what is going on regarding our pensions but its not good news.

At least many of those commenting here are familiar with both the pension and fitness test issues. It is foolish to transfer out in almost all cases. There are some possible exceptions, like those who have reason to believe that they will die much earlier than normal and so won't receive as much benefit from the pension as usual.

There's also a lot of misinformation about and things like not explaining to individuals that they are less affected than others. Besides the section that you are in, there's also the plain fact that you can retire at 50 or 55 or any other age if you want to, regardless of when this particular work pension starts. All you need to do is arrange sufficient funds to live on until it does start, just like anyone else. This scheme, as a deferred pension, would be a great retirement income asset to have, including for those who leave the job.

Given what you've written about leaving it seems very unlikely that you will be able to find an IFA who will agree to a transfer out for the purpose given. This is because it will make you worse off and an IFA can't advise you to do things that will make you worse off because they can then have liability for paying the difference between good advice and the advice given.

makki1 wrote: »

1. Can I transfer my pension into a property and if so would this only be a commercial property which I could not live in?

In theory it is possible to transfer your pension into a SIPP and within the SIPP buy a property. Residential property is a prohibited investment except large collective schemes and within property funds. Things like large student projects housing perhaps a hundred students with a few hundred individual investors are the sort of thing that is acceptable as residential property.

makki1 wrote: »

2. Does the word commercial mean that this has to be a shop dwelling?

It means any commercial property. The dwelling part of a shop dwelling would be prohibited investment within a pension, the business portion would be permitted.

makki1 wrote: »

3. If not would this then mean I could transfer the money into a by to let property renting it out under a business?

Buy to let residential property is a prohibited investment within a pension. Buy to let commercial is fine. You can't do it under a business in your own name from within a pension because the property has to be formally owned by the pension scheme trustees for your benefit.

makki1 wrote: »

4. Would I be able to transfer my funds to purchase more than one property.

You can buy as many properties as you like and mortgages of up to half of the pension pot value are permitted.

makki1 wrote: »

Also please explain, you say I cannot purchase a buy to let but I can purchase more than one property with the funds.

You can buy ten shops or ten offices or five of each and a couple of warehouses if you like.

dunstonh

I am a serving fire fighter and am thinking of transferring my pension fund into a property.

Good grief. What on earth has made you think that would be a good idea?

I will be seeking further professional advice, but the company who look after the brigade pension have told me the charge for advice is 700 pounds so I am looking for a cheaper way to collate the information.

The advice will be not to do it.

In regard to being silly, I am far from being silly but looking out for my best interest. I cannot say too much about what is going on regarding our pensions but its not good news.

What you are considering is daft beyond belief. The strong terms people are using to indicate that are because it is a really really silly thing to do. The changes to your pension are not liked by the staff but it is still better than property and everything else out there.

If I do I will be waiting till I am 65 which is some time away before I get my pension. Therefore I would like my money to work better for me NOW than wait another 15 years.

Why do you think property will work better for you? It wont.

I really don't think you have done a proper analysis on this. Don't let union bluster steer your decision process. Look at what you have. Then read the changes properly. Changes are that what you believe and what is actually happening is very different.

However, finding an IFA that will be willing to sign off on a transfer on this basis is going to be difficult given that the regulator treats occupational pension transfers as mis-sales unless proven otherwise and everything you have said would indicate it would be a clear mis-sale.

mark55man

makki1 - I know the advice is a bit of a shock to the system - especially when what you were hoping for was a how to.

But the posters on here are a mixture of professional and experienced amatuers and the advice is meant on a basis that considering all the possible outcomes for yourself - the decision to leave you money in the pension (whether you stay or leave the service) will be a better decision than the alternative 99 times out of a 100.

you are imagining you might find a property that is worth 10% a year (or even they may find oil under it and its worth loads more). What the advise is telling you is that in the experience of the industry you will in 10-15 years time be kicking yourself if you made that decisions.

I mean you wouldn't listen to me about how to put a fire out - even though I'm pretty sure I could do a good job

PS Also just because the pension may be getting a bit worse doesn't make it bad

GHJ_2

To all
I have read this post and as a serving firefighter i can sympathise with makki1. What he/she is trying to do is weigh up what the options are even if they are worse financially. Sometimes its not just about the money.
I am also looking into what my options are and i am in the original scheme with 23 years service and at 46 i am contemplating taking a half pension at 50 rather than work an extra 4 years on top of that to get a full pension. This will cost me a significant amount of money from my pension pot but the job satisfaction just isnt there anymore.
I am also looking into an even more expensive option and leaving now which is where i am asking for factual advice.
If i leave now i am led to believe that my pension will be frozen until i am 60 however what i want to know is my other options such as the SIPP scheme. How does this work and how do i join? he reason i ask is that as a hard working individual with many transferable skills i am very fortunate to have a number of other job avenues which will lead to a severance package being negotiated. With this in mind i am prepared to take the hit from my fire service pension providing i can compensate it elsewhere and the possibility of reinvesting my existing pension fund into a SIPP might be an option.
So without opening pandoras box please comment. thanks

Linton

GHJ wrote: »

To all
I have read this post and as a serving firefighter i can sympathise with makki1. What he/she is trying to do is weigh up what the options are even if they are worse financially. Sometimes its not just about the money.
I am also looking into what my options are and i am in the original scheme with 23 years service and at 46 i am contemplating taking a half pension at 50 rather than work an extra 4 years on top of that to get a full pension. This will cost me a significant amount of money from my pension pot but the job satisfaction just isnt there anymore.
I am also looking into an even more expensive option and leaving now which is where i am asking for factual advice.
If i leave now i am led to believe that my pension will be frozen until i am 60 however what i want to know is my other options such as the SIPP scheme. How does this work and how do i join? he reason i ask is that as a hard working individual with many transferable skills i am very fortunate to have a number of other job avenues which will lead to a severance package being negotiated. With this in mind i am prepared to take the hit from my fire service pension providing i can compensate it elsewhere and the possibility of reinvesting my existing pension fund into a SIPP might be an option.
So without opening pandoras box please comment. thanks

Your other options are a personal pension or transfer into the pension scheme of your next employer. With any personal pension you pay in cash which is invested usually on the stock market in the hope that by the time you retire your pot will have grown to the point where it is sufficient to support you for your life after retirement. A SIPP is a form of personal pension suitable for skilled investors who want access to the very wide range of options it offers. It is likely to be more expensive than something simpler. You can set up a personal pension by going straight to a provider or talking to an IFA who will identify one appropriate for your needs.

Your fire service pension wont be frozen, it will increase with inflation. Why do you want to take a hit in your fire service pension? For what gain? It is unlikely the transfer value would be anywhere close to what is needed to replace the pension you would be losing. There is nothing to stop you leaving your pension where it is and setting up a new pension from money earned in the future.

To transfer the pension elsewhere, the receiving company is very likely to insist on approval from an IFA. This is because it is considered a serious risk that in future years when you realise what you have lost you will sue the receiving company for mis-selling and they may have to recompense you. By getting IFA approval they transfer that risk to the IFA. So an IFA would only approve if you had one of the few good reasons to transfer, such as very serious ill-health.

Are firemen wanting to transfer their pension as some sort of way of getting back at an employer who has upset them? If so it wont work as leaving the pension scheme actually benefits the employer.

dunstonh

With this in mind i am prepared to take the hit from my fire service pension providing i can compensate it elsewhere and the possibility of reinvesting my existing pension fund into a SIPP might be an option.

Finding an IFA willing to do that will be near on impossible on the basis you describe. It would be a awful thing to do.

Are firemen wanting to transfer their pension as some sort of way of getting back at an employer who has upset them? If so it wont work as leaving the pension scheme actually benefits the employer.

That is the mentality of the union and how they present the information to the employees. Really stupid. They seem to think that opting out of the pension or transferring it is a way of sticking it up the Govt. Crazy.

GHJ_2

Thanks for your comments Linton & dunstonh.
I am not looking to leave and opt out of my pension as a way of getting back at my employer. I am not in the union and hear both sides. Govt and employees both have some valid points however both also have so many hidden agendas that the reason i joined the job (professionalism, pride, pleasure and to serve the community) is somewhat lost in all the tit for tat bull***t.
After 23 years it has now become a slog just going to work and i feel that if i have other avenues i should consider them rather than become one of those moaners that just sit in the corner spouting off (i am not at that stage yet!)
I suppose i was probably given some duff information regarding SIPP (hence the query) as i was led to believe that i could transfer my current pension fund (26/60ths) to a SIPP, invest in property and have the option to retire at 55 with a final salary pension.
Finally before i get a load of abuse stating that i should feel lucky even having a job and a pension, i do appreciate that there are people out there that would give a limb to be in my position however as i said before it isnt necessarily about the money. I am a middle manager who has worked very hard to get where i am and unfortunately i am stuck with my employer and have little chance to go anywhere else. If i wanted to apply for a job with another fire service i will have to sell my house and move counties (and there is no guarantee it will be any different).
The pension scheme is what keeps us in the job due to the fact that the closer to the finish line you get the heavier the chain is around your neck.
Thanks again for the advice. :beer::beer:

hyubh

I suppose i was probably given some duff information regarding SIPP (hence the query) as i was led to believe that i could transfer my current pension fund (26/60ths) to a SIPP, invest in property and have the option to retire at 55 with a final salary pension.

That's mixing two things. If you transferred out, then you would lose the final salary pension and exchange it for a pot of money that gets invested, the proceeds of which you would then buy a pension with on retirement. In the latter case, no fractions or salary amounts would go into determining what you could buy - rather, it would just be how much money your investments were now worth, together with whether you wanted things like a spousal pension (standard with the FPS) and/or index linking (also standard with the FPS).

kidmugsy

GHJ wrote: »

If i wanted to apply for a job with another fire service i will have to sell my house and move counties (and there is no guarantee it will be any different).

If I may say so, many of us have probably moved in that way: job and county and house. Though perhaps at younger ages than you are.

I have every sympathy with anyone who gets fed up with the perpetual cowpoo that accompanies jobs nowadays. But have a care! Everyone here thinks you'd be mad to transfer your pension. What none of us can know is how much more you'd enjoy life if you simply resigned and went off to do something else. But if you do, be sure to leave your pension to grow!

Loughton_Monkey

GHJ wrote: »

.......Finally before i get a load of abuse stating that i should feel lucky even having a job and a pension, i do appreciate that there are people out there that would give a limb to be in my position however as i said before it isnt necessarily about the money. I am a middle manager who has worked very hard to get where i am and unfortunately i am stuck with my employer and have little chance to go anywhere else.....

It has been apparent for some time that there is some bad morale in the Fire Service.

Most people around here know little about fires, but a lot about pensions and investing.

You are right that most people would give their right arms to have as good a pension as you. Many of us have been in desperately frustrating jobs (with a FS pension) and have ultimately left them (I did). This is an individual choice. But to do anything at all with the pension rights [even if you leave] it will ultimately hit you extremely hard in your own pocket.

If you seriously think you will die very shortly, then it may be advisable to do something although even then it's not necessarily beneficial.

But apart from that, you should take it from those who know that moving funds from the scheme [in current work, or working elsewhere] is plain silly. Working in a job with no satisfaction can be hard, but please don't compound that by messing with your very valuable pension, otherwise you would spend all of your retirement in abject bitterness once you had realised the huge mistake you made, which would almost certainly be irreversible.

My own departure (in a highly frustrated state) left me with a pension I am now drawing. With hindsight, I have calculated that the pension rights I accrued with them cost them more than they ever paid me in salary! [An extreme case, but I know this to be true]. So do what I do (in retirement), and raise a glass of gin & tonic every evening and drink to the valuable pension, while smirking that the frustration is all behind you.