Transfering Fire brigade pension to buy a property

jamesd

GHJ wrote: »

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.

It's really unlikely that you can get a severance or new job package that would cover as much as you'd lose on the firefighter pension. Think in terms of hundreds of thousands of Pounds to get to what you'd have if you stuck with the job for another four years.

An IFA would be required and an IFA just can't tell you to do it because they would be on the hook for the wrong advice cost and end up paying that themselves.

Your best financial course is almost certainly to stick in the job for another four years unless you can get a truly huge increase in pay from leaving. I doubt that it's practical for any private sector employer to compensate you for just how much you'd lose on the pension by doing it. It's just way too costly and completely unrealistic for them.

GHJ wrote: »

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.

Yes, you were given very badly duff information. You do not get a final salary pension from a SIPP. The closest you can get to it is an index-linked annuity. At age 55 you might get around 3% of the pension pot value. You can get more like 5% by taking income from investments using income drawdown instead, with non-guaranteed inflation cover - but likely - and investment ups and downs.

It's possible that you just got pieces mixed up, though. You could leave the job and take the final salary pension while using a SIPP in the new job,. This would get you the firefighters final salary pension and also whatever the SIPP can buy you.

It's not really fun to stick in a job that you don't like but four years and knowing that you have an exit planned isn't so bad compared to how much guaranteed income it gets you for the rest of your life.

GHJ_2

Loughton_Monkey wrote: »

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.

As i am healthy with no known illness i will keep my head down and try and get to the finishing line. thanks for all the advice. :T

Annisele

makki1 wrote: »

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.

£700 is actually pretty cheap. Some of that money pays for the adviser's professional indemnity insurance - so he can afford to compensate you if he gives negligent advice.

Advice to transfer out of a pension scheme like yours is usually negligent (although as others have said, there are a few exceptions). If the advice is negligent, the cost to you - potentially passed on to the adviser - can be literally hundreds of thousands of pounds. That makes professional indemnity insurance for advisers dealing in pension transfers pretty expensive!

Also, don't assume you would get fully compensated for bad advice. Any adviser who makes a habit of wrongly recommending people leave final salary schemes is likely to go out of business, and no longer be there to pay any compensation. There are also compensation limits with both the Financial Ombudsman Service and the Financial Services Compensation Scheme.

jamesd

GHJ wrote: »

i will keep my head down and try and get to the finishing line.

That's a better plan.

Is it going to be enough for you to completely stop working? If not, are you interested in finding out what it'd take to be able to do that? If you're interested, tell us what your minimum income requirement is and what your desirable income level is. Median average pensioner income is £18,000 a year before tax. Once we know your target and minimum we can work out what you'd have to put into a personal pension - SIPP or just plain personal pension - to get there between now and 55.

atush

GHJ wrote: »

As i am healthy with no known illness i will keep my head down and try and get to the finishing line. thanks for all the advice. :T

I have to say, if I were you, this is what I would do.

And of course, you can look forwards to a new career after as I assume 4 years in your age won't make a big difference to your skills/future employment. At which time you can open your sipp and put all your FS pension income into it!

GHJ_2

jamesd wrote: »

That's a better plan.

Is it going to be enough for you to completely stop working? If not, are you interested in finding out what it'd take to be able to do that? If you're interested, tell us what your minimum income requirement is and what your desirable income level is. Median average pensioner income is £18,000 a year before tax. Once we know your target and minimum we can work out what you'd have to put into a personal pension - SIPP or just plain personal pension - to get there between now and 55.

If i leave at 50 it will cost me £100k from my lump some that i would receive at 54 when i would have accrued full contributions.
So how much will need to contribute say over 5 and 10 years to get that sort of figure?

GHJ_2

atush wrote: »

I have to say, if I were you, this is what I would do.

And of course, you can look forwards to a new career after as I assume 4 years in your age won't make a big difference to your skills/future employment. At which time you can open your sipp and put all your FS pension income into it!

Based on that theory what is the max one can invest over a short period of say 5 - 10 years and do you have a choice what the SIPP can invest in. I am led to believe that from October this year private property is also included as well as commercial.
:question:

atush

You can put in (from next year) 40K or your entire income if that is lower.

As for Sipps, those are basically personal pensions for experienced investors. given your question that isn't you (at least for now). This isn't a jibe, just an observation. Sipps can invest in a wider range Of (possibly riskier) assets and costs can be higher. So if you are just investing in conventional funds, a personal pension could be better.

In your case, if you are working, and can live on that wage, I would put 100% of your pension income into a pension. However, I would do it thru the new job, esp if charges are low and there is an employers contribution.

Otherwise, if your pension income is 8K, pay that into a pension (and look forward to 10K in the new pension).

atush

GHJ wrote: »

If i leave at 50 it will cost me £100k from my lump some that i would receive at 54 when i would have accrued full contributions.
So how much will need to contribute say over 5 and 10 years to get that sort of figure?

There is a huge difference between a 100K lump sum, and 100K pension. To get a 100K lump sum, you'd have to have 400K in your pension pot. And how much would depend on the returns during that period.

Over 5 years, to get 100K lump sum (and 300K pot for future income) you'd have to put away- w/o investment income- well over 5K per month. With income less, but not hugely less. And if an investment cycle turned bad (like in 2008/9) you'd be happy to get back what you put in (plus the tax relief).

If you were talking a pension pot of 100K, with 25K tax free LS and an income from the 75K, then we are talking 1300 per month assuming no investment income. Assuming 5% growth, 1K per month over 5 years.