transfer db to dc

dunstonh

Graham001 wrote: »

Thanks for the reply, I would be grateful if you could elaborate on why you believe it would be a silly mistake, I was only exploring the possibility of investing the funds I have accrued in this pensionin a manner that i consider would give me a better return than i am currently predicted, But i grant you it would be a mistake to take risk with the funds from my main pension

The required critical yield is normally too high for investments to match the benefits for the level of risk taken.

What is the critical yield for your investments to beat the occupational scheme?
What investments would you use?

xylophone

I was always told this is a defined benefit scheme and the annual statement has a transfer value

The pension does have a transfer value - see post 9 above.

You are a deferred pensioner in a Final Salary Scheme.

See http://www.barnett-waddingham.co.uk/news/2012/07/revaluation-for-early-leavers/

http://www.pensionsadvisoryservice.org.uk/life-events/leaving-your-pension-scheme/keeping-your-benefits-or-pot-in-your-scheme

Any DC scheme prepared to accept the transfer would insist that you took the advice of an IFA before doing so - you might find be hard put to find one who would agree, as such a transfer is rarely a good idea.

https://www.moneyadviceservice.org.uk/en/articles/transferring-out-of-a-defined-benefit-pension-scheme

xylophone

It's a pity that the govt didn't make it much easier for people to swap from db schemes to dc, at least for govt employees. It would save the taxpayers a fortune.

http://citywire.co.uk/new-model-adviser/budget-2014-govt-considers-db-to-dc-pension-transfer-ban/a741509 might be of interest.....

kidmugsy

xylophone wrote: »

http://citywire.co.uk/new-model-adviser/budget-2014-govt-considers-db-to-dc-pension-transfer-ban/a741509 might be of interest.....

That implies that the govt hasn't yet twigged that all it needs to do is change the rules to reduce transfer values, then invite the Gadarene swine to bolt for the exits.

amandajc

Thanks for that link, I was particularly interested to read this:

"The Treasury said: ‘The government recognises that greater flexibility could lead to more people seeking to transfer from DB to DC schemes. For public service DB schemes, this could represent a significant cost to the taxpayer, as these schemes are largely unfunded.

‘Funded define DB schemes play an important role in funding long-term investment in the UK economy, which the government does not want to put at risk.'

Out of interest which public sector DB schemes are funded? I believe LGPS (of which I am a member) is?

(btw I totally appreciate the value of my DB LGPS and recognise the need for changes to try to ensure it is sustainable.)

kidmugsy

amandajc wrote: »

Out of interest which public sector DB schemes are funded? I believe LGPS (of which I am a member) is?

Good question: I'm curious too.

Do you happen to know whether the LGPS schemes are, on the whole, well funded?

Graham001

dunstonh wrote: »

The required critical yield is normally too high for investments to match the benefits for the level of risk taken.

What is the critical yield for your investments to beat the occupational scheme?
What investments would you use?

In the region of 4-6% which is better than the yield of my pension. I am only exploring my options and i do value your views and opinions. Let me emphasise that I am in no way attempting to take the money and run, or gamble it away, but if there was the opportunity for me to invest my funds in a manner which I considered better for my future i might consider it.

Truthseeker_2

Graham001 wrote: »

I was always told this is a defined benefit scheme and the annual statement has a transfer value

Careful!! The transfer value is not a fund value. You will find that the transfer value is much less that the value of a cash fund needed to buy the pension you would be entitled to.

dunstonh

In the region of 4-6% which is better than the yield of my pension.

I have never seen a critical yield that low. Are you sure you are correct? Typically it is into double digits.

Remember you have to factor in indexation.

Graham001

dunstonh wrote: »

I have never seen a critical yield that low. Are you sure you are correct? Typically it is into double digits.

Remember you have to factor in indexation.

yeah sorry about that, i thought you meant the seasonaly adjusted figures according to the johnson sliding scale then applying the quantum measures. But the reality is if i were to invest the same sum it could achieve 4-6% net, now you can give it whatever fancy name you like but that is a better return year on year than my pension currently