Cashing in an Index-lined pension?

atush

Triumph13 wrote: »

What's wrong with the obvious strategy of living on the £200k cash and taking the pensions at their standard age?

If you are happy with £27k pa plus state pension as your long term pension then the £200k should fill in the gap nicely.

Can't see why are looked past this most obvious strategy???
Live off your low earning cash (invest some of it) and save your DB/FS pensions until they are maximised.

rudebhoy

zagfles wrote: »

What charges have you agreed? If you haven't, suggest you ask him for charges in cash terms, not % terms. Amazing how small 1% sounds but how big £6000 sounds!

It's 3k if I agree to let them implement their recommendations.

rudebhoy

dunstonh wrote: »

There are plenty of scams going on about defined benefit transfers. This often includes a non-regulated company doing the talk and using unregulated investments in an attempt to try and avoid common sense warnings.

Did you contact this adviser or did they cold call you? (the scams are mostly in the cold calls)

I contacted them. They are regulated by the FSA. Really was just wanting to know the best options for investing my 200k, was surprised when they even started talking about cashing in the pension.

Have just arranged to talk to another IFA tomorrow to get his take on this.

PensionTech

Just wanted to check if this is a reasonable strategy. Guy seems sound enough, but that means nothing.

See if he's regulated: http://www.fsa.gov.uk/register/indivSearchForm.do

If you find him on there, look at the "permissions" tab to make sure that he - and anyone else who talks to you about this - is authorised to advise on the kind of pension transfer to which you refer.

Even if he is regulated, your hunch is right - it's very unexpected that an IFA would advise a DB to DC transfer, especially of such a significant amount, unless you have advised him that you think you're about to die shortly (but in more than a year) and want to make provision for your dependants, or you've convinced him that you have a really solid reason for needing the benefits in DC form. It's almost always a terrible idea to make this kind of transfer.

The other thing to look out for is any investments he's recommended - make sure he doesn't have any links to them!

dunstonh

Agree with the above. To put it in context, in excess of 95% of defined benefit pensions are best left where they are. There can be reasons (covered in earlier posts) but it is a highly specialist area and a very high risk thing to do and the vast majority should not do it. it is an area that you need to be on guard and have very strong research and documented advice and justification.

Freecall

rudebhoy wrote: »

I am 10 years older than her.

So you have a 43 year old wife. Are there no spousal benefits with your current schemes?

magpiecottage

As soon as the budget announcement on pension passed George Osborne's lips a misselling scandal was predicted. It looks like it has started.

I spent YEARS looking at missold pensions. I virtually never came across a transfer from a defined benefit scheme was advantageous, and transfers transfers from BG were some of the biggest losses - and I have NEVER known somebody to leave an employer's scheme they are currently in to prove beneficial (unless their boss was called Robert Maxwell)

rudebhoy

Freecall wrote: »

So you have a 43 year old wife. Are there no spousal benefits with your current schemes?

yes. The BG one pays her 2/3rds pension if I die before her, need to check the current one but imagine it will be similar.

rpc

rudebhoy wrote: »

yes. The BG one pays her 2/3rds pension if I die before her, need to check the current one but imagine it will be similar.

With her being younger, that significantly increases the value of the pension. They will be paying out for around a median 35-40 years and possibly much longer.

I really don't see how giving up the DB pensions can make sense, particularly when you have other savings that (on the face of it) can adequately cover you until the DB pensions kick in.

atush

+40 years if she is in her 40's. Could be mroe like 50.

It would be MADNESS to transfer out. And I would never trust that IFA with my other pot.