Final salary scheme

wayfaring

Hi,
I am a member of the Arcadia defined benefit pension scheme and have been in a consultation process regarding the possibility of leaving the scheme and transferring the pot to a defined contribution scheme.
The advice given was to stay in the scheme, however I do wish to leave. The independent financial advisor was appointed by Arcadia, presumably as this is a financial 'advisor' they can only advise and not force me to stay in the scheme.
I just wanted to check the position before I go back to them as the report I've been sent makes it sound as though I have no part in the decision-making process.

wayfaring

Thank you for your reply Malcnascar.
It's a relatively small pension and the enhancement value would allow an extremely useful tax free sum for myself and my family during the next couple of years. I'm more interested in helping my children at the moment and if that means misery and poverty in old age, so be it.
Please could you explain why you think it will be very very hard to do what I want?

greenglide

Because the IFA will be committed to explain to you which is financially better for you (it has nothing to do with the employer having appointed them) and if you wish to move the money you would normally have to find a provider who was prepared to accept the transfer.

If the employer has an alternative scheme to transfer you to it "may" be simpler but the IFA would have to be very, very careful to ensure that he is not blamed for you taking "the wrong" decision.

Do you really, really, want to be poor in your old age?

How old are you? You won't, generally, get anything until you are 55.

lonestar1

Wanting to help your children is commendable but they may not want you to ruin your retirement to do so

brewerdave

An IFA HAS to sign off the transfer and its doubtful whether any IFA will want to take on the risk as you want the cash for short term needs - normally you personally have to be in poor health with a reduced life expectancy.

Linton

You can only move out of a DB pension if you can find someone willing to transfer in. I am sure you could find a scam pension company eager to accept your money but most reputable ones would only do it with the approval of an IFA . An IFA would be unlikely to give approval on the basis of your given reasons as a transfer would be unlikely to be in your financial interest.

The risk for them is that in a few years time you could realise you had made a mistake and sue them for a mis-sale.

wayfaring

Thank you for your replies.
I don't really expect to be poor in retirement as I have a freehold commercial property which I expect to be able to let at a reasonable rate, certainly enough to maintain my modest lifestyle. Also, I was surprised that no mention was made by the adviser of the possible advantages of transferring into a sipp where the pension could buy the property, which I believe would be advantageous from a tax and cgt point of view.
I intend to take these issues up with him but wanted to know where I stood with regard to having to follow his recommendation beforehand.
Thank you again.
p.s. This is a pension from an ex employer from the eighties. Not sure if that is relevant.

xylophone

See post 20 here https://forums.moneysavingexpert.com/discussion/comment/66930193#Comment_66930193

From your original post, where you have said that Arcadia provided the IFA, are we to gather that Arcadia has approached the deferred pensioners and offered an enhancement to transfer out?


http://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

http://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

The above may be worth a read.

And re new state pension https://www.gov.uk/new-state-pension/overview

Cyberman60

Keep it where it is !! I'm now retired by virtue of a DC scheme that I had frozen for over 15 years after 13 years of contributions .:p

Your_Hero

wayfaring wrote: »

Thank you for your replies.
I don't really expect to be poor in retirement as I have a freehold commercial property which I expect to be able to let at a reasonable rate, certainly enough to maintain my modest lifestyle. Also, I was surprised that no mention was made by the adviser of the possible advantages of transferring into a sipp where the pension could buy the property, which I believe would be advantageous from a tax and cgt point of view.

Compared to your DB benefit, this is highly unlikely to be better.

The adviser would not need to mention transferring into a SIPP to allow you to buy property because he isn't there to sell you anything. He's there to give you advice and if the maths behind it all do not add up for a transfer out then he will recommend not to.

DB transfers are high risk and the starting point is that they are "unsuitable/wrong" for the client so the IFA must be able to prove without any doubt that it is in your best interests. In the majority of cases, we know that it is not as you often require double digit growth to match the benefits (this is the comparison that has to be made, regardless of how you want to draw the benefits as a lump sum/drawdown etc.)

You've got to understand that there will be a regulatory liability on whichever provider (or indeed an IFA under their advice) that accepts the transfer in. A complaint in 5, 10, or however many years' time would mean one of them would almost certainly have to pay out compensation to you if the incorrect advice/procedures were followed.

mgdavid

wayfaring wrote: »

Thank you for your reply Malcnascar.
It's a relatively small pension and the enhancement value would allow an extremely useful tax free sum for myself and my family during the next couple of years. I'm more interested in helping my children at the moment and if that means misery and poverty in old age, so be it.
Please could you explain why you think it will be very very hard to do what I want?

The government and the industry don't see it like that; pension schemes are to provide for *you* to live off when past working age, not to spend now and possibly end up being State-subsidised some time in later life.
Other taxpayers are not too keen on the idea either...