Transferring DB pension - why wouldn't I ?

Good_bad_and_ugly

Not at all. I rather thought the words flowed from the heart like warm, golden syrup. A singular instance can hardly be prescriptive and dogmatic now.. can it?

atush

From the heart like warm golden syrup? mmmm Not so much. More like angry poison.

Everything you post here, always carries insults for other posters. Why not actually give advice instead of insults?

Good_bad_and_ugly

Erm, right ho.

Firstly, I don't think at all, that everything I post is insulting. You don't agree? Fine.

Secondly, my advice has always been to take personal advice because one size doesn't fit all, and because it's impossible on a message-board to know enough about someone's circumstances to pass an personalised opinion on something as complicated as a pension transfer.

By all means, offer facts, but some people are advantaged by transferring out. Not all, not many.. but some are. And until you know someone's story, you can't say that someone would be "extremely foolish" to transfer out. I have never told anyone to transfer out, and I tell people to see an IFA for a personal consultation.

You don't think they need to, you don't agree, again? Fine, that's your choice but at least I'm not sniping at you (have we ever had any form of discourse at all?). However, at least allow me the right to express a valid contra-opinion without jumping down my throat.

Pax, out.

milford59

This is what I think I am going to do.... Take the 997k transfer from the DB scheme, and add it to the 803k from my DC schemes.... Then I will crystallise the whole lot by taking all my available TFLS - (I have Fixed Protection 2014, so my LTA is 1.5 mio)

So I will get 375k Tax free, and I will pay 55% tax on the other 300k. After all that is done, it will leave a balance of 1125k invested, and that can then grow as much as it likes and I don't have to worry about the LTA any more. I don't need the money for at least the next 4 years, and maybe not even then.

The 510k I have released will be invested, although I appreciate that any gains above CGT allowance will be taxable, so I will give half to my wife.

zagfles

milford59 wrote: »

This is what I think I am going to do.... Take the 997k transfer from the DB scheme, and add it to the 803k from my DC schemes.... Then I will crystallise the whole lot by taking all my available TFLS - (I have Fixed Protection 2014, so my LTA is 1.5 mio)

So I will get 375k Tax free, and I will pay 55% tax on the other 300k. After all that is done, it will leave a balance of 1125k invested, and that can then grow as much as it likes and I don't have to worry about the LTA any more. I don't need the money for at least the next 4 years, and maybe not even then.

The 510k I have released will be invested, although I appreciate that any gains above CGT allowance will be taxable, so I will give half to my wife.

Won't you be subject to the further LTA test at age 75, or do you intend to draw down enough for that not to be a problem?

kidmugsy

milford59 wrote: »

This is what I think I am going to do.... Take the 997k transfer from the DB scheme, and add it to the 803k from my DC schemes.... Then I will crystallise the whole lot by taking all my available TFLS - (I have Fixed Protection 2014, so my LTA is 1.5 mio).

Fair enough, it's your shout. In your shoes I would heed the sage remark above ("Vast TFLSs are an appetising prospect for tax-raising politicians") and take my DC TFLS before the Budget on July 8th. It's good that Mr Balls isn't around to make the public finances any shakier, but they remain shaky anyhow.

On the same lines, I wouldn't want to have a DB->DC transfer in hand when the Budget happens. So I might do it now if I thought it could be completed before July 8th, or defer the transfer until I saw what was in the Budget.

And, given the huge sums involved (huge by my standards anyway) I'd have my remaining DC pot spread across at least two providers. Diversification, don'cha know?

P.S.

milford59 wrote: »

I will pay 55% tax on the other 300k.

As a taxpayer, may I thank you for this extraordinary act of generosity towards the Exchequer?

milford59

Well - this transfer still hasn't happened. The 3 months period during which the Transfer Value was valid ran out at the end of June and I had to get another valuation. To my surprise, it had gone UP by £40k, even though gilt yields had also gone up.

Anyway, the Compliance department at the company where I am looking to transfer in are not happy, because the critical yield calculations are high... Of course they are high !! The comparison is a joke, because all it looks at is the difference between me selling MY annuity back to my DB provider... And me buying a NEW annuity from someone else, with my Transfer Value.... There is a massive Bid/Offer spread.

They don't take into consideration my desire to get the money into my estate, the fact that I have plenty of other savings and I don't plan to start drawdown for a number of years and I want to crystallise the whole lot now and pay my tax before either my DC pot grows some more or the government raise the (unrealistic). 20x multiple for DB schemes.

These critical yield calculations are such a blunt tool, using unrealistic data.
(rant over)

kidmugsy

milford59 wrote: »

They don't take into consideration my desire to get the money into my estate

Good God, don't do that. It'll be exposed to IHT: at least keep it in a DC pension.

mania112

Yeah your plans (if i've understood them correctly) are to completely cash in your pensions once they're transferred.

This would include paying a lot of money to the tax man, so not very sensible.

The other point to make is that IFAs are very wary of DB transfers at the moment, due to FCA uncertainty on what they will allow advisers to do. Being an insistent client is no longer an option, so if an IFA says no, it has to mean no. If the critical yields are high, they will say no.

milford59

kidmugsy wrote: »

Good God, don't do that. It'll be exposed to IHT: at least keep it in a DC pension.

Sorry - I phrased that badly - I meant that the money would be in a DC scheme as opposed to a Pension that will be worthless if my wife and I die...