Wealth at Work retirement advice

Wedgewood

Hi. Does anyone have experience of the company Wealth at Work? I have been to a retirement seminar they ran for BT and subsequently had a chat with an advisor. But how good is their ongoing advice/performance once their expertise with the BT pension scheme is used up? The core advice was to trade off DB pension against tax free lump sum. But they would wouldn't they because they can then offer to invest it for me in a managed portfolio. Anyone actually used them?

jamesd

The usual and usually correct advice is never to trade ongoing pension income to get a larger lump sum and that it is usually best to take no tax free lump sum from a workplace defined benefit pension.

There can be exceptions where the commutation rate is exceptionally good but they aren't common. Commutation rate is amount of lump sum : pension income given up. Truly horrible commutation rats are lower than the very bad 12:1 offered by many public sector schemes. A rate of around 28:1 is roughly cost neutral for the pension scheme for some typical sorts of age.

Pension schemes and their advisers may encourage people to take the maximum lump sums to reduce the long term liabilities/costs for the pension scheme because it's usually such a good deal for the scheme and bad deal for the scheme member.

There are pension schemes that allow using AVCs for the lump sum for the whole entitlement (AVC and defined benefit combined) and in those it's usually a good idea to take enough lump sum to use the full AVC amount. The BT scheme is one of the ones that allows this.

Those in higher income tax ranges could also benefit from taking a larger tax free lump sum if that causes more of their income to be in basic rate income tax, or in higher rather than top rate. For these people there's a shift that makes it at least less bad to take the tax free lump sum, and maybe even good sooner than it will for those at basic rate.

It's likely to matter whether you are in group A, B or C in the BT scheme.

A has an automatic tax free lump sum of three times pension level (page 11). You can choose to trade lower ongoing income for more lump sum or lump sum for more ongoing income but I don't see the rates. Expect that the commutation rate will be worse than the reverse commutation rate - that is, you lose more income per Pound of extra lump sum than you get per Pound of lump sum given up. But maybe not, since I can't see the figures I can't check. You could also transfer the whole pot to another pension scheme using the CETV but must get financial advice to do this if it's worth more than £30,000 CETV. The transfer out might be a good deal, it depends largely on just what the CETV is vs the income level.

B is similar to A. C is similar but has no automatic lump sum.

It's not possible to know whether it's a good or bad idea to take more or less lump sum for any specific pension without knowing what the commutation rates are.

robin61

As James has mentioned the AVC scheme at BT is well worth piling into. Not only do you get income tax relief but you also score for NI relief if you make regular monthly contributions. Then you can use the AVC to increase your tax free lump sum without compromising your pension. You really can't go wrong.
By the way my wife transferred her personal pension over to a wealth at work SIPP last year and although their charges are not the cheapest they appear to be doing a good job as regards the returns although I would say they have a high turnover of staff so expect to have to deal with different advisors if you decide to go with them.

chris_m

jamesd wrote: »

It's likely to matter whether you are in group A, B or C in the BT scheme.

A has an automatic tax free lump sum of three times pension level .........
B is similar to A. C is similar but has no automatic lump sum.

Section C does have an automatic lump sum - for service and contributions since 2009.
The scheme was changed that year to comprise Final Salary for service up to 2009 and Career Average for service after then.
The Career Average part is split with a proportion of the accrued benefits being a lump sum and the remainder being the monthly pension.

RickyMiller

Hi,
I have had a recent experience of this company, and based on it I would advise you to avoid them like the plague.
The company I work for has recruited [EMAIL="Wealth@Work"]Wealth@Work[/EMAIL] to provide financial advice for its employees on pensions and any other investments.
I had a meeting with one of their reps back in September 2014, to discuss the numerous pensions that I have accrued during my moves around the country. I was told that I could expect a report with investment recommendations between 6-8 weeks from the date of the meeting. 16 weeks later, nothing had arrived, so I contacted the rep and was told that it had taken longer than expected to get information from some of the pension companies, but they had it all now and that a report would be with me shortly.
A month later and still no report, so I enquired again. This time the report was held up because they wanted to wait until after the government had announced its changes to pension policy (drawdown etc) and then incorporate any of those changes that were relevant into the report.
Finally, I got the report on the 11th May 2015 (8 months later).
And what did it tell me?
Well, after trawling through several pages extolling the benefits of having a 'managed portfolio' of investments I got to the illustrations detailing what I might get back at retirement age, based on a constant set of assumptions. For each of the three pension schemes covered by the illustrations, I got a better return leaving them where they were, compared to moving them to a scheme managed by [EMAIL="Wealth@Work"]Wealth@Work[/EMAIL]!
The remainder of the report continued to tell me how a managed portfolio was much better for me, as it gave me 24 hour control over my investments.
In summary, [EMAIL="Wealth@Work"]Wealth@Work[/EMAIL] wanted me to move the pension pots that I had built up, to one of there schemes. Have me pay around £1700 per year in management fees for the next 20 years, for which they would give me back less money when I retired than I would get if I just left the pension funds where they were.
It cap it all off, each of the illustrations had a date indicating when they had been drafted. That date was the 10th Dec 2014, meaning that they did not include any of the new pension policy changes announced in April 2015.
Disappointed would be an understatement

greenglide

But at least they "seem" to have been honest and not promised "guaranteed" returns of "much better" than you are getting currently?

Maybe the fees on your present schemes are low or the present funds are doing very well while theirs are more defensive?