IFA Charges -thoughts please..

kidmugsy

I'm much cheaper than that IFA - but I don't do advice, only suggestions. My principal suggestion is that you keep your investments diversified: a SIPP with one provider, an S&S ISA with another provider, a Cash ISA with a third, and a deferred FS pension in a separate scheme sounds pretty good to me.

If the terms for leaving the FS pension are humungously advantageous, I suppose there is a case for transferring, especially if you doubt the financial strength of the scheme. But an FS pension runs itself when one is old and perhaps muddled and easily tired.

My second suggestion is that you either learn to DIY, or find an IFA with lower charges and, maybe, one who makes a better case for his advice.

dunstonh

The rationale given is to allow more direct control over the way the fund is invested and give more options on the ways the benefits can be taken in future such as an income drawdown arrangement from the pension fund when I decide to dip into the fund.

1 - You require no control over a defined benefit scheme.
2 - If income drawdown is a possibility you are considering then why not wait until closer to the time to see if you still feel the same way? (cases where people have made changes many years in advance have been treated at mis-sales).

Also to provide better death benefits to my estate, although I am fit and healthy and don't expect to be meeting my maker for a good few decades yet!

You are healthy. So, no reason to transfer anything now. Also, are you more interested in what you will get or the estate? Is there a spouse?

However, I don't have children and in the event of my untimely demise a sum based on 5 times 50% of the deferred pension would go to my estate.

Why are you so interested in your estate?

sandsy

Re. The FS pension:
Have you asked for my direct control?
Have you asked for better death benefits?
Are these your objectives? Or the financial adviser's way of justifying his advice?

Based on those charges, I'd be running in the opposite direction very fast.

TheSurveyor_2

jem16 wrote: »

You have said the transfer value is £500k - what is the actual value of the pension plus any lump sum on retirement?

You haven't mentioned whether or not there is a spouse? If there is a spouse then there would be a pension for him/her on your death.

The pension current value is £15k pa but this is projected to rise to £46k by retirement age (65). Can take a tax free lump sum with reduced pension.

No spouse at present and no dependants.

dunstonh wrote: »

Why are you so interested in your estate?

I'm not especially except it would be nice to know my Grand Nieces would benefit in the event of my early demise.

sandsy wrote: »

Re. The FS pension:
Have you asked for my direct control?
Have you asked for better death benefits?
Or the financial adviser's way of justifying his advice?

No;
No;
I think you may be right!

xylophone

Have you completed an expression of wishes in favour of your grand nieces in respect of your FS pension?

mania112

Think about it this way:

You're being told to give up £46k pa at age 65 for £500k now.

Statistically you'll live for 23 years if you live to 65.

23 x 46,000 = £1,058,000

- the Final Salary is risk-free
- transferring to a platform is not risk-free
- if you transfer your investment HAS to perform very well year-on-year to achieve £1m (almost impossible in my opinion)
- and even then if you had £1m on the platform you are not guaranteed it will pay you £46k pa.

jem16

TheSurveyor wrote: »

The pension current value is £15k pa but this is projected to rise to £46k by retirement age (65). Can take a tax free lump sum with reduced pension.

Presumably the £46kpa is also index linked?

The IFA should do a critical yield calculation to work out what you need to achieve to make a DC pension beat the DB pension.

However I can't see any reason for transferring this now.

kidmugsy

TheSurveyor wrote: »

I'm not especially except it would be nice to know my Grand Nieces would benefit in the event of my early demise.

I suggest you consider buying "Whole of Life" insurance with a fixed payment rate. The sum insured can be paid straight to them, by-passing your estate, which may be very handy depending on what the IHT laws are at the time of your death. Do not, I suggest, muck around with your pensions to make an amateurish simulation of what an insurance policy would achieve in a well-designed way.

P.S. adding to xylophone's comment, you should complete an expression of wishes in favour of your grand nieces in respect of your SIPP. That, again, will bypass your estate.

dunstonh

23 x 46,000 = £1,058,000

Plus, that annual income will be index linked. So, it will more than that.

I'm not especially except it would be nice to know my Grand Nieces would benefit in the event of my early demise.

Even if it means you will be financially worse off? Why not take out a whole of life assurance using the extra pension income you will have and let them have the payout from that on your death.

In the late 80s and early 90s, when investment returns were much higher, there was a period known as pension mis-selling. This is where people were told to transfer their defined benefit pension schemes. four out of 5 were deemed mis-sales. Today, we have lower returns and more volatility. So, what have you seen that makes you think that this is a better option?

TH1878

Something doesn't stack up with those pension figures - the revaluation rate over the next 11 years (to go from £15k to £46k) is 10.7%

So, the OP is either an active member of the scheme (in which case, don't transfer) or the figures aren't right. Are you sure the £15k wasn't the pension at date of leaving the scheme?

In any case, if the figures ARE correct, the critical yield will be in the region of 11.5% to 12% per annum AFTER charges