Does it make sense to make any further contributions

fcandmp

Thanks Daniel54 and JamesD for the clarification re UFPLS and now something I understand better to take into consideration.

JamesD, regarding my current employer's introduced IFA ( note this scheme is DC rather than DB and I wonder if your comments still hold?) which they have negotiated a single transaction fee to review the ceasing of contributions and migration to a scheme providing drawdown, as theirs does not. The single fee is £500, and am told could be legitimately charged to the pension holding as part of the transition.

In terms of the possible DB scheme transfer(s), what might constitute good value? I have CETV values for each if I were to transfer now, do I simply divide them by my estimated lifetime and compare similar lifetime's worth of comparable pension payments?

Finally, I have seen various references to the benefits of VCT investing as part of the mix, but also seen recent articles regarding the European Commission sticking its nose in regarding current schemes, with the potential that they lose their VCT status for perhaps being too mature in status. What is your consideration of this regarding the Albion scheme you often reference?

jamesd

It's still useful to get advice that is completely independent of your employer.

Once of the requirements for auto-enrolment eligible schemes is that employees can opt out at any time. So I know of no way for them to lawfully compel you to seek advice to do so. All it takes is an opt out request to the pension provider.

A good or bad CETV depends on the particular benefits provided by the scheme, like the retirement age, nature of inflation-linking, spousal benefits and pension payment amount. It also depends on how much income you think you could generate from the transferred money, which will be related to your own risk tolerance.

I've seen some material about rules for new investments within VCTs, for example potentially barring management buyout deals. What are you thinking of?

fcandmp

JamesD thanks again. Re my employer and independent guidance, I think that is because they are not just considering the withdrawal from contributions, but the transfer of my DC holdings / policy to a different scheme that will permit me to crystallise and drawdown. my employer offers a capped cash alternative to the contributions they make and I understand that they factor a lot of is together.

on the VCT front, I guess I am asking how you might consider the risk of the Albion scheme failing to meet VCT status at some point in the near future? I am not sure I understand all the implications of changes to VCt rules occurring this year, but it seemed like some were deemed not risky enough?

jamesd

Transfer of DC schemes also doesn't require advice and I think that the rules require them to make the transfer unless they believe that there is a fraud risk. Something as routine as drawdown certainly shouldn't be a concern for a scheme, given that it's the choice of more than half of those seeking a retirement income now, having recently overtaken annuity purchase.

VCT rules changes happen but do not apply to existing holdings and maybe not to VCTs established before the change. The main holdings of the Albion VCT were prohibited for new schemes some years back on the grounds that they were too low risk, like the airport hotel that is their largest holding. That didn't affect the status of schemes that had already made such investments.

There are some VCTs that have tended to favour management buyout deals and those may be the most severely affected, for their new issuance, not their existing investments. The potential risk for these is that they might have relied on a pipeline of deals that will be banned in order to meet the requirement for having a certain portion of the VCT money invested in qualifying investments within a certain time. But I doubt that any will be affected because there are some other investments that can qualify, like some AIM shares.

So I expect some VCTs to step back this year while they work out how to redo their investment pipeline but not any VCTs failing to qualify.

fcandmp

My understanding is much improved, thanks for your guidance and patience.