final salary pension scheme

mccarthy1

I have a final salary pension that I no longer contribute to.
I am 55 and would like to cash in.
I have been to 4 IFA,s and they all say they will not touch it with a barge pole.
the scheme administration are happy for me to have the full CETV .

Any ideas, other than becoming terminally I'll, as to where I can go to ?
I want to take the 25% tax free and reinvest the rest (approx £100000) in Drawdown or maybe a sipp

MANY THANKS

Mistermeaner

Why do you wish to do this?

How much are you due per annum?

JuneAB

It's possible for an IFA to advise against it but for you to ignore that and transfer it in anyway, as long as you show your provider you have been explained what you are giving up by transferring out.

Although, there may be a reason why no one wants to touch this.....!

xylophone

the scheme administration are happy for me to have the full CETV .

I wonder why?

https://www.fidelity.co.uk/investor/markets-insights/retirement/moving-out-of-db-pension

https://www.fca.org.uk/static/documents/factsheets/fs035-pension-reforms-insistent-clients.pdf

mccarthy1

Taking 25% lump sum then £4000 PER ANNUM pension

mccarthy1

It seems the yield required to match my benefits of the pension are approx 8% per annum and they don't want to take that risk......

Bazofts_Revenge

Are they looking at the yields at retirement at 65 or at the deferred rates including what maybe draconian reduction factors for going early. 30-40% Penalty.

My Final salary transfer value was £221000 yet I have 9 years left to get to 55 when I would expect to get just £6000 a year due to the early retirement reduction factors. I talked to Hargreaves Lansdown and over the phone they sounded happy to advise and that I had already understood the ups and downs. They quoted me £700 for advice. At the moment I would just need a yield of 2.7% to give me that income from that lump sum. I would hope for more but could live off the natural yield. In my case it is only about half of my wealth. The lump sum increased by 21% in 12 months so for me it will stay where it is until I need it.

PensionTech

the scheme administration are happy for me to have the full CETV

This doesn't mean anything; it's nothing to do with the administrators. The scheme's trustees (who are usually one level removed from the administration) are legally obliged to allow you to transfer out if you want to, the scheme's administrators are contractually obliged to process that transaction on behalf of the trustees, and neither is permitted to offer you any advice about whether it is a good idea to transfer or not. So even though - as xylophone points out - a transfer out is quite probably in the scheme's interests, whether or not they are "happy" for you to transfer out really doesn't factor into it at all, and certainly doesn't have any bearing on whether it's a good idea for you or not.

The issue is that - because of concerns about people transferring DB pensions to DC schemes without due regard to the risks, and in order to avoid mass exits from DB schemes that are heavily invested in vital markets - any transferring scheme must now obtain evidence that the member has taken advice from an IFA. The content of the advice itself doesn't matter; your IFA could tell you it's a terrible idea, but as long as they're willing to put pen to paper and inform your current scheme that they have dispensed regulated financial advice (regardless of what it was, and whether or not it was then followed), then you may transfer. I am assuming, however, that your IFAs are refusing even to write that letter.

The fact that you no longer pay into this pension is also entirely irrelevant. That does not mean that it is worth less than an active DC pension. Transfer values are reduced to take into account expected investment return before retirement, and the whole point of the critical yield is to demonstrate how good the investment return in the DC scheme would have to be before the benefits could match the DB. It is, of course, important to consider the fact that this only looks at what happens if the DC benefits are taken in the same form as the DB benefits; this form of benefits may not be suitable for everyone, and in some cases it may make good sense to be able to use them more flexibly in a DC scheme - but this will not be the case for most people.

Why do you want the money?

sandsy

mccarthy1 wrote: »

It seems the yield required to match my benefits of the pension are approx 8% per annum and they don't want to take that risk......

That's because they know the Ombudsman would come down on them like a ton of bricks for making a positive recommendation at that rate, if you were to complain later about the advice you received. The Ombudsman seems to be currently assuming that 5-6% is reasonable for a person with a balanced attitude to risk based on some cases I read online.

However, it's worth noting that you don't need a positive recommendation in order to proceed. All you need is a letter from an adviser to prove you've already taken advice.

mccarthy1

Hi

I understand your post completely !
my financial situation is I want total control to do want whatever I want to do with with my money !!!!
Personal circucmstases dictate that I may wish to spend it all on a sports car or spring onions
the need is the absolute and therefore not to be judged on personal preference !!!

I,m not about to die but it seems that I can't make decisions about my financial wealth without the acceptantance of an IFA who knows nothing about me yet understand my reasons for wanting to do it ! !

mccarthy1

Hi

I understand your post completely !
my financial situation is I want total control to do want whatever I want to do with with my money !!!!
Personal circucmstases dictate that I may wish to spend it all on a sports car or spring onions
the need is the absolute and therefore not to be judged on personal preference !!!

I,m not about to die but it seems that I can't make decisions about my financial wealth without the acceptantance of an IFA who knows nothing about me yet understand my reasons for wanting to do it ! !