final salary pension scheme

RickyB2000

mccarthy1 wrote: »

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 ! !

I would agree, there are no checks on spending in place for those with DC schemes so why should it matter what you are going to spend on for DB scheme transfers (you should have a plan though for the next 40 years and understand all the risks, so it is not entirely irrelevant when considering trading one benefit for another).

What matters is are you getting a good deal. The DB scheme is able to 'con' people out of money, offering what looks like a large cash sum but that is actually a poor deal. You may be the greatest financial mind out there with a grand plan on how you will double your money every year through retirement, but as you say, the governement doesn't know anything about you. It has to assume lowest common denominator and that you know nothing about finances and when you see a big number on a piece of paper its just gimme gimme. It therefore requires you to find out whether the DB scheme is offering you value for money and that you fully understand this.

When you say won't touch with a barge pole, is this because you are asking them to write a letter saying the transfer is a good idea? Or they refuse to write any letter?

hyubh

RickyB2000 wrote: »

I would agree, there are no checks on spending in place for those with DC schemes so why should it matter what you are going to spend on for DB scheme transfers

However, the opening up of what you can do with a DC pension is a recent phenomenon. With the tax breaks involved in pension saving, a little paternalism to ensure people with good pensions don't nevertheless end up falling back on the state in old age seems sensible to me.

The DB scheme is able to 'con' people out of money, offering what looks like a large cash sum but that is actually a poor deal.

The fact valuing a DB pension from the individual's POV may be different from the scheme's is not a matter of 'conning' the individual.

Malthusian

mccarthy1 wrote: »

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 !!!

If I was an employee benefits company or insurer or left-wing thinktank lobbying the government to make it even more difficult for people to transfer out of defined benefit schemes, I would be showing them this post as evidence.

If you keep ringing round IFAs you'll probably eventually find someone willing to take the money to provide you with a letter saying "this is a bad idea but on your head be it", and run the risk of you complaining later when the money is gone. But I wouldn't touch it with a barge pole either. If I was a taxi driver and someone flagged me down with a morose expression and a bottle of whiskey and said "I'd like to be driven to Beachy Head please" there's no law that can force me to serve them.

dunstonh

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......

Ok, that is high. It is difficult for any adviser to justify transferring out with a critical yield that high.

my financial situation is I want total control to do want whatever I want to do with with my money !!!!

Doesn't mean that you are doing the right thing and when you finally realise that it was the wrong thing and it probably cost you tens or even hundreds of thousands of pounds in lost money, you would likely raise a complaint.

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 ! !

The IFA does know things about you as they ask questions to build an overview of you and your situation. They also ask your reasons. The problem is that you seem less aware of what you are giving up.

9 out of 10 defined benefit schemes are best left where they are. The regulatory position is that the pension transfer is effectively mis-sold unless proven otherwise. So, there has to be damned good justification for recommending a transfer.

Whilst IFAs are free to provide advice to not recommend the transfer but then proceed on the basis of insistent client, most will not do it because a) their PI insurance doesn't allow it. b) they told FCA they wouldnt do it as part of their business plan c) they personally dont want the high risk.

They may well decide on a case by case basis depending on the client. Everything you have posted so far, if that is how you have acted with the IFA, would actually drive me away from doing it as it just comes across a car crash waiting to happen.

You will eventually find an adviser willing to do it on insistent client basis. But more fool them.

RickyB2000

hyubh wrote: »

However, the opening up of what you can do with a DC pension is a recent phenomenon. With the tax breaks involved in pension saving, a little paternalism to ensure people with good pensions don't nevertheless end up falling back on the state in old age seems sensible to me.



The fact valuing a DB pension from the individual's POV may be different from the scheme's is not a matter of 'conning' the individual.

hyubh wrote: »

However, the opening up of what you can do with a DC pension is a recent phenomenon. With the tax breaks involved in pension saving, a little paternalism to ensure people with good pensions don't nevertheless end up falling back on the state in old age seems sensible to me.



The fact valuing a DB pension from the individual's POV may be different from the scheme's is not a matter of 'conning' the individual.

Not sure I fully agree. The main thing the IFA is doing is checking you are getting a good deal.If the transfer was like 1%, would things be different? Even if the transfer value was many times what the DB scheme offered, nothing stopping you blowing it all on day one of retirement. Now as a result of seeing the IFA you may decide the porche is not such a good idea, I agree. But isn't the main thrust whether you are getting a good deal, not whether if you do get a good deal to transfer you don't blow the lot?

conning was a purposefully emotive term.

Linton

mccarthy1 wrote: »

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 !!!

But it isnt your money. What you own is the guarantee from your DB pension scheme that they will pay you a defined amount each month when you reach a defined age. That's it, there is no pot of money with your name on it.

The scheme trustees are offering to give you a sum of their money to release themselves from this expensive obligation. The sum of money that they are offering to give you is less valuable in pure financial terms than the guarantee. The government has chosen to set up a strong form of consumer protection to help ensure that people arent duped into selling their pension assets for less than their true value.

OldBeanz

The government has said that DB pensions can be encashed. It should be the role of the IFA to ensure that the pension holder is presented with the facts about the returns required to match the pension and any other benefits. The pension holder should then be free to encash his pension and buy his Ferrari if he then wishes to do so. Why should anyone constrain a DB pension, other than ensuring the pensioner is presented with the figures, and not a DC pension?

greenglide

The government has said that DB pensions can be encashed.

The government hasnt said DB pensions can be cashed. They have always been transferable to DC schemes and they introduced rules to ban such transfers from unfunded public sector schemes and to require advice to be obtained if the transfer was worth more than £30,000.

Since most people have no concept of the potential value of a DB pension, cannot accurately estimate their lifespan and have no real ability in managing more than a couple of thousands of "savings" rather than investing for the longer term this seems quite reasonable.

Maybe people who do such a transfer should be permanently excluded from means tested benefits?

The Government introduced the rule that such a transfer

OldBeanz

Yes you're correct that they can be transferred but once in a DC then it can be encashed.
Having spent the money paying for advice nobody is obliged to follow the most financially beneficial. I do not think the IFA's should be liable either, assuming the advice is correct.
The previous government said it was quite happy for people to do what they want with their pensions (Lamborghinis) and that still stands.

dunstonh

It should be the role of the IFA to ensure that the pension holder is presented with the facts about the returns required to match the pension and any other benefits. The pension holder should then be free to encash his pension and buy his Ferrari if he then wishes to do so. Why should anyone constrain a DB pension, other than ensuring the pensioner is presented with the figures, and not a DC pension?

And when the Ferrari turns out to be too expensive to run and the person runs out of money, they will put in a complaint. Often encouraged by a claims company giving all sorts of template reasons in the hope that one will stick. Often telling lies in the process in an attempt to get money out of that adviser.

You then have a liberal ombudsman who does not believe consumers tell lies and believes the average consumer is a bit thick and doesnt understand anything and that most of the the paperwork they receive is not read. They also take little notice of disclaimers.

The problem is purely down to commercial risk and liability in a nanny state environment.