final salary pension scheme

mgdavid

deaglecat wrote: »

..........
Does the fact that a DB scheme is significantly in deficit make a good reason for wanting to exit ? ............

no because IIRC the PPF guarantees 90%.

RickyB2000

mgdavid wrote: »

no because IIRC the PPF guarantees 90%.

There is a cap. It is quite generous though, so I would expect only a tiny number of the highly paid would be hit by the cap.

There is also a cap on how much it increases each year (both before and after retirement). If inflation shot up this may be worse than the terms of the original pension, eroding your wealth.

As long as you trust the PPF then I do agree this makes this a weak argument.

dunstonh

Surely if you are single,no dependants etc it would be a good idea to consider transferring and freeing up a DB pension pot? you might croak early and leave it all behind with the company!

This is why the adviser will calculate the critical yield to see what is needed to match the existing scheme. Statistically, the defined benefit scheme will pay more whilst alive. So, do you want more whilst you are alive or distant family members to get some money when you are dead?

The IFA's may be refusing to produce the letter you require. It would be nice if they could possibly explain why that is.

Probably as he hasnt employed and paid them to. Normally, in the initial conversation you get free, the IFA will form an opinion as to whether the service being offered is suitable and needed. I suspect from what is said, and how these things normally work, that the IFAs are withdrawing their services in that stage. So far, on three pages of thread, we still do not have a justifiable reason as to why the OP wants to transfer the pension.

mccarthy1

Thanks Dunston. I have only received free advice .
I want to be master of my own financial destiny.
I have no savings,need a car, want to get married, invest the "POT" myself, financially support my son and have a decent savings account which I could call upon if needed.
I am now thinking about conforming to general opinion and taking the tax free lump sum and having the monthly pension paid into a savings account and then transferring the money into a stocks and shares isa.?????

coyrls

mccarthy1 wrote: »

Thanks Dunston. I have only received free advice .
I want to be master of my own financial destiny.
I have no savings,need a car, want to get married, invest the "POT" myself, financially support my son and have a decent savings account which I could call upon if needed.
I am now thinking about conforming to general opinion and taking the tax free lump sum and having the monthly pension paid into a savings account and then transferring the money into a stocks and shares isa.?????

You're probably suffering a huge reduction in your DB pension by taking it at 55. Is taking your pension early your only option?

mccarthy1

Pension reduced by 20% and yes I can't think of another way of funding other than taking the pension now.

Malthusian

I want to be master of my own financial destiny.

Why do you want to be master of an actuarially reduced lump sum instead of master of a considerably more valuable guaranteed inflation-proofed income to be paid to you for the rest of your life?

In over 90% of cases, having the guaranteed final salary pension will give you considerably more power over the rest of your financial life - because that and the State Pension are likely to pay for life's necessities, giving you more freedom to do what you want with the rest of your money.

You already have full control over the lump sum represented by the CETV. One of the many options you have with that CETV is to leave it where it is until it becomes a highly valuable, irreplacable guaranteed income for life. You are already master of your own destiny, you don't have to prove it to everyone by cutting your own throat.

Brogden

dunstonh wrote: »

Probably as he hasnt employed and paid them to. Normally, in the initial conversation you get free, the IFA will form an opinion as to whether the service being offered is suitable and needed. I suspect from what is said, and how these things normally work, that the IFAs are withdrawing their services in that stage. So far, on three pages of thread, we still do not have a justifiable reason as to why the OP wants to transfer the pension.

Dunston, I know we corresponded a little bit some time ago and you wrote some very thought provoking things so thank you for that.

Obviously, in this modern world no IFA is a salesman of financial products (as some were) and is now paid purely for their knowledge and expertise. I also fully understand that an IFA can choose to be involved in the types of advice they wish and to decline to be involved in anything they would prefer not to be. Fine.

It is this 'IFA's withdrawing their services' bit which does not sit comfortably with me and seems somewhat 'lofty.' It is as though they have spotted something terrible and are running for the hills.....I do remember being particularly annoyed with the repeated mention of 'alarm bells ringing' in a thread I started previously. I am not necessarily saying this was from you but this is not a very mature and balanced approach in my humble opinion and only serves to make the whole pensions world even more opaque to the lay pension client who simply wants advice in what is (and is for me) the single biggest financial decision of their life.

The OP aside for a moment.......what of the guy who has a substantial DB value, is happy to pay for advice and has no financial knowledge? He simply wants to have a pie and a pint and go to the match on a Saturday. Who is going to advise him? Are the IFA's all going to 'withdraw their services?' Are they going to say 'alarm bells are ringing' and run away? I ask you.....what is this guy supposed to make of all of this? It may not wholly be the fault of the IFA's but this situation has to be utterly undesirable. Bad for the client and ultimately bad for the adviser.

There are a lot of folk complaining about the costs of financial advice. Well maybe that is an issue and maybe it isn't....BUT.....the lay client can be willing to draw a very large cheque and still not be able to find somebody who can help him.

I am now more than happy with the independent financial advice I have received following some false starts a few months ago. The message I give to anybody who is struggling with this whole issue which caused me enormous frustration is to keep going.....there are IFA's who will provide to you the superb advice you need for a price. They may not tell you what you want to hear BUT the service is available 'here and there.' The 'opaque' nature of the whole thing is lamentable and I hope we will all see some improvements shortly!

dunstonh

It is this 'IFA's withdrawing their services' bit which does not sit comfortably with me and seems somewhat 'lofty.'

It is a statement that could mean a number of things. I suspect in this case, it isnt that they have withdrawn their services but have refused to take the OP on as a client.

It is as though they have spotted something terrible and are running for the hills...

My feeling is that too.

I do remember being particularly annoyed with the repeated mention of 'alarm bells ringing' in a thread I started previously. I am not necessarily saying this was from you but this is not a very mature and balanced approach in my humble opinion and only serves to make the whole pensions world even more opaque to the lay pension client who simply wants advice in what is (and is for me) the single biggest financial decision of their life.

I have rejected potential clients in the past. No adviser is under any obligation to take people on board. You sometimes get people who you speak to in the initial free meeting that hold bad opinions and not willing to be educated in the reasons or have a history of being a troublemaker. You know that taking them on is going to be more hassle than it is worth. Or the transaction is too high risk or not cost effective for either the adviser or the client. Or it could be outside the scope of permissions. Defined benefit transfers require a specialist permission that most IFAs do not have.

There will be someone out there he can use. However, to use that phrase you dislike, there are alarm bells ringing here. Put yourself in the adviser's shoes for one minute. The OP want's to do a transaction that is considered bad advice in 9 out of 10 cases and more or less has a default position of mis-sold unless proven otherwise. The OP has given no justification for doing it. So, is it worth the risk?

Malthusian

Those who are following these "I need an IFA to say I've taken advice but none of them will touch me with a barge pole" threads, may be interested to know that the Financial Ombudsman Service has recently upheld the complaint of a client who did proceed with a final salary transfer against the IFA's advice, then made a complaint against the adviser (who told them not to do it) after they spunked the money up the wall. The adviser who was foolish enough to get his or her barge pole out now has to pay the client the money she would have received had she remained in the final salary scheme.

The decision can be read here.

The transfer was pre-pension freedoms (the FOS wouldn't have got around to a pension-freedom-era complaint yet). But it nonetheless illustrates that when advisers refuse to deal with an "insistent client", they are not just being paranoid.