Transfer from db to personal pension

wooder

My wife has two pensions in the same fund (called period 1 and period 2 which I think is from when she changed from full time to part time) and I think they are defined benefit pensions.

If it is decided to transfer the pension, is the transfer value likely to be significantly different to the capital value ?

Would she likely be able to transfer the pension to a Old Mutual Wealth Collective Retirement Account pension as this would enable her to take flexi drawdown and manage the investments herself ?

I know she would have to consult a IFA - how much is it likely to cost to do the transfer with no ongoing involvement from the IFA and is she likely to be able to find an IFA to do this ?

dunstonh

I know she would have to consult a IFA - how much is it likely to cost to do the transfer with no ongoing involvement from the IFA and is she likely to be able to find an IFA to do this ?

£3k to £5k typically. Anything above really means they dont want to do it.
She will be able to find one but many wont transact if the advice is in the negative to transfer. So, you need to find that out first.

xylophone

I think they are defined benefit pensions.

Doesn't she know? Is there an information booklet?

wooder

xylophone wrote: »

Doesn't she know? Is there an information booklet?

Can't see anywhere on the documentation that says 'this is a DB pension'. It closed to new contributions in 2007 and it's the United Norwest Co-operative Employees Pension Fund

xylophone

This?

https://pensions.coop.co.uk/your-pension-scheme/other-pension-schemes/2012-scheme-changes/united-norwest

According to the fact sheet


What does it cost?
Contributions vary according to your age and which scheme you were originally a member of. Rates vary from
6.25% to 9%, with most members paying 8% or 9%.
What does my employer pay?
Your employer pays all the costs of running the scheme and the balance of the cost of providing all the
benefits the scheme gives you.
What will I receive when I retire?
You will receive a pension for life, worked out using your final pay, multiplied by 1/60th for every year of
pensionable service if you joined before 1 February 2003, or 1/65th if you joined on or after that date. Final
pay is the highest annual basic pay (including commission) from your final five years of pensionable service.
How does my pension increase in payment?
Once you are receiving your pension, it will be increased each year by the rate of inflation currently measured
using the Retail Prices Index (RPI), up to a maximum of 5%.
When can I take my pension?
The normal retirement age is 65. You can choose to take your pension at any age from 55, although your
pension may be reduced to take account of the fact that it is being paid early, and therefore will be paid for
longer. If you joined before 17 January 1995, there is no reduction between the ages of 60 and 65. For other
members, the Trustees can waive the reductions between ages 60 and 65 subject to employer consent.

so if this, yes, a DB Scheme.

Does your wife still work for the Co-op? Or is this a deferred pension?

How old is your wife?

I don't understand this business of the "capital value"?

hyubh

xylophone wrote: »

Does your wife still work for the Co-op? Or is this a deferred pension?

As the factsheet you quote says, Co-op moved members from various smaller schemes into its main one a few years back. The DB section of the main one (Pace) has itself now closed however (having briefly gone CARE beforehand), so Mrs Wooder will be deferred.

I don't understand this business of the "capital value"?

Lifetime allowance figure on a benefit statement perhaps...?

PensionTech

Lifetime allowance figure on a benefit statement perhaps...?

Yes looks like it.

If it is decided to transfer the pension, is the transfer value likely to be significantly different to the capital value ?

Yes. It will almost certainly be substantially higher. This does not mean it is automatically a good idea to transfer. The "capital value" is meaningless for all purposes other than tax. It in no way denotes how much the benefit is worth.

There is also the possibility that if your wife has actually reached (or is within a year of) normal retirement age under the scheme, she may not be allowed to transfer.

AnotherJoe

I have a similar pension (also closed) and there is a fund attached to it, you can either take the fund value and do what you want with it or take the 1/60th per year of final salary.

You would be absolutely barking to do anything other than take the 1/60th unless extreme circumstances such as very limited life expectancy were applicable.

In the days the scheme started it was actually possible that taking the money at retirement and investing it yourself would have provided a better return but those days like most DB schemes are very long gone.

PensionTech

I have a similar pension (also closed) and there is a fund attached to it, you can either take the fund value and do what you want with it or take the 1/60th per year of final salary.

That sounds like a hybrid scheme - the OP's appears to be pure DB.

wooder

This is what it says regarding transfer and capital value for period 1 with a similar letter for period 2

Transfer Out

It may be possible for you to transfer your benefits to another arrangement that provides flexible benefits. Please contact us if you wish to consider this option and we will calculate your transfer value.

You should consult a financial adviser registered with the FCA if you wish to consider this option.



thanks

Silvertabby

The capital value is simply a notional valuation for DB schemes - it isn't the transfer value.

If you want to investigate a transfer the first thing to do is to ask for a transfer valuation as per:

Transfer Out

It may be possible for you to transfer your benefits to another arrangement that provides flexible benefits. Please contact us if you wish to consider this option and we will calculate your transfer value.

You should consult a financial adviser registered with the FCA if you wish to consider this option.

You don't need to consult with an IFA straight away - only once you have the transfer valuation and if you want to actually proceed with it.