Final salary transfer help

xylophone

I will have to see a pensions advisor

If you wish to transfer out of a DB pension of the value(s) cited, you will be required to take advice from an IFA who is a pensions transfer specialist.

http://www.qropsspecialists.com/pension-transfer-specialist/

"According to the FCA rulebook, a pension transfer specialist must have CF30 (customer function) and hold a qualification from:

• G60 or AF3 (CII)
• Pensions paper of Professional Investment Certificate (IFS)
• Fellow/Associate of Pensions Management Institute
• Fellow/Associate of Faculty of Actuaries

A pension company which wants to compare a pension transfer to keeping a pension in a final salary scheme in the UK must:

1) compare the benefits which are likely to be paid under the defined benefits scheme with the benefits payable under the personal pension or stakeholder and give the client a copy of this comparison highlighting factors which support or do not support the firm’s advice; and

2) give the client enough information to make an informed decision but also try to make sure that the client understands the comparison and the advice given.


For final salary pension schemes or defined benefit schemes, the requirements are more complex with a transfer value analysis report (TVAS) needed.

What is a TVAS?

A TVAS is a benefit/risk analysis report which helps clients understand whether to transfer their pension scheme or keep their pension pot where it is. A pension transfer specialist who is UK FCA qualified can prepare the report on a client’s behalf."


https://www.unbiased.co.uk/ re IFA.

Benefriction

Savings £10k
Mortgage o/s £4.5k will be repaid in 18months
I have spoken to my son and he does mind whether he inherits the pension or not

The cetv is good until feb 2017
RBS normal retirement age is 60 this applies to me as I am 60 in January
I am looking to downsize and a car is very important to me
The pension is split as follows:
Just income £9997+£1500 =£11497 with no lump sum or
£1087 inc with lump sum£7247
£7181 inc with lump sum£47876
Both will mean me living very frugally
If I take the cetv I can take 25% this will give a lump sum of £72k Even without any growth I could live off this sum for at least 4 years!
Is there no financial instruments out there where I could 'safely' invest the remaining funds?
What would be the best pension plan to start now instead of an isa? A pp or a sipp?

westv

Benefriction wrote: »

£7181 inc with lump sum£47876

Maybe you could take the £7,181 and use the £47k to fund the 5 years until you get the state pension?
That'll give you about £15k tax free annual income now.

jamesd

What's the CETV (transfer value) for the one that is either £1500 or £1087 with £7247 lump sum? And the one that is either £9997 or £7187 with £47876 lump sum? Using the 26.3 times income from the earlier post it'd be about £39,400 and about £262,900.

The reason I'm asking is that the commutation rate to take the lump sum and income combination is not good compared to the CETV rates you gave earlier. So it seems possible that the best option is to do a transfer of one of them and take no lump sum from the other one, just income. This also has the advantage that the one you don't transfer is money you don't to wonder about investing with, because the scheme takes care of paying you the income.

What income do you need not to be living frugally? And to be living reasonably normally? Those numbers will help to sort out the level of income range and when you might be able to retire.

jamesd

You can't get high incomes without taking investment risk. What I'd personally do is put the money into P2P lending because I expect to see 8-10% interest after losses to defaults each year. Perhaps taking the taxable portion from the pension over more than one tax year to reduce the tax cost.

dunstonh

I was originally able to have my state pension at age 60. Now it has been put back to 65 really!!

The change from 60 to 65 happened over 20 years ago in 1995 (and was in consultation and had media coverage for a good few years before that). So, it hasnt "now been put back to 65".

And there hasnt been a further 5 year change either.

jamesd

Knowing that you're looking to downsize is also very important to your plans. Can you give rough numbers for the property value today and the sort of rough amount you'd want to spend on the downsized one, and roughly when you'd do it? That would give us some idea of how much capital you'd get out of the deal that you could use to live on.

Another advantage to downsizing is that the bills like council tax and heating are likely to be lower, a useful cut in spending need.

Benefriction

The computations are:
£9997 income = cetv of £245012
£1500 income = cetv of £44120
Tot cetv tf of £289132


The lump sum of £47829 means reduced income of £7181 and
lump sum £7307 means a reduced income of £1087

Another alternative could be to continue working and take the full pension (income only) and save this to pay off mtge in 4 mnths could be mtge free. This could help my situation.
Ideally for me to live ok I would need a further £300 - £500 per month additional income but right now this would come from working until I get the state pension. I will order a new statement from DWP - I think it is £155 per week

I would look at downsizing next year I need a valuation on my home

What type of new additional pension plan would be good for me if I am working I could use the rbs pension income and reinvest it in a new plan?

Benefriction

What is a P2P ?

bigadaj

Benefriction wrote: »

What is a P2P ?

Peer to peer lending, you lend money to individuals or businesses, ideally secured, and they pay interest on the money. Your money isn't guaranteed but you factor defaults into your return, which is why James suggested the net rates rather than gross rate that are quoted of 10-14% or more.

The cetv values you've quoted aren't great in current environments, it translates as an effective yield of 4% which is pretty good and presumably inflation linked?

You can't get anything near this with no or low risk investments in the current environment and you don't seem to have the knowledge of self manage, so would have to pay an ifa to do it. You would need an ifa sign off for any transfer in any case and the crotical yield is likely to be too high to get a recommendation I would have thought.

Those pensions sums are pretty good and far better than anyone could now accrue, get some figures on downsizing as that may be critical to your financial future and when you can retire.