25% tax free lump sum calculation

jamesd

DB pensions often have a 3% cap on an island inflation increases and would probably fare worse than BTL in a high inflation situation.

bikeman

dunstonh wrote: »

it wouldnt be £220k invested in a buy to let. You would lose nearly half that amount in tax.

That's not true. I would be taxed on 75% of that amount only if I drawdown it all in one year when in fact I would get a mortgage and minimise tax by drawing down to make the payments.

The CETV isn;t just going to disappear just because I invest it elsewhere. There are other pensions, ISAs etc where I can probably grow as well. Any way that's my problem.

After doing more research I've now discovered that whilst I am required by the govt to get independent advice, that advice is not really all that I need because the pensions companies have added on their own little proviso in that most just wont accept the transfer without a positive recommendation from an IFA.

So likely senario is I incur a large fee just to be told that the transfer is not recommended (likely as most just wont want the risk of comeback) and therefore waste my money.

Of course the likelihood of a positive recommendation to transfer would increase dramatically for someone with a large pot and who is willing to reinvest through the IFA. So much for independent advice.

In short this change is legislation is only of any use to the very wealthy - i shouldn't be too surprised at that now should I.

kidmugsy

bikeman wrote: »

In short this change is legislation is only of any use to the very wealthy - i shouldn't be too surprised at that now should I.

Actually it's intended to protect the dim and ignorant. And you should do more homework: there are firms who will accept transfers even if the advice you received was "don't do it".

dunstonh

That's not true. I would be taxed on 75% of that amount only if I drawdown it all in one year when in fact I would get a mortgage and minimise tax by drawing down to make the payments.

You would be taxed on 75%, would lose your personal allowance and have most of it taxed at 40/45%. That is nearly half of it.

If you plan to use the money on a BTL, then phasing withdrawals over 8-10 years does not fit with that objective.

There are other pensions, ISAs etc where I can probably grow as well. Any way that's my problem.

Its not just your problem. It is the problem of the adviser and your objectives cant be so wishy washy if you want to get a positive outcome. (i.e. saying you can take the money out to put in the ISA would be a mis-sale in this scenario. So, that would not be a good objective)

Of course the likelihood of a positive recommendation to transfer would increase dramatically for someone with a large pot and who is willing to reinvest through the IFA. So much for independent advice.

Rubbish.

In short this change is legislation is only of any use to the very wealthy - i shouldn't be too surprised at that now should I.

What change in legislation? - the tweaks haven't changed anything in. Advice has been required ever since the pension misselling of the 80s and early 90s.

jamesd

It doesn't matter much that most won't take a transfer against advice, just use one that will.

The advice requirement wasn't in the original proposal. It was added at the request of the Commons Work and Pensions Committee to protect those who don't understand the implications.

bikeman

dunstonh wrote: »

What change in legislation? - the tweaks haven't changed anything in. Advice has been required ever since the pension misselling of the 80s and early 90s.

We've gone off topic from my OP but the change I refer to is commonly referred to as the new pension freedoms but I think you do know that.

The spirit of this freedom is that consumers should be free to switch providers and to offer some safeguard rules are in place so that those with cetv over £30k should obtain advice.

It is not within the spirit of this freedom for pension companies to refuse transfers of DB pensions without IFA approval and for some to even extend this to pots below £30k. But that's just typical of this industry - a law unto themselves.

bikeman

jamesd wrote: »

It doesn't matter much that most won't take a transfer against advice, just use one that will.

Actually it does matter, I have several small pensions that I will need to consolidate at some point. I'd like this to be to one of my existing pensions. As there are fees associated with transfer and fund performance differs between providers it very much does matter if the pool of choice is limited.

dunstonh

It is not within the spirit of this freedom for pension companies to refuse transfers of DB pensions without IFA approval and for some to even extend this to pots below £30k. But that's just typical of this industry - a law unto themselves.

So, you would force businesses to do things against their will? Even if in the majority of cases it is wrong for the consumer?

jamesd

bikeman wrote: »

Actually it does matter, I have several small pensions that I will need to consolidate at some point. I'd like this to be to one of my existing pensions. As there are fees associated with transfer and fund performance differs between providers it very much does matter if the pool of choice is limited.

So transfer to a place you don't prefer then on to the one you want.

davieg11

bikeman wrote: »

That's not true. I would be taxed on 75% of that amount only if I drawdown it all in one year when in fact I would get a mortgage and minimise tax by drawing down to make the payments.

The CETV isn;t just going to disappear just because I invest it elsewhere. There are other pensions, ISAs etc where I can probably grow as well. Any way that's my problem.

After doing more research I've now discovered that whilst I am required by the govt to get independent advice, that advice is not really all that I need because the pensions companies have added on their own little proviso in that most just wont accept the transfer without a positive recommendation from an IFA.

So likely senario is I incur a large fee just to be told that the transfer is not recommended (likely as most just wont want the risk of comeback) and therefore waste my money.

Of course the likelihood of a positive recommendation to transfer would increase dramatically for someone with a large pot and who is willing to reinvest through the IFA. So much for independent advice.I.

You won't waste your money. You find an IFA that will transfer for you as an insistent client if you don't get a positive recommendation. Luckily I got a positive recommendation from both my small DB pensions with a critical yield of 6.2% on 1 of them.