I transferred my £570,000 final salary pension – and regret it'

ams25

https://www.telegraph.co.uk/pensions-retirement/news/transferred-570000-final-salary-pension-regret/

Interesting article in DT today. If he's regretting it after recent small falls what happens when markets take a real tumble.

So, for those that have transferred their final salary pension...how is it going? I am sure for some it makes/made sense...but probably not for many that have transferred.

I do have a deferred pension...still 7 years away....but I'm holding on to it.

dunstonh

This is the problem with larger values and inexperienced investors. Small movements in the markets with single-digit percentage drops can actually be very large monetary amounts. If they are not used to it and not prepped for it, then you can see some people making bad decisions.

So, for those that have transferred their final salary pension...how is it going? I am sure for some it makes/made sense...but probably not for many that have transferred.

I suspect most are prepped and will consult their adviser if concerned. Given recent CETVs, it probably makes sense for most rather than not many. A complete reverse of the historical position. However, if people dont understand investments, then it could lead to problems.

Dox

...and people wonder why there is now a legal requirement to seek proper advice if the CETV is £30K plus.....

There will always be some who regret their decision (and will probably blame their adviser, however good a job he/she did). So what? It's a free country and pension freedoms include the freedom to do things you will later regret.

Silvertabby

I can't read all of the article, but looks like he swapped a pension of £28K per year for £570,000.

That's only a fraction over 20 X. Surely no reputable IFA would have recommended that?

Peelerfart

My DB pension had a CETV of about the same as that telegraph chap. It's very tempting but as I'm a wimp I decided against it and took the safe option.

It's a different story I think, if your a pro or a keen investment amateur but for me it wasn't a starter.

I don't regret it, but having spent many years attached to the steel industry I often bump into people who regale me with stories of huge sums being offered from B Steel/Tata pension scheme.

I wonder how this will pan out 5,10,15 years down the line.

bostonerimus

For an engineer the guy in the article seems to be doing some weird maths...he thinks he'll need 1.2M to replace a pension of 28k/year stating at age 65, that's way off. Even if he just puts his 560k payment in a savings account and gets 2% it will grow to about 710k by the time he's 65 and then a 4% withdrawal gets him his 28k.

I'm currently conducting a small experiment. Back in 2015 I took a CETV of $35k at age 53 instead of a pension that would have paid $2160/year immediately or $5600/year at age 65 (no index linking). This is a pretty good pension and a pretty bad CETV compared to the numbers people are getting in the UK right now. But as the numbers were relatively small I decided to take the CETV and I figured I'd need 6% return over my lifetime to equal the pension. So I put the $35k in a simple 60/40 multi asset fund and so far it has returned an annual average of 7%, so I'm ahead. I would not have done this if this had been my only defined benefit pension or the amounts much larger!

AnotherJoe

Silvertabby wrote: »

I can't read all of the article, but looks like he swapped a pension of £28K per year for £570,000.

That's only a fraction over 20 X. Surely no reputable IFA would have recommended that?

They may not have done, you don't need to get a positive recommendation to go ahead. You just need to get a recommendation.

kidmugsy

Dox wrote: »

So what? It's a free country and pension freedoms include the freedom to do things you will later regret.

Unfortunately a politician will then come along and try to harvest the votes of these people by promising to take money from me and hand it to them. That's what.

Pun

kidmugsy wrote: »

Unfortunately a politician will then come along and try to harvest the votes of these people by promising to take money from me and hand it to them. That's what.

Scaremongering. Compensation for misselling doesn't come from the taxpayer, so unless you are heavily invested in PI insurers, or companies which may have to pay redress, you don't need to worry your little head about it.

goRt

Going through the process atm, my working assumption is that my SIPP will drop somewhere between 30-50% the day after I start investing and then put those values into cfireSIM, I'm still better off transferring out of the DB. I have a property with no mortgage so can control my costs.
I have to manage the LTA (even though I'm FP14) so withdraw the max of the basic rate tax band less other taxable income.
I've been retired since age 50 so have 5+ years of managing to a budget with minimal income.

Paul_Herring

For those who have used their free "premium" article this week, or can't be bothered registering:

- 53 yr old male, married, "three young children"
- 3 years ago, left employer, was offered to swap a deferred £28,000pa (from 65) pension for £560,000 'today' (presuming that was 3 years ago.)
- he put the £560,000, plus another £30,000 from "another pension" (presumably a DC) into a SIPP.
- Home worth £800,000 with an interest free £300,000 mortgage on it
- Reckoned he needed his SIPP to grow to £1.2m over 15 years to match the £28K above.
- After those three years, his SIPP is now worth £570,000

I have worked very hard and I don!!!8217;t want to see my pension flatlining or even shrinking. Apart from the Sipp, my wife and I only have a couple of other small pensions. With expert advice my plan now is to get my pension pot back on course over the next 12 years before retirement.