Final Salary Pension Transfer

hyubh

peterbaker wrote: »

You might be best to offer it, hyubh. If so please do. I haven't told you the whole story, but suffice to say that the years when I obtained two valuations I did not have to pay for the second ones - just bang the table very hard to make the trustees and actuaries wake up, and this year I fully expect to have a third valuation (higher than the other two, at no charge before the year is out).

If the scheme is providing multiple CETV quotations a year for free, then you are being quietly encouraged to transfer out, not the opposite.

Thank goodness the most popular A level this year was Maths. The crooks who think they can pull the wool over members eyes on CETV calculations and other shallow minded financial services corporate wheezes will eventually get forced out by force of good logic over the evil of corporate greed, manipulations and obfuscation. Trustees, actuaries, pension directors and administrators hate members who use advance maths to question what they've been up to.

Are you related to our dear friend graffias...?

PS there ain't no sand in my just desserts

Ta - fixed!

soulsaver

davidcook wrote: »

Hi, I'm looking for some advice.


I have a final salary pension pot of 550000, and am looking to transfer out to another scheme.


Reasons are to carry on growing the pot, as currently it's frozen, I also want to give myself the choice if I want at 55 to take early retirement with no penalty, as in the current scheme I believe there's around a 21% penalty.
I am 48 no responsibilities, single with no dependants.


I have spoken to 2 IFA's so far, 1 agreed to take on the transfer, but when the fees came back they seemed very high. 2.7% transfer and 2.2 yearly management.


The 2nd advised me to stay where I was.


I have another meeting in place later today to discuss with another.


I know people will have gone through this and I am interested in your experiences.


Thank You
David

You don't need an IFA to 'take on' the transfer - you need an IFA with specialist pension qualification to make a declaration (usually on a pro forma doc supplied by your scheme) that you have had transfer advice.

Usually, your scheme admin aren't interested whether the advice was positive or not, just that you've had it. So even if it's negative they'll transfer out as long as you meet their paperwork requirements.

Did you intend to manage the future investments yourself?

Some receiving schemes/ SIPP platforms won't accept 'insistent clients', but you can find some that will. AJ Bell do, I believe, but there are others.

Whilst the IFA usually handles it, you can manage the transfer yourself, it's just a diligent paper chase.

I transferred out of a DB scheme CETV £300k+ IFA fee (positive)£2.5k & no on-going - but could get the same fee & 0.5% pa elsewhere.

peterbaker

hyubh wrote: »

If the scheme is providing multiple CETV quotations a year for free, then you are being quietly encouraged to transfer out, not the opposite.

Did I say they were routinely providing multiple CETV quotations for free each year? They are not. They would charge me if they weren't embarrassed by being caught with pants down.

In fact they just overtly reminded existing employees of the sponsoring employer (who are also deferred members as the scheme is now closed) that should they transfer out and then find their jobs made redundant, they naturally could not expect enhanced defined benefit pension rights as part of the redundancy package. That recent gem seems to me to indicate that this particular scheme is trying to avoid too many CETV payouts at the moment. I believe it may have something to do with the cycle of triannual valuations. Existing employees are more likely to have inside information. Insiders get to know the best time to transfer out while ordinary members have to wait for the results (and consequences of secret negotiations between trustees, unions and the sponsoring employer) of scheme valuations supposedly accurate as at dates many months or even over a year previously.

But back to multiple CETVs in a single year, what this scheme's administrators are doing is continuing to operate with an administrative mess which causes them to regularly c*ck-up CETV calculations if they even bother to sit down and do any; and goodness knows what else they regularly mess up.

Generally I think too many pension actuaries and scheme administrators have gotten into the mind-numbing situation of believing whatever their ill-programmed computers spew out as the CETV answer. Meantime trustees busy themselves with tweaking their internal dispute procedures in an effort to manage complaints demand.

ams25

OP ....Nobody can provide helpful guidance without more information (pension amount, NRA, other savings/investments, pensions, state pension forecast, for starters).

I would suggest you need to do (much) more research and learning before you even consider giving up a likely extremely valuable FS pension (that many would love to have) for the prospect of self managing £550k (and perhaps losing a lot more than 21%) and/or paying excessive amounts to advisers. If I were you I would want to have more understanding before potentially being poorly advised. It may seem like a tempting amount of money, but as the adviser who told you not to transfer implied, that does not necessarily mean it's a sensible thing to do.

While there is a chance transferring is the right thing to do for you, there's a greater chance it is not. I like you have a deferred pension (increasing every year with CPI) but I am 100% keeping it.

hyubh

peterbaker wrote: »

Did I say they were routinely providing multiple CETV quotations for free each year?

Yes you did, in the bit I quoted: 'suffice to say that the years when I obtained two valuations I did not have to pay for the second ones'.

They would charge me if they weren't embarrassed by being caught with pants down.

You are finding intentionality where there is none. Following statutory requirements, and the fact computing a CETV (particularly for a private sector scheme) isn't a trivial procedure, normal DB practice is one free CETV quotation every 12 months, with additional ones charged for. Sometimes a private sector scheme can also provide an indicative figure on annual benefit statements, but no DB scheme has to.

they naturally could not expect enhanced defined benefit pension rights as part of the redundancy package.

There's no 'natural' about it - perhaps the employer will be open to using the pension scheme as a way to ease employees out, perhaps not. It was quite common 'back in the day', but back in the day the true costs of DB pensions weren't properly acknowledged.

A multi-employer scheme (e.g. LGPS) might impose a structured approach to such matters, but even then, it's less common than you might assume (the LGPS is a bit of an outlier).

That recent gem seems to me to indicate that this particular scheme is trying to avoid too many CETV payouts at the moment.

On what evidence...?

I believe it may have something to do with the cycle of triannual valuations.

Highly unlikely - at the most a very high rate of CETV payouts will temporarily impact cashflow, however the triennial valuation concerns liabilities.

Existing employees are more likely to have inside information. Insiders get to know the best time to transfer out while ordinary members have to wait for the results (and consequences of secret negotiations between trustees, unions and the sponsoring employer) of scheme valuations supposedly accurate as at dates many months or even over a year previously.

I'm struggling to conceive of any 'inside information' held by 'existing employees' that could somehow leave them in a better situation vis-a-vis transferring out of the pension scheme...

But back to multiple CETVs in a single year

Since you don't appear to have any real reason to transfer out, beyond a vague appreciation of the 2015 changes to DC schemes and coincidental rise in DB CETVs, why not relax, and take the DB pension as always intended...

GunJack

yet another thread hijacked by a peterbaker rant - he's just been on a long one over on the Techie Board even after being proved to be incompetent.......

hyubh

GunJack wrote: »

yet another thread hijacked by a peterbaker rant - he's just been on a long one over on the Techie Board even after being proved to be incompetent.......

Crikey, just seen it...

goRt

soulsaver wrote: »

You don't need an IFA to 'take on' the transfer - you need an IFA with specialist pension qualification to make a declaration (usually on a pro forma doc supplied by your scheme) that you have had transfer advice.

Usually, your scheme admin aren't interested whether the advice was positive or not, just that you've had it. So even if it's negative they'll transfer out as long as you meet their paperwork requirements.

Did you intend to manage the future investments yourself?

Some receiving schemes/ SIPP platforms won't accept 'insistent clients', but you can find some that will. AJ Bell do, I believe, but there are others.

Whilst the IFA usually handles it, you can manage the transfer yourself, it's just a diligent paper chase.

I transferred out of a DB scheme CETV £300k+ IFA fee (positive)£2.5k & no on-going - but could get the same fee & 0.5% pa elsewhere.

Care to PM me the contact details for the IFA, I'm currently chasing around for quotes and the lowest I have is 8k, up to 15k for a CETV of 750k (3 DB schemes). I've tried 12 companies and only been able to get 5 quotes so far (TBF one with a contingent charge of 2% pa didn't want my business).

Thanks

kidmugsy

Are the sane people on holiday this week?

peterbaker

kidmugsy wrote: »

Are the sane people on holiday this week?

Isn't the world of UK pensions pretty insane in a good week anyway?

GunJack wrote: »

yet another thread hijacked by a peterbaker rant - he's just been on a long one over on the Techie Board even after being proved to be incompetent.......

Call it a hijack if it is someone elses thread, but the one where you chose to insult me by suggesting I wasn't a very good friend of a person who was scammed was my thread!

Also call it a rant if your vocabulary doesn't stretch much beyond four-letter words, and shout it out as incompetence if helps you avoid worrying about complex risks that affect others less able than yourself. Seriously what kind of narrow lives do you some of you live?

I do however like that you do notice such things as my posts and do actually react and shout about what you've seen - how many readers have you caused to rush over to the scene of the "rant"? Quite some today, judging by the increased view count. That's the whole point of my posts when a forum is otherwise dominated by pretty narrow-minded posting.

And take hyubh's surely tongue in cheek responses to me here on davidcook's thread, for example - hyubh is more a local authority pension scheme person if I have remembered correctly over the years, so why he is trying to dispute my clear messages about what I have experienced continuously over years now via major pension administrator incompetence on an important private DB scheme, I do not know.

I have described the obvious c*ck ups which resulted in me demanding recalculations (for free - they tried in vain to charge me of course).

I posted primarily for the OP's benefit so that the OP does not fall into the trap of believing that IFA's can rationalise the transfer decision any better than anyone else. Generally they can't even begin to second guess the scruples of the trustees or the prospective future health of the sponsoring employer.

No-one should become fixated either on the supposed validity of any CETV figures quoted by their pension administrator from time to time, or on the validity of any specialist pension IFA's advice to transfer or not to transfer based on their fee or based on the IFA's comparisons of supposed future yields.

hyubh urges that CETV quotes are no trivial procedure. Of course they are in 2018 for large schemes once the assumptions are agreed. I could do my own (and have done) in a dozen lines in a spreadsheet if they weren't so anally retentive with their assumptions from month to month. Indeed instant online CETVs are the norm now for some major schemes. For those large schemes that still aren't online yet share the same administrators as the ones that are, you have to question why they are still keeping CETV quote procedures so close to their chest if not for the purpose of manipulating them in dodgy ways to assist the sponsoring employer as much as the members.

Similarly it is bloomin' obvious that if an FD is also a trustee of a pension scheme then he has inside information which he is able to share with his chosen associates to judge such things as when to jump ship, or to buy and sell shares and yes, whether to transfer out of the pension scheme. Or must we always give them the benefit of the doubt just because the sweet darlings have consented to act as "trustees"?


It also is pretty obvious that triannual valuations and interim (e.g. annual valuations) result in hidden moments when interesting developments in pension scheme liabilities are revealed to insiders. That's because DB pension scheme liabilities are the number one risk to many businesses who may sometimes be forgiven for wondering whether their core business is managing billion pound pension scheme liabilities and investments rather than their actual businesses. They constantly need to know what the pension scheme is doing.

Sometimes the actual businesses sponsoring employers thought they were running seem a mere sideline to the pension scheme operation! Sponsoring Employers' actual businesses may only turnover amounts in some years that scarcely even cover the movement in pension scheme liabilities!

Jumping ship, and taking various company jewels too is rather all too common in the City, hyubh. Manipulating own share price and dissembling and obfuscating actual pension scheme liabilities are sadly other traits long ago perfected in the City.

The law gives me the right to cash in my sole surviving DB pension as I see fit as an insistent client if I can find an IFA to sign a suitable declaration. Sadly the law apparently gave two other DB pension schemes where I was a member, the ok to be wound up against my will despite the sponsoring employer in both cases being perfectly able to continue to fund the scheme. In one early case around the same time Robert Maxwell fell off the back of a boat, they had wound up the scheme and sent a "surplus" back to USA as a windfall to their shareholders, and in the second they simply did not want to continue because a large number of members had suffered redundancy following takeover, so from that moment had become a burden as second class deferred members. The still employed and connected first class members managed to transfer out first of course leaving the majority to suffer a flakey S32 default fate with the likes of Aviva.

Wind ups are perhaps less prevalent now, but the possibility is just part of life's rich tapestry as a deferred member of a closed scheme.

The suggestion to do nothing and let all the nefarious environmental action that occurs around large private sector DB schemes wash over me until itis time to just shutup and to trust I'll be able to take whatever DB pension is owing is not a view I share with hyubh.

For a start, a large part of my projected pension is GMP which will not increase annually with CPI or anything else above 0% because HMG have completely reneged on it and the scheme itself was extremely slow to tell deferred members what HMG's changes to their commitments to what were contracted out schemes really would mean.

In the private sector it is a dog eat dog world. The big dog Goldman Sachs has already taken a greedy bite out of my scheme and simultaneously out of the UK economy using some fancy wheeze that exploited the disparity between yields on HMG's Railtrack bonds and gilts. We were told that it was part of the "de-risking" of our scheme which only wizards like Goldmans can work up as magic. Notice that Goldmans rarely hang around to see how their advice works out - I fear that more often they are elsewhere busily selling instruments that bet against protections they have just created for other clients.