DB Transfer out, Have you done it and how has it gone

aphill24

Hi, Quite a few of my workmates have already or are in the process of transferring out of our workplace DB pension scheme. I was wondering if there are any members on here who have done the same and what has happened since?
If you could turn the clock back would you do it again? Do you worry on a daily basis how your new sipp is performimg?
Also if possible are you able to name the company you invested in?
Personally I am not interested myself as I want the garuantee of a fixed sum coming in every month for as long as I live but can't help asking the previous questions as there is rarley any feedback on what has happened to people who have taken the route.

DairyQueen

For most people it is a very bad idea to transfer away from a DB scheme. However, there is a fairly narrow range of personal circumstances within which such a transfer is recommended. My circumstances fit within that narrow range and I transferred last year.

- I have reduced life expectancy.
- OH and I have other sources of guaranteed retirement income that will cover all basic expenses regardless of which of us is the survivor. Our SIPPs will fund discretionary spends.
- OH will not be reliant on income from my pension.
- We have no dependents and I have no children.
- My SIPP will pass to my beneficiaries tax free if I die before age 75.
- I was offered an enhanced CETV (high 30s multiple).
- I spent sufficient time researching pensions and investments to gain the confidence of the IFA that I was competent to manage the SIPP.
- I have a medium-high attitude to risk.

This combination of circumstances is atypical and I received a positive recommendation to transfer.

IFAs are generally wary of undertaking this type of advice. I suspect that positive recommendations are rarer than hen's teeth. Platforms are equally wary of receiving funds from DB transfers and most will not do so without a positive IFA recommendation. I was therefore concerned to read that 'quite a few' of your colleagues have transfeered/are transferring.

AJ Bell were the recipients of the cash and I have chosen to invest in highly diversified, low-cost passives. These form the core of our joint SIPP portfolio. If these funds were required for non-discretionary spends I would definitely have invested them more cautiously. Indeed, I would probably have opted for an IFA-managed portfolio.

I don't lose any sleep over volatility. I understand and accept the risks associated with stock market investment. I understand the strategies that will be required to manage drawdown. I am aware of the risks associated with sequence of returns and we will be able to suspend drawdown when/if markets turn against us.

So, no regrets whatsoever but I can't over-emphasise the exceptional nature of our circumstances.

aphill24

Thanks for the response, I was asking for more information on how the Sipps have performed rather than the reasons for opting out which I fully understand.
If people have been succesful with their investments would they share it as 99% of my workmates are going with Prudential and are told of all the positives that could happen but not many are mentioning the possible falls to their pots. The fact that they might not be making the correct decision is not what I want to discuss really.

Albermarle

Another reason to think about moving out of a DB scheme could be if the employer is having financial problems /poor outlook. Most private company DB schemes are in deficit ( as far as I know ) and need regular injections of cash from the employer . If markets were to have a long bear run, this situation will get worse and more companies may be unable to continue to support their schemes . Although the Government will pay out if a scheme fails it is on worse terms , if you are not yet taking a pension from the scheme .
I was offered 32X CETV but refused. However if I thought my old employer was heading for financial trouble , it could have changed my mind.

Albermarle

Regarding how SIPPS may have performed this will be very dependent on timing .
For example of you cashed out of a DB scheme five years ago , you would have seen very good growth of 30 to 50% , depending exactly what funds you were invested in . However if you had done it at the start of this year you could be up to 10% down .
Also it depends a lot on what type of funds you invest in the SIPP wrapper. Cautious, high risk/return etc .
So the answer to your question, is it all depends .

JoeCrystal

aphill24 wrote: »

Personally I am not interested myself as I want the garuantee of a fixed sum coming in every month for as long as I live but can't help asking the previous questions as there is rarley any feedback on what has happened to people who have taken the route.

We haven't had a proper financial crash yet. Then we probably will see an increase in posts bemoaning about the losses that their transferred out funds has suffered. That is if they are willing to admit it.

whatsup7

I cashed out a year ago, and I’m down 1%.
Still the right choice for me as it gives me flexibility to retire on my terms, I have no dependants.
A lot of my friends also moved to the pru and are showing gains of about 4% at present but I believe this might be readjusted downwards on November 25 th when it gets updated

tacpot12

I moved three personal pensions to a SIPP last year and have lost about £21,000 (6%) in capital value over the last 12 months, but I have also received about £14,000 of dividends in the same period (3.8% yield).

ConMan

I did it, but it was under the £30k so no advice required. Process took around 2-3 weeks when I submitted the forms. Moved it into HL, but likely to move to to a lower cost platform in the new year.

wooder

We transferred my wife's db pension into a Aviva SIPP about 1 year ago and it has worked well for us.

It is invested in 100% equities and so far, we have drawn down about 4 times what she would have got for 1 year if she had left it in the db pension, and there has been no reduction in the initial capital transfer value.

The main problem is that it is a major faff to do. We needed a IFA as the value was over 30k and although the IFA was very good and prompt, the same can't be said for the pension companies and it took almost a whole year from the first cetv request until the money was finally in the sipp with all i's dotted and t's crossed.

Still glad we did it though.

aphill24

Thanks all, a few examples there. Workmates are being led to believe they will get a guaranteed 4% with the Pru and I was looking for evidence to back up my concerns to this advice from people who have actually gone down the same road. There are some big sums being transferred out from 500k to 750k depending on service. One has just had a quote of 20k to move the DB pension to Pru with an ongoing 1% charge PA