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

kidmugsy

Thrugelmir wrote: »

The reaction to a period of cold turkey may result in far more volatility.

What if the dead cat eats the cold turkey?

DairyQueen

aphill24 wrote: »

Thanks what I meant was what you answered, IE Up 1.45% net of charges on the year. They are being promised 4% growth during draw down plus the 25% tax free Lump sum is more than the sum they get from the Ford db scheme.
They are all making it sound so simplistic that the kids will get the sipp if they die and would rather this happen than stay in the db scheme where the children don't get anything. The OH get 50% if they are married but when they pass there is no other beneficiaries to the fund.

I agree with others. There will be no 'promise'. Suggestions of sustainable 4% drawdown or, indeed, 4% growth, would be something they would grab onto to justify transferring when they were blinded by those ££££££.

I find it hard to believe that any IFA would have advised a client to transfer without providing a very clear indication of the risks. Bottom line is that a 4% drawdown rate has been largely discredited for those in the UK. 3% (or even 2.5%) is the target most often mentioned in the context of UK investors. Even then, it's considered prudent to have a few years income in reserve in order to suspend drawdown during bear markets.

If you wish to challenge their over-optimism then mention 'sequence of returns risk'. This is one of the biggest risks for retirees relying on the markets for their pension income. If they are in blissful ignorance then they need to wise-up pronto. Feel free to shake your head sagely when they look at you in bemusement. A full-blown bear market at the beginning of retirement can be catastrophic if drawdown continues on a straight-line x% rate.

xylophone

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.

Well they can always claim compensation...:)

https://www.ftadviser.com/sipp/2018/09/14/ombudsman-finds-in-favour-of-insistent-client/

Pension_Geek

I expect what your colleagues are referring to is the Prufund Expected Growth Rate. It generally sits about 5.5% and after wrapper and adviser fees would be about 4%. It’s not guaranteed by any means. There is on the prufund, a minimum income guarantee available but it’s pricey and there are myriad conditions attached.

If you want a guaranteed income, then DB scheme is the only show in town.