Transfer frozen final salary pension

Trombone_Stu

Hi I'm after a bit of advice/help . I have a frozen final salary pension with a transferable value of 450k I'm 47 with OH and want to retire at 55 struggling with health not life threatening but enough for me to be flowing down I'm getting other colleagues saying move it but really unsure and don't want to end up with it all disappearing if investment goes wrong can I protect it to a certain degree or should I leave alone and take my final salary pension which will pay 11500 per year, TIA

sandsy

The chances are extremely high that your colleagues are neither specialists in transferring pensions and know insufficient about you, your needs and objectives and your attitude to risk to tell you what is best for you.

Is the income of £11500 the level it was when you left the scheme, the level now or a (non-guaranteed) projection of its level at some future age, Eg, 55 or normal scheme retirement age?

If you want to explore a transfer, you will need to take proper advice from a suitably qualified adviser, by law. This will explore your full retirement planning provision and what you need to achieve. Not all advisers have the relevant qualification. Look for an adviser who describes their services as independent.

If you're averse to investment risk, then transferring is unlikely to be a good option for you.

kuratowski

It's usually not a good idea to swap a known future income for an uncertain investment portfolio, which might indeed "end up all disappearing". There are a very few individuals for whom this would be right choice, but from what you describe I don't think you're one of them (and, probably, neither are your colleagues, but that's their look-out).

Only this morning on the radio I heard an advert from a claims management company trying to encourage people who transferred out of final salary pensions to make a claim for mis-selling... this is going to be a big thing.

Marcon

Your final salary pension certainly won't be frozen - it will be increasing between the time you left active membership of the scheme and the time when you start to draw your benefits (or transfer it, if you do transfer). Maybe talk to the people handling the day to day administration and find out a bit more about the whole matter, including possible early retirement.

dunstonh

I have a frozen final salary pension with a transferable value of 450k

I very much doubt it is frozen tehn. More likely deferred.

I'm getting other colleagues saying move

Historically, in 9 out of 10 cases it is best not to move it. What reasons are your colleagues saying about it being suitable for you?

and don't want to end up with it all disappearing if investment goes wrong

This suggests your investment knowledge and understanding is close to zero. This can be a big issue when it comes to DB transfers. The chances of it disappearing are remote. It would either need you to do something stupid, like going off the mainstream into a scam, you spending all the money as you lack self control or the world facing an apocalyptic event. in which case you would care about your pension.

can I protect it to a certain degree

You introduce new risks if you do that. And then you have to ask the question, why would you come out of a guaranteed scheme if you want a guarantee?

Conventional investing would of the typical UK investor could see losses in short term of around 20%. So, you would lose around £90,000. You would expect several of those during your retirement. Far more frequent loss periods of around 10% would occur, losing you £45,000. All quite normal and acceptable.

So, if losing £45k to £90k would be too much for you then you really do have to ask whether transferring the DB pension is suitable.

I have intentionally ignored the growth periods as novice investors tend to ignore those. e.g.
"I am down £1000"
"yes, you are down 1% on last year. However, you are still up 20%, £20,000 over the last 3 years"
"but I am down £1000. I am not happy. I think I should take it out as I am losing money".

That sort of scenario is extremely common. As farcical as it may be to some people. And with the higher value funds that would exist after a DB transfer, small swings mean larger monetary amounts.

Trombone_Stu

Thank you all for your replies
The pension was closed but is rising slowly each year and the 11500 is what it will be at 55
I've only just started looking into pensions so as stated know zero
I guess I will leave it where it is .

dunstonh

The pension was closed but is rising slowly each year and the 11500 is what it will be at 55

Based in todays terms. Not future money terms. And 55 is early for most DB schemes. Many have reduced amounts for taking it at that age. 60-65 are the dominant scheme ages. Yours could be 55 but you should check.

JoeCrystal

Trombone_Stu wrote: »

Thank you all for your replies
The pension was closed but is rising slowly each year and the 11500 is what it will be at 55
I've only just started looking into pensions so as stated know zero
I guess I will leave it where it is .

Then it is an excellent thing that you paid into the scheme back then. Otherwise, you could be in a much worse position if you ignored the pension until now.

Trombone_Stu

JoeCrystal wrote: »

Then it is an excellent thing that you paid into the scheme back then. Otherwise, you could be in a much worse position if you ignored the pension until now.

I knew at the time it was a great pension that's why I never really bothered but it was only others saying they'd moved it got me thinking.

Blackbeard_of_Perranporth

I have a heart condition. I have not yet considered at anytime of even getting close to asking for mine early, no matter how much I am tempted! (57!)