Transfer old Barclays GMP to SIPP?

enthusiasticsaver

I know there are quite a few threads on the Forum about the Barclays 1964 scheme and deferred GMPs.

My NRD is next year and Willis Towers Watson have been decidedly unhelpful up until now about giving me any sort of assurances about what it will pay out but they sent me a formula, I have perused the terms and conditions of the scheme and according to my calculations it should give me £3840 per year so not a fortune but better than a kick in the teeth. This is principally because it has been revalued in deferment by 8.5% per year as I left in December 1985 after joining the scheme in 1978. My GMP portion is £221 per annum and nothing beyond that.


I have got a transfer out quotation just now from WTW which states a transfer value of £66884. I know that as it is all pre 1988 the pension will not be increased annually in line with inflation so I am assuming that it will be £3840 until death. I still have to see if that includes any spousal protection for my husband but I seem to recall it is 50% if I pre decease him.


My question is should I consider transferring that £66884 out into my SIPP now? I also have a LGPS which I am drawing on now. If I divide that £66884 by my expected annual pension it comes to 17 years so I will be better off keeping it if I live until at least 77 but if I transfer it out to my SIPP I get the benefit of growth which given no annual increases is something to consider. I also have to see an IFA and from what I have read it is not easy to get anyone to sign off on this. Is it worth pursuing or should I just take the pension at my NRD? Any advice?


From an information point of view I am a non taxpayer using less than half my PA and the Barclays GMP will still keep me below that and I should not become a tax payer until my state pension kicks in in 2026. I have a forecast of £150 per week as it stands (as at April 2018) and I am four years shy of full contributions due to my COPE and early retirement and if I made up those 4 years NI contributions I would get £164.35 per week. My husband is on a very good DB pension and we have investments etc but are drawing on savings for big holidays, cars and home improvements. I have claimed the marriage allowance to allow my DH to pay less tax.


Sorry this is a bit long winded.

enthusiasticsaver

Incidentally the £66884 is the current transfer value or guaranteed cash equivalent so I am thinking this actually is the CETV.

I am assuming there would be fees to transfer it out too plus the IFA advice so am leaning towards leaving it with Barclays.

xylophone

I doubt there would be fees to transfer out but you would certainly have to pay the Pension Transfer Specialist.

In your particular situation, I could see an argument to transfer out.

If transferred to a SIPP, you could take the PCLS and and then draw down as much of the balance as would keep you within your tax free allowance until the pension ran out - this could enable you to defer drawing your state pension.

Or you could leave the pension to (hopefully) grow with the object of leaving it as an inheritance.

It is probable that you will still be in the land of the living aged 77 but with a non increasing pension, you need to consider the buying power of the pension after inflation.

https://www.royallondon.com/media/good-with-your-money-guides/five-good-reasons-to-transfer-out-of-your-company-pension-and-five-good-reasons-not-to/ may be worth a read.

enthusiasticsaver

xylophone wrote: »

I doubt there would be fees to transfer out but you would certainly have to pay the Pension Transfer Specialist.

In your particular situation, I could see an argument to transfer out.

If transferred to a SIPP, you could take the PCLS and and then draw down as much of the balance as would keep you within your tax free allowance until the pension ran out - this could enable you to defer drawing your state pension.

Or you could leave the pension to (hopefully) grow with the object of leaving it as an inheritance.

It is probable that you will still be in the land of the living aged 77 but with a non increasing pension, you need to consider the buying power of the pension after inflation.

https://www.royallondon.com/media/good-with-your-money-guides/five-good-reasons-to-transfer-out-of-your-company-pension-and-five-good-reasons-not-to/ may be worth a read.

Thanks xylophone and I will definitely read the link. Part of my thinking mirrors yours in that with a non inflating pension the value will be eroded over time. I also think putting it into my sipp gives me more flexibility in when and how I draw it both to suit our spending habits and to minimise tax paid. As you say it also gives me the option to leave it invested to pass on as an inheritance.

Definitely food for thought.

enthusiasticsaver

I have just spoken to an pension transfer specialist IFA about transferring it but his fees are a flat fee of £4500 which is around 6.7% of the total pension transfer value. He points out rightly that the work is the same for a pension of this size as it would be for a pot of several hundred thousand but I am not sure that transferring it out would add £4500 in value. Any thoughts anyone?

debtfreeforlife

Transferring it out might not give you £4500 in value but would it make a significant difference to daily spending and give you more freedom? If so it might be worth it. As xylophone points out, you could then draw down more which would give you more individual spending money if needed.

Does your DH have spousal protection on his pension? I'm assuming so (since I know you pretty well in RL :rotfl:) but if he doesn't - then making additional funds available to you if necessary might be worth it.

xylophone

You could ring round to try to get a cost comparison?

https://adviserbook.co.uk/

You would tick "confirmed independent" and "pension transfer".

xylophone

https://forums.moneysavingexpert.com/discussion/5901585/cetv-ifa-advice-costs&highlight=db+pension+ifa

Post 16

https://www.first-equitable.co.uk/final-salary-pension-transfer-advice/

Worth an enquiry if you decide to go down the transfer out route?

enthusiasticsaver

Thanks debtfreeforlife and yes it will certainly give me more flexibility. In general the advice is not to transfer a DB pension out though so I actually understand why they have to do a lot of work to make sure the decision is right for me. If it was a bigger pot or a smaller fee I wouldn't hesitate. My DH has a significant pension and investments in his own name and will get 50% of both mine if I keep it as a DB pension. I will get 50% of his pension if he predecessor me.

If I transfer it it will go into investments and hopefully make up the £4500 in growth although of course there are no guarantees so I am swaying to and fro. The clock is ticking though as Barclays ask for a year before NRD at least prior to transfer and this is due to pay out next February.

Thanks for the links xylophone and yes I will phone around. The advisor who contacted me came from unbiased.co and was recommended by The Money Advice Service. He is an expert on GMPs and knew his stuff on the Barclays scheme so I guess the £4500 pays for that expertise.

xylophone

Do let us know how you get on.

enthusiasticsaver

Thanks xylophone. I have made an appointment with an IFA which I found on the advisor board link you put up. Some only want to deal with pensions over £100k but this one says they deal with pensions from £10k up.

One thing I have found is it is very rare for an IFA to agree to just deal with the transfer. They will only deal with clients who have a relationship with them so that means they want to know about our stocks and shares isas and sipps, private pensions, savings etc not only for me but my husband too so we have a free meeting with one in a week or so but I have no doubt he is going to want to deal with all our investments before he agrees to sign the documentation Barclays wants to say I have taken IFA advice. None seem transparent on fee structure but this one does work on a percentage and a fixed fee basis. He explained that they use an indemnity firm to sign off on the pension transfer so this is fast becoming a bit of a nightmare and maybe a costly one. The initial meeting is free though so we will see what he says.