True Potential - good idea or not?

AnotherJoe

Take a "worst case" scenario.£30k is 3% (to match your BT pension)

So, lets say a year or two after you transfer theres a stock market crash. Lets say 35%. Now you have £650k and your drawdown pension at 3% just went to less than £20k for next year.
And the year after if the market doesn't rise by more than 50%.

You wont really be at risk of of company bankruptcy if you take the BT pension, worst case you'll still be on 90% with the govt guarantee eg £27k.

Stubod

..there is no way would give up an index linked pension of £30k (and spouse benefits) unless I had serious health problems. But that's just me...

beamyup

Or another "extreme" case - if you are scared by the risks presented above.

If you were to take no risk and just drawdown from a "cash" sipp.

ZERO growth in your pot. but 3% CPI.

So drawdown starting at £30,000, rising by 3% CPI each year

You would run out of cash after 23 years of drawdown.
You may not need £30k per annum - especially after state pension?

I do not recommend this approach BTW.

nigelbb

I wouldn't trust financial advice from any company with such a naff vomit inducing name as "True Potential".

Albermarle

So, lets say a year or two after you transfer theres a stock market crash. Lets say 35%. Now you have £650k

Although I am in full agreement with the sentiment of the above , I think it is unlikely that a 35% market crash would lead to an actual 35% drop in pension value if the money is invested in a balanced fund .
Still even to lose £200K in a matter of days could be a bit stressful.....

dunstonh

Albermarle wrote: »

Although I am in full agreement with the sentiment of the above , I think it is unlikely that a 35% market crash would lead to an actual 35% drop in pension value if the money is invested in a balanced fund .
Still even to lose £200K in a matter of days could be a bit stressful.....

25% would be more typical. However, the big issue for many DB transfers is that they have no history of using risk based investments. Suddenly they get very big funds where even the smallest movements will see large monetary movements.

e.g. an £800k fund with a relatively minor 15% drop in value is a £120,000 fall. That can be a complete shock to someone with no investment history. Indeed, some will be shocked if the fall was 1.5% (£12,000).

Not if but when.... and multiple times.

bostonerimus

dunstonh wrote: »

25% would be more typical. However, the big issue for many DB transfers is that they have no history of using risk based investments. Suddenly they get very big funds where even the smallest movements will see large monetary movements.

e.g. an £800k fund with a relatively minor 15% drop in value is a £120,000 fall. That can be a complete shock to someone with no investment history. Indeed, some will be shocked if the fall was 1.5% (£12,000).

Not if but when.... and multiple times.

Agreed, volatility can be hard to manage when multiples of your projected annual income can be wiped off the value of your pension pot. The recent 15% drop in the value of the S&P500 was nothing out of the ordinary so anyone managing 1M pension pot must be prepared to see the absolute value fluctuate by 100s of thousands of pounds and know what to do (or what not to do) until the value is most probably recovered.

If the 30k index linked pension with 50% spousal benefit is enough retirement income for the OP then why gamble. Sometimes I think people concentrate on the wrong goals.....is your pension pot to provide you with enough income for your entire retirement or to provide an inheritance?

Dox

Madeinireland wrote: »

Hi,
With regard to the tight timescale... if I get a transfer value now (which is going to take a few weeks anyway) I presume any IFA can advise on that valuation so don’t quite understand why I can’t just let them get the valuation done at this stage while I get the right adviser if indeed it’s not them.

I understand a further valuation would be chargeable (apparently £150) so I guess I can just take that hit if required.

You're putting the cart before the horse. Get your adviser lined up, get through the various checks they will need to carry out on you (money laundering etc) and then request the TV.

£150 seems very cheap for a second quote (and I presume you've checked they will do a second quote within 12 months) - £500 + VAT is more typical.

Thrugelmir

Madeinireland wrote: »

My pension value is going to be in the region of £1m plus.

Nothing like money in the pocket.

"The rule is, jam to-morrow and jam yesterday – but never jam to-day."

Kit_Katt

Personally i would prefer the £1M plus the flexibility to take more or less as i need and as you say your family history seems shorter in years.

Passing on the warchest to your better half if you die first ...state pension kicking in ... and ultimately anything thats left going to your kids for example at their nominal tax rate, seems more appealing to me.

2018 i saw a 6.6% drop in my fund but YTD have made that back and now showing a nice surplus. So in a well managed decent portfolio despite a brutal year my fund didnt drop 20%+.

You never said how old you are , your spouse pension status and if you had access to any cash ISA property income etc ... i think putting all your history on the table makes sense to get a more rounded opinion.