Pension transfer - no brainer?

thunderbird

I'm seeing a pensions advisor about this (and realise I can't transfer without paying them to review it all) but I'm rather surprised by this...



I currently have a final salary pension from a previous job which will pay me (currently) just under £3k per annum from age 60 (10 years time). I expect to still be working full time then and to be taxed on this. At present I don't know if I will be retiring before 67.



I was very surprised to find out the transfer value is £140k! That seems a huge amount for the amount I'll be getting each year. And to me (who knows very little about pensions) that it would be much better to transfer that out. Is this unsually large?

MallyGirl

It is quite a high multiple but there are lots of questions to answer.
Does the £3k figure increase by inflation (or something else) over the next 10 years.
Does the £3k increase by inflation (or something else) once you start receiving it?
Is there a spouse pension- often 50%?
Any other guarantees or benefits?
Do you have the interest/ skills to invest that money yourself if you transferred?
Transfer fees could cost £5k plus if you can find anyone to do it

thunderbird

Yes it does increase by a small amount each year.

I don't have a spouse so don't need to consider that aspect.

I have the forms to do the transfer, it just needs to be accompanied by proof that I've received financial advice. I would transfer it to the pension I'm currently paying into.

xylophone

https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/five-good-reasons-good-with-your-money-guide-2018-edition.pdf

I would transfer it to the pension I'm currently paying into.

You are aware that if this current pension is a DC Scheme, you will require the advice of a Pension Transfer Specialist in respect of the transfer in of the DB pension and that the scheme may not be willing to accept a transfer in unless you have a positive recommendation from the PTS?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

It is also possible that the scheme (whether DB or DC) does not accept transfers in - have you checked?

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

thunderbird

Yes they will accept the transfer, as I said I have to provide evidence that I've received advice from an authorised advisor.

I have got a state pension forecast.

thunderbird

Thanks for the links

Malthusian

thunderbird wrote: »

Yes they will accept the transfer, as I said I have to provide evidence that I've received advice from an authorised advisor.

Unless it's AJ Bell or one of a handful of others that accept "insistent clients", it will have to be positive.

If it isn't positive there's nothing stopping you from transferring to one of the handful that will accept it, and doing a DC-to-DC transfer.

Make sure the adviser will actually provide confirmation that you received advice even if it's negative. They have been known to refuse. (This isn't on once the work has been done - and possibly even charged for - but some advisers would rather be irritating than legally liable, and you don't want the hassle, especially with an unusually high CETV that will eventually expire.)

Can you defer the pension to age 67 and get late retirement factor increases if you don't want to take it at 60?

enthusiasticsaver

I have considered doing this myself as I have a deferred DB pension paying out next year when I am 60 and have got the transfer figures. My annual amount is higher than yours though but not index linked once in payment. The transfer figure is significantly lower than yours so I would say yes £140k transfer value on a £3k pension is high.


I think you will find that firstly the costs of the advice is high and secondly you may not be able to transfer if the PTS does not recommend it. It is a DB scheme which needs the PTS advice/recommend not a DC scheme as some have said.