Final Salary Scheme - what to do with friends advice.

MallyGirl

BBH123 wrote: »

My friend has no worries about running out of money in her later years as she feels the state will kick in for any needs she may have ( I don't think like this and want to have my own money and my own choices )

Have you ever taken a look at the sort of care home you might end up in if the state is paying. You might be lucky but probably not

[Deleted User]

MallyGirl wrote: »

Have you ever taken a look at the sort of care home you might end up in if the state is paying. You might be lucky but probably not

See I said exactly that but she says state and private funded folk live in the same care homes , I think she is basing this on her 94 nan's experience and she did well out of the state. I think they were different times though and her nan was always in the state system whereas I have not been and wouldn't want the hassle of that when I'm elderly and don't understand the red tape and forms.

Albermarle

A wise decision to come to.
Remember when you take your DB pension you will almost certainly be offered the option of taking a tax free lump sum with a reduced pension ongoing. You will have to decide what to do.
It depends partly on whether the lump sum would could be used for something useful /how long you think you might live/your tax position .
You should be aware though, this tax free lump sum will not be anywhere near as high as the possible £250K you could have got by transferring out. ( just did not want you t be disappointed !)

Albermarle

In fact the more I think about it there is a lot to be said for a guaranteed income. Perhaps if I knew enough to make an informed investment or manage my own portfolio it would be different but I don't.

This can happen but clearly those with money in general end up in nicer ones . I saw some pretty poor places when I looked for my Mum and luckily she had enough money to upgrade.

MEM62

BBH123 wrote: »

I had a friend nagging me at the weekend about the above.

* Friends
* The bloke down the pub
* Your hairdresser / barber
* Your barman
* Facebook

Are all notoriously unreliable sources of financial advice. Your pension is crucial to your financial well-being in retirement. Surely, you would want professional advice in respect of managing / protecting it. Plan you retirement using advice from any of the above at your peril.

[Deleted User]

MEM62 wrote: »

* Friends
* The bloke down the pub
* Your hairdresser / barber
* Your barman
* Facebook

Are all notoriously unreliable sources of financial advice. Your pension is crucial to your financial well-being in retirement. Surely, you would want professional advice in respect of managing / protecting it. Plan you retirement using advice from any of the above at your peril.

Haha yes of course


No way would I actually act on a friends advice. I cant help but wonder why she was so adamant I should do it.

Paul_Herring

I cant help but wonder why she was so adamant I should do it.

- Cannot conceive that your situation could be any different than hers?
- She thinks she knows better than you?
- Misplaced over-concern?
- "I've just heard about this great new thing - everyone else should do it! How could they not??!"
- Dunning–Kruger effect?

Those are some of the more generous reasons I could think of.

MallyGirl

BBH123 wrote: »

Haha yes of course


No way would I actually act on a friends advice. I cant help but wonder why she was so adamant I should do it.

It would validate that she had done the right thing?
If she had done the wrong thing then you would not be any better off than her?

lisyloo

BBH123 wrote: »

See I said exactly that but she says state and private funded folk live in the same care homes , I think she is basing this on her 94 nan's experience and she did well out of the state. I think they were different times though and her nan was always in the state system whereas I have not been and wouldn't want the hassle of that when I'm elderly and don't understand the red tape and forms.

Some are ok.
We got my MIL into a decent one but only by fighting and taking it “to panel” as it was outside the normal rates.
If you have no advocates to fight for you then you’re much more likely to end up in a rotten one.
Many of the homes that took LA residents were very poor indeed and not somewhere you or a loved one would want to end up.
Many of the decent ones had LA residents where a family member was paying a top-up I.e. paying extra about the LA rate.

I would say it’s foolish to rely on getting somewhere decent being state funded and I’ve seen quite a few (about 20 in south glos and banes).

To claim you won’t care by then is also foolish.
My MiL probably doesn’t care much 3 years into a dimensia diagnosis, but she did for the first 2 years, so you can’t rely on becoming unaware straightaway, it just doesn’t work that way.

DairyQueen

I am one of the few who were recommended to transfer out of my DB scheme after taking independent advice from a pensions specialist. Note that such advice is expensive and increasingly difficult to find.

My circumstances are unusual and the majority will not meet the criteria for such a recommendation:

- I have reduced life expectancy
- I am married but OH is well-pensioned and does not require my widower's benefits
- We have sufficient other guaranteed, pension income and assets to meet our needs
- I have no children but any unused funds would be of benefit to my nephews
- I am not risk averse. If a drop of 20%+ drop in value (and a 5+year bear market) scares the hell out of you then don't even consider transferring.
- I already managed a reasonable-sized pension pot. No pretensions to expertise but sufficiently comfortable with self-management not to suffer the heebie jeebies at the thought of an extended bear market.
- Drawdown will be more flexible and tax efficient for our circumstances
- I was offered an enhanced transfer value (x 32).

I stress that transferring is the wrong decision for most people and the only way to determine whether you are one of the exceptions is to invest in independent professional advice. Forget the well-meaning advice of your mates. I wonder just how enthusiastic your friend will be when the markets next take a substantial drop?