Questions re transfer from DB scheme

HandyMandy

I intend to seek advice from an IFA next year when I turn 55 to see if transferring from my DB scheme is the correct decision for me. My deferred pension at age 60 is £9,780 p/a (left former employer in 2010), latest transfer value quote is £435,710, it’s gone up by over £100k in the past year which seems a huge increase, fingers crossed it’ll keep increasing over the next 10 months. In the meantime though I’ve a few questions mainly regarding transferring out:

1. With regards to IFA transfer fees is 1 - 1.5% fairly typical and can the fee be deducted from the transfer fund?
2. What type of pension do people generally transfer into when they have no clue about investments?
3. What’s the difference between a personal pension & a SIPP (I understand annuities as I used to deal with death claims on them in my former job).
4. Does the IFA normally manage a pension policy, changing funds Etc according to the market & individual needs or do people usually transfer into some kind of managed account and it’s the pension provider who looks after the funds. What kind of annual fee does IFA’s / pension providers typically charge for managing a pension fund?
5. When a Pension is crystallised and goes into drawdown, is the pension managed in the same fashion as pre crystallisation & subject to the same annual charges?
6. I was opted out for a number of years & my COPE amount is £46 per week. If I stick with the DB pension I believe the DB pension reduces when the state pension kicks in. If transferred out does this reduction no longer apply?

Sorry for the long post but just trying to get a better understanding of things before I see an IFA.

Many thanks.

sandsy

If you have no clue about investments, why would you want to transfer from a pension where all the risk (investment and longevity) is taken by the sponsoring employer to a pension where you take all the risks on yourself?

bostonerimus

sandsy wrote: »

If you have no clue about investments, why would you want to transfer from a pension where all the risk (investment and longevity) is taken by the sponsoring employer to a pension where you take all the risks on yourself?

Yep I agree. You should only transfer out if you understand DC pension investing and drawdown so you can evaluate the advice you get from an IFA. FYI if you transfer you could easily end up paying a quarter of your initial annual drawdown income in fees to an IFA and platform. Still the transfer amount is tempting so start education yourself now so you know how best to manage this vitally important financial decision.We are talking 435k so don't leave the management of this money up to someone else. Take responsibility for your finances.

HandyMandy

Thanks for the replies, I am trying to learn more about pensions hence my questions above.

Just to be clear I’m not asking if transferring out is correct for me, that’s for an IFA to recommend or not, when I seek advice next year. In the meantime I’m just information gathering and would be grateful if anyone can answer my questions above.

Thanks.

drumtochty

[FONT=&quot]They have they advised you not to transfer as you obviously do not have not the skills or have done your homework.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]If you have read posts on this forum and the guides from SIPP providers available on the net, the information is already there for you to read.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]It is your future and up to you to do the research, not to ask questions on a forum before you have done your homework.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]You have decided it is not your responsibility to do the background research first. Sorry that is the wrong way around.[/FONT]

Albermarle

1. With regards to IFA transfer fees is 1 - 1.5% fairly typical and can the fee be deducted from the transfer fund? £5k to£10K if you can find an IFA with the right qualifications
2. What type of pension do people generally transfer into when they have no clue about investments? One that is riskier than a DB pension
3. What’s the difference between a personal pension & a SIPP (I understand annuities as I used to deal with death claims on them in my former job). In reality not a lot
4. Does the IFA normally manage a pension policy, changing funds Etc according to the market & individual needs or do people usually transfer into some kind of managed account and it’s the pension provider who looks after the funds. What kind of annual fee does IFA’s / pension providers typically charge for managing a pension fund? IFA will charge approx. 0.5% + the cost of the pension . Pension providers do not manage funds for you , they follow your instructions .
5. When a Pension is crystallised and goes into drawdown, is the pension managed in the same fashion as pre crystallisation & subject to the same annual charges?Managed in a similar way
6. I was opted out for a number of years & my COPE amount is £46 per week. If I stick with the DB pension I believe the DB pension reduces when the state pension kicks in. If transferred out does this reduction no longer apply?No idea, seems a strange arrangement

Have a read of this
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

sammyjammy

I appreciate you are not at the stage of making a decision on this but I think from what I have gleaned from your posts you need to do a lot more reading and understanding of pensions before you start asking such questions.


Unless you upskill your knowledge a huge amount no IFA is going to recommend a transfer out.


Just out of curiosity why is it you are considering it?

HandyMandy

Thanks for your response Albermarle & appreciate your link which I will read.

For the others who replied, I know I need to do a lot more reading up on pensions and i have searched on line but a lot of the information is difficult to understand & isn’t written in plain English. If anyone has other links to useful sites which explain pensions / investments for beginners I’d appreciate it.

I know I’ll definitely never be knowledgeable or confident enough to manage an investment myself so perhaps transferring is a non starter for me, but unless I ask questions and of course make the effort to read up myself then I’ll never know.

Sammyjam the reason I’m considering it is because of the large transfer value, I could easily live off £15,000 per annum and then reduce it when I get my SP. I have a few friends who transferred out of the same DB scheme a few years ago, I’m not sure how they manage their investments but I’ll ask next time I meet up with them.

coyrls

Why do you think you need to wait until you are 55 before transferring a deferred DB pension?

HandyMandy

Coyrls, I’ve been told (by others who have already transferred out of my scheme) you can only transfer before age 55 if you buddy up with someone who is also transferring.

JoeCrystal

HandyMandy wrote: »

Coyrls, I’ve been told (by others who have already transferred out of my scheme) you can only transfer before age 55 if you buddy up with someone who is also transferring.

What did your DB pension administrators say? Never mind what others say.