Questions re transfer from DB scheme

[Deleted User]

We did transfer my wife's DB pension into a SIPP for which the IFA takes money for doing nothing

Just fire the IFA.

Officer_Dibble

HandyMandy wrote:

fingers crossed it’ll keep increasing over the next 10 months. That depends on bond rates, inflation forecasts etc. There can't be much scope for improvement of transfer rates, but who knows?

1. With regards to IFA transfer fees is 1 - 1.5% fairly typical and can the fee be deducted from the transfer fund? I paid 1% out of the transferred fund. This is one area that's likely to change. At the moment, yes.The FCA is keen to ban contingent charging, where the fee is paid out of the transferred sum if the transfer goes ahead, but there's no fee if there's no transfer.
2. What type of pension do people generally transfer into when they have no clue about investments? I used Tideway to do my transfer into a SIPP which they manage - they offer a range of managed portfolios with different risks and timeframes, all well explained during the transfer process. I fully intended to move away from their management quickly, but have been very happy in the year since I transferred (7.5% annual return after charges) so will stay with them for a while at least.
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). Complete flexibility with a SIPP, including (should you wish) partial or total investment in annuities at some future date should rates improve.
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? Tideway's wealth management website has a good comparison chart, as I'm sure others do. Beware of hidden charges!
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? Mine will be, with a tweak towards a lower risk portfolio. Charges vary depending on SIPP provider.
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? Presumably the transfer value will take this into account - the reduction will no longer apply

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

I don't get the negativity round here about someone without an encyclopedic knowledge of investing for retirement taking a transfer. You need to understand the risks, but you don't need to know how to construct a balanced and secure pension fund. In some ways I think my investment experience counted against me during the transfer process, in that I looked like the kind of person who might move everything into a self select SIPP and fill it with the kind of shares that would be unlikely to provide a secure and worry free retirement - I had to convince them that I wouldn't. The increased flexibility is wonderful. I've gone from having one pension at 60, then increased income at 65 with a second DB pension then another increase at 67 with state pension. Since the transfer (of the age 60 DB) I've gone part time (a couple of years before 55), will then start taking some pension at 55 while still working, and can decide when to stop work depending on the pot's performance. No regrets.

john-306

My wife next year will be in a similar position to the Op but with much less less CETV, but still for us substantial.
Staying in DB would give guaranteed pension for her life, she dies, I get half, I die then it dies with us. We both live till 90s great, don't make it out of our 60s then we lose out big time.
Transfer out, she gets 36x CETV figure that keeps going up quite a lot over the last year.
25% tax free from DB would be 40% less than transferring out and taking tax free from that. Also we both die and whats left in pension goes to the kids.
We're still looking for the negatives and more positives before needing to decide.

Parking_Trouble

ZingPowZing wrote: »

We did transfer my wife's DB pension into a SIPP for which the IFA takes money for doing nothing

Just fire the IFA.

That was the plan but we decided to take his advice to wait until Brexit had a bit more clarity. He's had enough money. Time for him to go.

Albermarle

We both live till 90s great, don't make it out of our 60s then we lose out big time.

For a man who has reached age 65, he can expect to live on average until age 87 and a woman 89.
Note the word 'average ' as this means 50% will beyond those ages. If you are reasonably healthy and live a reasonable lifestyle , then you are more than 50% likely to grow older than the average.
For a couple I think there is around a 20/25% chance that one will survive to 95 and maybe even older.

We're still looking for the negatives and more positives before needing to decide.

This is a good objective analysis:
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

HandyMandy

Thanks for the reply’s with video & reading links, lots of constructive info to help me gain a better understanding of pensions.

Since my last posting I’ve had a look at the schemes terms & conditions and whilst I’m on target to qualify for the full SP my DB pension will decrease at SP age.

The deduction is calculated as 1/80 x £3,510 for each year of pensionable service up to 31 Dec 2007. I joined the scheme in Aug 1985, so by my calculations (£3,510 / 80 x 22 years = £965.25). Can anyone advise if my calculation is correct?

Thanks.

Andrew31

A lot of people here suggest not to transfer, but i would suggest go to an IFA and be honest about what you want. However, dont go to them and tell them you want to transfer, you should not be blinded by the big transfer, tell them what you want to do with your retirement.

There is so much scaremongering drummed up by the FCA on DB transfers, but it can be right thing to do for some people.

As for all this manage it yourself talk, yes can do if you have the skills. I would fix my car if i was a mechanic, but i am not so leave it to the professionals.

Take advice on here with a pinch of salt (mine included) as you do not know anything about the people giving the advice and they no little about you other than a few short paragraphs.

Find a trusted adviser and be open and honest.Good luck

Thrugelmir

Andrew31 wrote: »

There is so much scaremongering drummed up by the FCA on DB transfers

From the FCA in June 2019.

Despite this, too much advice is not of an acceptable standard. When we published our last update on this in December 2018 we were clear that our targeted work had found advice was suitable in fewer than 50% of cases; this was not acceptable and standards must be improved. We said, as a result of these findings, that every firm active in the market could expect to hear from us in 2019.

Andrew31

On this board, you will get a range of advice that I'll wager is more informed and balanced than the advice of any IFA, even if you stumble across a good one.

I will take that wager!

Andrew31

Thrugelmir wrote: »

From the FCA in June 2019.

thanks for googling this and clarifying my point.