Could anyone comment on taking a CETV who has done it??

TBC15

For a less fafing about approach.

Have three years cash in hand at retirement point and put the rest in Fundsmith. What could possibly go wrong?

jamesd

Deleted_User wrote: »

- You are limiting not just the US but all the developed markets outside Asia.

About 12.7% on the same scale of EU small cap held elsewhere. Was around twice that but I halved the position in early Feb 2018, thinking I might do better elsewhere (sell price 6% below current).

Deleted_User wrote: »

- Massive tilt to small and EM.

And deliberately so, particularly the very high small cap. There's another 13.8% UK small cap elsewhere (Merian vs SL, they behave differently). On the same scale combined small cap has been about 63% of roughly 129% - so about 49% of 100% - which is extremely high.

Deleted_User wrote: »

- Why hedge the developed countries? Is that because you believe USD will fall?

To cut US drop exposure. Not all developed because of the EU small cap position elsewhere.

On the currency side I was looking to hedge for a brexit clarity Sterling gain so around 10/2017 I switched from Standard Life World Ex UK Eq (BlackRock) Pn Fd to SL Vanguard FTSE Developed World Hedged Pension Fd.

Deleted_User wrote: »

Certainly awesome returns in 2019. A bit less than S&P 500 but very good given you limited your US allocations.

Yes, nice for a bull market, with less currency volatility. 0.79076 to 0.77275 GBP per USD over twelve months means a currency hit of 2.2% [STRIKE]9.8%[/STRIKE] in Sterling terms for the S&P 500 so I think I'm [STRIKE]well[/STRIKE] ahead given that in USD it's up about 28%. Given the S&P looking likely to turn in its best year since 2013 I've reason to be pleased.

Deleted_User wrote: »

Wonder what standard deviation one gets on a portfolio like this.

Nice in a bull market. In drawdown terms that I use when describing fund risk to people I'd describe small cap or emerging markets as likely to see a 70-80% drop when a global large cap sees 40% down.

I sold much of my EU ex(cluding) UK small cap a few days ago to eliminate volatility on some money I'm shifting out of my pensions.

[Deleted User]

Yes, nice for a bull market, with less currency volatility. 0.79076 to 0.77275 GBP per USD over twelve months means a currency hit of 9.8% in Sterling terms for the S&P 500 so I think I'm well ahead given that in USD it's up about 28%. Given the S&P looking likely to turn in its best year since 2013 I've reason to be pleased.

Actually it means a currency hit of 2%. There is a cost to hedging, of course, but I agree that you have every reason to be pleased.

[Deleted User]

OK, I just wanted to emphasize that “VLS60 etc” isn’t the full story. While it’s a good solution in many circumstances, that does not remove the need for some planning so that you can come up with a suitable asset allocation to meet your financial goals. Knowing your income needs and sources is going to dictate the amounts of annuity, cash, bonds and equities you hold whether that’s in a passive index portfolio , a multi-asset fund or an actively managed sliced and diced portfolio at the other extreme.

I agree that VLS 60 isn’t the full story, and that in a perfect world picking the exact vehicle is the last step, but that’s not what the OP seems to be looking for. If one wants to avoid educating himself and all the steps leading towards building an investment policy statement, then putting everything into VLS 60 and focusing on maximizing one’s savings rate is always a good solution, whatever the circumstances.

You might leave a few quid on the table but unless you need all the money in a couple of years, a balanced fund of index funds is hard to beat for an easy and cost efficient way to invest.

SonOf

bostonerimus wrote: »

I'm always dubious about discounts and rebates, it's invariably a sales pitch to get you to buy something....oh great I'm getting a deal.

UTs used to have a spread where the bulk went to seller. However, most UTs retailed via platforms removed all or most of the spread.

Most UTs have moved to OEIC status which are single priced.

Its not a sales pitch when the spread is reduced. Its just a legacy fund style being used in the modern world.

nigelbb

Deleted_User wrote: »

Buying cars from the manufacturer is illegal - in most places.

Just in most places in the US not worldwide.

[Deleted User]

happyandcontented wrote: »

We have had advice, one advisor was dead against even looking at it, one was all for it, and one will go through the process but is not particularly enthusiastic. We gave them all the same details/facts. Two were independent, one was via

Like you, we have run the figures and thought about it very seriously. We are leaning towards just doing it and hoping we don't regret it.;)

Finding an advisor who is suitably qualified is tricky too, and we feel that a lot of them want to protect themselves which may cloud their judgement.

Would you mind sharing the name/location of the advisor you used? (by pm if you prefer)

Don't use the HL adviser. I went through "the Hargreaves Lansdown experience" with a DB pension and I can tell you it really is the pits.

Have you thought of taking the DC pension instead?
If you took a quarter as cash and added your savings, you could bridge to your dream home and keep the security and safety of a large DB pension income. With the remainder in a SIPP, you would have a sporting chance of running £300k up to LTA, but later rather than sooner in life.
And you wouldn't have to pay a five-figure sum to an adviser.

happyandcontented

ZingPowZing wrote: »

Don't use the HL adviser. I went through "the Hargreaves Lansdown experience" with a DB pension and I can tell you it really is the pits.

Have you thought of taking the DC pension instead?
If you took a quarter as cash and added your savings, you could bridge to your dream home and keep the security and safety of a large DB pension income. With the remainder in a SIPP, you would have a sporting chance of running £300k up to LTA, but later rather than sooner in life.
And you wouldn't have to pay a five-figure sum to an adviser.

Did you take the CETV via HL or just go through the advice process?

[Deleted User]

happyandcontented wrote: »

Did you take the CETV via HL or just go through the advice process?

No, I had to go against HL advice to get the pension out.

I assume the HL pension transfer specialist said c "We are conservative but it may be that your CETV is really attractive. We can run an analysis (£1500) and then give you a pretty good indication whether you should proceed to a recommendation but, if you do proceed, we charge (c£14000 in your case) in either case."

You can probably see the trap involved here.

If you do proceed to the recommendation, the HL adviser will recommend that you stick.
But it gets worse.
If you see through the self-interest and try to transfer against advice, you will find that you have to find an alternative provider by yourself and THEN the HL pension transfer specialist will not provide a signature on the receiving form to the fact that he has provided advice, because they are paranoid about the potential future liability to a mis-selling claim. Apparently, AJ Bell will accept DB pension transfers without a Financial Adviser's signature to the fact that you have accepted advice but, as you can see, it's a bit of a racket.

DairyQueen

happyandcontented wrote: »

I have read all the pros and cons with regard to taking a CETV and we are still wavering. I would like to hear from anyone who has just decided to take the leap and do it.

Our position is that we have 400k in a DC pot and a CETV on a DB pension of around 800k.

We own our own house worth around £300k mortgage-free and have approx 50k of savings. No other debt.

We both turn 60 next year. All our kids are self-sufficient and homeowners.

We are both still working but I plan ( quite reluctantly!) to retire in July 2020, OH will carry on for a max of two more years. We both have full SP at 67. I have 2 very small pensions that kick in when I turn 60.

We estimate that we will want to travel extensively in the first few years of retirement and we want to do so without stinting.

We have also seen a new build house that we love but we would need to put 150k to it after selling ours. We think that may be a foolish move, but it is a dream house.

Given all the above and the fact that the DB pot has poor spouse provision unless the pension is actually in payment ( 65 is the nominated age) and the lack of inheritability we are seriously considering transferring the 800k out.

Currently, we are both in good health but close friends dying without realising dreams has made us think...but we just keep on thinking and never make a decision:rotfl:

This coming year events and big birthday mean we need to take that decision and put the plans in motion.

Thoughts?

Thoughts from anyone who has done this?

Yep, me.

I'm not sure my experience will be helpful as the wisdom (or not) of transferring is so dependent on each individual's circumstances. The major differences between your situation and our's are:
- you are considering transferring your main source of guaranteed income
- I have reduced life expectancy.

I transferred in 2017 with an enhanced CETV (x 32) from a private sector DB and was fortunate that the scheme paid for the IFA (I received a positive recommendation). I was then age 58 with a scheme NRA of 60 and already retired (supporting elderly parents). Property (mortgage-free) of approx £500k. Mr DQ (two years older and still working) has a generous DB pension which he has since deferred in order to increase to £32k at age 65 (2/3rds widows - max 5% indexation) plus a small S32 of approx £3k (no indexation). We have 2 x full nSPs from age 66. In 2017 our combined other assets (SIPPs/DCs/ISAs/ cash) was collectively worth around £500k.

Positives for transferring:
1) My reduced life expectancy
2) Sufficient other guaranteed income
3) Mr DQ did not require the widow(er) benefit
4) No dependents
5) Limited indexation on the DB pension once in payment. Discretionary increases on the excess in reality meant zero increases for several prior years, plus max 3% indexation on the post-88 GMP.
7) I had experience (non-expert) of managing our portfolio - including SIPPs
8) High tolerance to risk
9) Tax. Mr DQ will flirt with HRT once all pensions are in payment and he is in drawdown, and breaching the (2016 protection) LTA is a danger. I, on the other hand, would be best-served taking flexible drawdown rather than a DB income to minimise income tax during my lifetime and max the inheritable benefit.

At the time we were not considering 'up-valuing' our property but are now considering doing just that. We also have an eye on a dream property that may require an additional £100k-ish to purchase.

Foregoing guaranteed, index-linked income is a very big decision and, even without the LTA implications, we would never have considered transferring from Mr DQ's DB. The only risk is the potential for it to end-up in the PPF before it goes into payment. Weighed against the financial benefits, and Mr DQ's rude health and family history of longevity, that is a small risk worth taking.

I am now managing a portfolio approaching £800k. The psychology of this shouldn't be underestimated. I have yet to experience the 30% drop my asset allocation and history suggests will happen sooner rather than later. That percentage drop will be higher if the crash is delayed a few years as we are currently overweight cash in order to front-load drawdown when OH retires in around 15/18 months.

Handling that 30%+ drop will be much, much easier with the comfort of our guaranteed income. How will you feel when your £800k crashes to, perhaps, £500k? You will need to have a plan and a strategy. You will need to be sufficiently well-informed to have confidence that you will not panic. It has taken me around 3 years to believe I am ready but I have yet to be tested.

Given the situation with bonds and cash, you will need a reasonably high equity percentage to sustain the heavy lifting required to maintain returns over the long-term. Are you able to tolerate the associated level of risk?

How much income do you need? This is a fundamental question that will weigh your transfer decision. Will you be able to cut your cloth/use cash in order to suspend drawdown for a prolonged period in the worst case scenario?

We decided to plan around probabilities. Possibilities are unlimited so go with the probability stats. This is especially true of life expectancy. The probability is that you will both live into your mid/late 80s (at least) and that a younger/same-age female will outlive her male spouse. There is a 25% chance that one of you will live to 95+. This is the opposite of our probability but likely applies to you.

Will the likely survivor be able to manage the portfolio? If no, who will manage?

The chances are high that you will need domestic support in your dotage and there is a 25% chance that one of you will require residential care. How will this be funded?

Do you wish to leave an inheritance? If so, why and how much? We decided against ring-fencing any assets for heirs. Our priority is each other's welfare and anything left will be a bonus for the beneficiaries.

What is your travel budget for your active retirement years. Is it affordable if you buy the dream house? Could it be sustained if the markets crash?

We found it helpful to do a comparison of our possible lifestyles based on our min/max expenses and comparing our min/max net income with/without transferring. Ditto inheritance.

Ultimately only you can decide whether the risk of transferring is worth the potential benefit. It could enable that dream house or it could reduce your income for several years in early retirement if sequence of returns is against you.

For us, transferring OH's DB failed the test but transferring mine passed it with flying colours.

Good luck.