Final salary pension

aloiseb

Hi Sue,

We’ve been taking advice on a similar situation recently and the conclusion we’ve come to is that the extra amount you will have on your pension income from the final salary pension is likely to be very important. So please consider carefully before giving it up. 2 old aged pensions alone may not give you a decent income for the next 40 years.

It sounds horrible, but surely it’s better to wait to invest in a house until your expectations about your mother’s estate are realised? The reason your mortgage people won’t take those expectations into account is because of the risk that she will have to have her future care funded, or even make a wild decision to leave a huge legacy to the cat’s home- and you may not end up with what you hope.

If you buy a house you will most likely have to spend squlions on sorting it out- always, always more than you think. Mortgage rates are probably going to rise too at some point, or so the adviser is probably thinking.

There’s also the risk of one of both of you having to retire early for one reason or another - statistically this must be bigger for all of us, as we age, and our parents age. Of course I hope you will be luckier than we were and not have to retire early for health reasons.

Hope that helps.....even if it’s not what you want to hear at the moment, and paying rent is sickening.:(

PS - might your mother agree to lend you 20K so thatvyoubhad the deposit without having to raid the pension? You’d probably need to think about tax implications if n case somebody said no, that’s a gift, and she subsequently lived
Less than 7 years.

saharajack

Try the register of Independent Financial Advisors, and make an appointment for a face to face discussion, rather than over the telephone. In that way, you'll both be able to see how you plans can or cannot work. There may be a small fee, but if you get a successful outcome, this charge may be waived.
Good luck!

Linton

Molliemoo2014 wrote: »

Hi there
They are only giving me a £13400 lump sum and £1800 a year guaranteed for life.With the best will in the world that wont be any good in our situation We need the lump sum now.
How can we go against the pension advisers advice and get the money if she said she wouldn’t help us ?

Are you sure about the numbers? Is the annual pension value up to date? Is 60 the normal pension age or is the figure based on taking the pension early? From memory, the ratio of transfer value vs pension is higher than any we have ever seen before.


As to the process:
1) Find an IFA with Pension Transfer Specialist qualifications. Only a minority of IFAs have this.
2) Ask them to advise you on transferring your DB pension. There will be what you may feel is a very high fee.
3) When they produce the report read it and reconsider your plans carefully. If you decide to go ahead, find a pension, perhaps a SIPP, that will accept a transfer-in and then allow you to withdraw the cash you want. There should be no problems if the report is favourable, otherwise there are only a small number of SIPP providers who will do it against advice. Your chosen provider will arrange the transfer.
4) Withdraw 25% tax free and any further money over time to minimise tax and put the rest into suitable share fund investments.


Note that if you withdraw any taxed money your maximum future annual pension contribution, including employers contribution, is reduced to £4K.

MallyGirl

My only Final salary pension is currently quoting £97k transfer value for a pension that will only pay £1834 pa from 60 (NRA) with no lump sum so the figures are in line with that.

Albermarle

Are you sure about the numbers?

That is what I was thinking, the numbers do not look right .

They are only giving me a £13400 lump sum and £1800 a year guaranteed for life

Is this maybe the figures given to you when you left the employer ?
When you leave an employer with a final salary scheme you are issued with a document stating the pension you will be entitled to at a certain age ( usually 60 or 65 ) . However as the years go by these figures are usually uprated with inflation but often they do not actually send you any updates.
How many years is it since you left the employer ? If it was a long time ago then most likely these figures will have increased significantly with inflation ,

MallyGirl

If the OP didn't work for that employer for long then there is nothing that wrong with those numbers imho.
My own similar figures are bang up to date as I can access them online

mark55man

Nothing wrong but your numbers imply a CETV ration of around 50x which is higher than most others seen on these forums. Now if you are getting 50x your money you on;y need to make 2% a year to receive an equivalent income from the cash that for your expected DB income. Which many of us would jump to in a shot!! Remembering its not the transfer that causes the tax charge, its the withdrawal

So either there are other factors in play, or the scheme age of 60 that make yours particularly high.OR the value of DB transfers (mainly set by compliance with government and industry rules rather than individual schemes) just went up and anyone considering doing this may have just got an uplift

Molliemoo2014

Yeah I thought the annual income amount seemed low but as everyone says the figures on paper are worthless if you can’t get at them !
I think we’re going to wait as the mortgage adviser is away for a week as I know his wealth management company also deal with pensions .Maybe we will get a different answer from them It’s worth a try

Molliemoo2014

By the way this schemes age is 58 so that’s why I’ve got a letter now as I’m fifty eight in May

Molliemoo2014

I only worked for them for seven years and left in 1995