To transfer final salary pension or not?

Gig1968

Ah thats good I have allready made my mind up so I just need an ifa ta sign off of a form of whatever the company who holds my pension now requires from the it's  to transfer it

BAXLEO

daveyjp said:

BAXLEO said:

I was in a similar position and was advised to take the offer out of the DB scheme. 

My thinking was that if something was to happen to me before I retired or even after a couple of years the money I would have taken out would have been very little. Yes my wife would get a spouse pension of 50%. The rest of the pot stays with the insurance company. With taking it out of the DB scheme then if something was to happen to me the entire pot would goto my family. 

Suppose it is all about choice and decisions to suit yourself. 

You are dealing with Unknown’s how long are you going to live? Will the pension pot grow as much as you hope?
If we had these answers everything else would be simple. 

Were you at any point advised it is possible to have a guaranteed income with a DB pension and also provide a lump sum for your family should you die a few years after retirement?

Was told I could purchase life insurance I think But it was expensive. To be fair was bombarded with letters and information as usual in financial matters. But was also advised  if pot grew by  3 % after fees it would supply the same as DB without reducing the pot. Obviously this can reduce as in times like today but in that instance would either have to cut cloth accordingly or have had cash out to ride out the rough times. 

PennyForThem_2

As a widow so very glad that I have the security of DB pensions of my husband (deceased) to rely on.  
I would so not want the risk of managing a SIPP that was once a gold plated DB pension (even at 50% its value).

Absolutely see why someone who does not have dependents would want to cash in a DB pension.  I might too in that situation. But please consider any partner - talk to them - are they happy with your decision and if you die could they cope with managing the assets?  You could put in a plan that they could follow or point them in direction of advisor;  I would have needed that as I would not be confident in managing SIPP investments on my own resources.

Just a thought....

Silvertabby

Transfer values for the LGPS are set by GAD, and are notoriously poor.  CETVs of less than 20 times the annual pension given up are not uncommon - yet people still do it.

When the 'freedoms' were announced, we were swamped with calls from pension members (both current and deferred) who wanted 'their' money as cash.  Now.  After explaining that the freedoms didn't apply to final salary schemes, such as the LGPS, we had to listen to their reasons for cashing in - promised the wife a new kitchen, family holiday and daughter's wedding were popular.

Rule of thumb for the LGPS is only transfer out if you have been diagnosed with an extremely life limiting condition, and have no dependants to leave on-going benefits to.  Even then, someone who retired on Tier 1 ill health, took the maximum commuted lump sum, and then died months later leaving the (tax free) lump sum death grant to anyone they chose, could leave more cash behind than if they had transferred it all out to a personal pension. (As the CETV wouldn't include the full ill health enhancement). 

happyandcontented

PennyForThem_2 said:

As a widow so very glad that I have the security of DB pensions of my husband (deceased) to rely on.  
I would so not want the risk of managing a SIPP that was once a gold plated DB pension (even at 50% its value).

Absolutely see why someone who does not have dependents would want to cash in a DB pension.  I might too in that situation. But please consider any partner - talk to them - are they happy with your decision and if you die could they cope with managing the assets?  You could put in a plan that they could follow or point them in direction of advisor;  I would have needed that as I would not be confident in managing SIPP investments on my own resources.

Just a thought....

In our case, the DB pension would not pay out a Widows Pension unless the pension was already in payment at the time of death. 

In the event of death prior to retirement age, it would only return the premiums paid which were c 68k versus the CETV of 953k. We chose the transfer (after taking robust advice) which is now going through, but it will be fully managed and we are happy to pay for that for the flexibility and the inheritability aspects.

Stephend1

I am in the same boat as wanting to take the transfer value.  Was offered 40k lump sum and 6k per year I assessed 20 years of living and came to 160k as round figures. Transfer value is 300K. ( 25% is 75K leaving 225K) I have no wife but three children so if I transfer my pot out and die before 75 they get what is left tax free and if I live longer then they pay tax or put in to their pensions.  I have another pension which I can take at 60, at present as 100K in and also have bonds at shares at the moment.  What I want to do is transfer my 300K in to my other 100K one and yes need the advice which I am going through and can be charged up to 5% max from some financial advisors and still say no.  Was told I can say I still want to do it even if they say no which i am picking up on the site.  My moan is I want to transfer from A(300k) to B (100K) direct not from A to the advisers company (C) then transfer out of theirs a month later to my B. Can it be done as I have spoke to two and both seem to say no. 

Albermarle

Probably pension B will not accept DB transfers with a negative recommendation . The large majority of pension providers take the same view . They are worried that if the client is disappointed with the outcome in a few years time ( spent too much/invested badly/poor markets ) they will try an sue them for cooperating in the transfer after a negative recommendation .
Also normally with a negative recommendation , the advisor(s) involved will not get involved further with the transfer for the same reasons.
You can organise it yourself to a provider that will accept and then later transfer to Pension B if you want .

dunstonh

Was offered 40k lump sum and 6k per year I assessed 20 years of living and came to 160k as round figures.

You seem to have ignored indexation on the income.

What I want to do is transfer my 300K in to my other 100K one and yes need the advice which I am going through and can be charged up to 5% max from some financial advisors and still say no.  

There is absolutely no reason to pay £15k for an  adviser to do this.  The target figure nowadays is £3500-£5000.  There will always be some that price high but that either means they dont want to do it or they are greedy

My moan is I want to transfer from A(300k) to B (100K) direct not from A to the advisers company (C) then transfer out of theirs a month later to my B. Can it be done as I have spoke to two and both seem to say no

As long as B accepts the trranfer then it can be done directly.     FAs wont be able to but IFAs can.   And dont assume B will accept it.  If its a legacy plan, it may not be open to new money.

TVAS

The reason why IFA's are running scared is because they keep getting the advice wrong and they got a fee of say 6k for advice they are likely to have to compensate the customer by 100k.

You said something key. You said the company was closed. What does this mean going forward? Does it mean the scheme is under threat because the employer is no longer contributing to the pension? They seem to have the money now but what would happen in the future? The IFA should have asked these questions about future scheme funding. 

So you will have DB £8,200 State Pension £9,000 guaranteed versus ISA 200k, rental income x 2 and DC £8,000 not guaranteed. You are proposing to move a guaranteed element of your retirement income to the non guaranteed element.

You have not mentioned if you are married and if such a spouse would need an income on your death. 

I cannot tell if you are an experienced investor because you said ISA of 200k but not if it is Stocks and Shares or cash. If it is the former then I would say you are an experienced investor you know the risks you are taking on transfer and the transfer value is generous a factor of 53 times. However you may struggle getting an adviser to sign this off and I am also doubtful that you could take benefits from 50 from the receiving drawdown provider. If you do proceed get that in writing from the receiving provider rather than your scheme because it would be the former who pays the tax free cash rather than the latter.