Can i cash in a pension early?

Albermarle

how much could I expect to pay an IFA for the relevant advice? Some people have said approx £4K, others are saying anywhere between £8k and £12k. 

From the many different threads on this subject , it could be any of those figures. The problem seems to be more actually finding an IFA with the right qualifications that are willing/interested . The FCA has been issuing clear guidance that transfers are normally not in the best long term interest of the client and the insurers who indemnify IFA's against mistakes , future legal action have jacked up their premiums accordingly . 

OldBeanz

britishboy said:

Thanks everyone, and I can see it’s a resounding ‘no, don’t transfer it out’.  I know the DB will continue to increase with inflation and at 60 or 65, it’ll be a very nice sum, but I don't have any children and do not want to work to 65.  IF I wanted to transfer out (I’ve been offered £556k for it, at 42 years old I thought this a great offer), how much could I expect to pay an IFA for the relevant advice? Some people have said approx £4K, others are saying anywhere between £8k and £12k

im just looking into it at present, so exploring all avenues 

You mentioned your retired colleagues had already done this. They would be my starting point.

Thrugelmir

Albermarle said:

how much could I expect to pay an IFA for the relevant advice? Some people have said approx £4K, others are saying anywhere between £8k and £12k. 

From the many different threads on this subject , it could be any of those figures. The problem seems to be more actually finding an IFA with the right qualifications that are willing/interested . The FCA has been issuing clear guidance that transfers are normally not in the best long term interest of the client and the insurers who indemnify IFA's against mistakes , future legal action have jacked up their premiums accordingly . 

That's because the quality of the advice has been found to be unacceptable by too many advisers. Combination of % fees for advisors and insistent clients made a recipe for disaster. 

NottinghamKnight

britishboy said:

Thanks all, Ive spoken to 2 former colleagues and both advised similar costs.  1% of the transfer fee and 0.75% to manage the portfolio per year.
I did want to transfer the DB transfer out value into the same pension provider I have my DC with but they told me it cant be done.  I want to do this as have spread my smaller DC pension over a few different investments (one being a bit unusual I think, which has grown the most over the last 2 years due to it being primarily US tech companies)

If you want to transfer into your own sipp then that's probably best done in two stages, transfer out of the db into a managed pension first, there is then nothing stopping you transferring from one dc scheme to another.

longwalks1

NottinghamKnight said:

britishboy said:

Thanks all, Ive spoken to 2 former colleagues and both advised similar costs.  1% of the transfer fee and 0.75% to manage the portfolio per year.
I did want to transfer the DB transfer out value into the same pension provider I have my DC with but they told me it cant be done.  I want to do this as have spread my smaller DC pension over a few different investments (one being a bit unusual I think, which has grown the most over the last 2 years due to it being primarily US tech companies)

If you want to transfer into your own sipp then that's probably best done in two stages, transfer out of the db into a managed pension first, there is then nothing stopping you transferring from one dc scheme to another.

Thanks NottinghamKnight - Would I get hit with the similar fees for transferring from one DC scheme to another?   Ive been reading online a fair bit and the general consensus is to stay in DB, so i think i may well struggle to find someone willing to give me the advice.  
Ive worked out even with a 6% interest a year on my CETV value, id be in a better place, earlier for retirement (please correct me if I'm wrong)

dunstonh

Ive worked out even with a 6% interest a year on my CETV value, id be in a better place, earlier for retirement (please correct me if I'm wrong)

Where do you propose getting 6% interest from?   Interest paying investments are lucky to get a percent or two.   

What about inflation?

NottinghamKnight

britishboy said:

NottinghamKnight said:

britishboy said:

Thanks all, Ive spoken to 2 former colleagues and both advised similar costs.  1% of the transfer fee and 0.75% to manage the portfolio per year.
I did want to transfer the DB transfer out value into the same pension provider I have my DC with but they told me it cant be done.  I want to do this as have spread my smaller DC pension over a few different investments (one being a bit unusual I think, which has grown the most over the last 2 years due to it being primarily US tech companies)

If you want to transfer into your own sipp then that's probably best done in two stages, transfer out of the db into a managed pension first, there is then nothing stopping you transferring from one dc scheme to another.

Thanks NottinghamKnight - Would I get hit with the similar fees for transferring from one DC scheme to another?   Ive been reading online a fair bit and the general consensus is to stay in DB, so i think i may well struggle to find someone willing to give me the advice.  
Ive worked out even with a 6% interest a year on my CETV value, id be in a better place, earlier for retirement (please correct me if I'm wrong)

There shouldn't be any fees to transfer to a dc scheme from another. Staying in the db scheme may well be in your best interest.

jamesd

vacheron said:

I have already been told that the likelyhood of anyone recommending the transfer to someone with my personal circumstances is almost zero. ... So it is not so much a question of "Should I?", but "Can I?", and in many cases the answer will be a resounding "No!"  

The law says that the answer to "can I?" after advice is always yes, whatever the advice says. The legal requirement is that the scheme being left sees proof that advice has been received; they can then transfer the money.

jamesd

Albermarle said:

even at 5% growth a year would leave me in a much better position than if i let the DB stay frozen until i retire. 

It is better to look at these % after inflation . Most calculations assume a 2.5% inflation rate , so your 5% = 2.5% actual growth .

Although nobody knows there does seem to some kind of consensus that the next 10 years will not as good for investors as the last 10 and a typical 60% equities portfolio will be luck to achieve 2% above inflation . 

A hair over 5% plus inflation happens to be the UK market long term average so that 5% may already be after inflation.

Less does seem likely for the next ten years so 3% then 5% for 100% equities,, plus inflation, looks like a better planning level than pure 5%.

jamesd

britishboy said:

Thanks everyone, and I can see it’s a resounding ‘no, don’t transfer it out’. 

It's more of a  resounding "it's not for me so it must not be for you either" than considering your own situation and wishes.

britishboy said:

I don't have any children and do not want to work to 65.  IF I wanted to transfer out (I’ve been offered £556k for it, at 42 years old I thought this a great offer),

It's a great offer alright. Even simple income drawdown rules imply that drawing 3% increasing with inflation a year is safe from age 55. With no growth other than inflation that implies £16.7k but growth in the next 13 years is likely, of course. A more flexible set of spending rules might start at 5%, £27.8k, but sometimes skip inflation increases and make extra cuts or increases. And that's assuming no more work additions from 42 to 55/58!

One thing you will need to plan for is an increase in the minimum pension access age from 55 now to say 60 for you. This means sufficient ISA investing to bridge the gap between desired retirement age and then.

It's highly likely that you'll really end up with 50-100% more income and the ability to shift some from older years when spending is normally lower.

Drawdown: safe withdrawal rates is an introduction to safe withdrawal rate theory that you should really understand.