Transfer Defined Benefit pension to SIPP, iSIPP or QROPs.

pip895

Another possible rout for you is to pretend to be a risk tolerant sophisticated investor with additional retirement funds - perhaps an expected inheritance..  You then accept a transfer into a SIPP of their choosing.  Once it is there you can decide to invest in bonds or what ever you want and in due course transfer it to the SIPP/iSIPP provider of your choice.    

Its a high risk strategy however..  No one here is suggesting its a good idea.

Albermarle

garmeg said:

Jxos08 said:

Albermarle said:

The multiple of 50 ( CETV divided by annual pension ) is VERY high , so I think a lot of people would be tempted at that level , as typically it is more in the 30 to 35X range.
Are you sure of your figures? Is the £7500 an up to date figure , or is it the figure you were given when you left the employer some years ago maybe ?

It's actually more than that - this is a recent quote valid until December.  Pension £7,354 a year (£613 a month) and transfer value is £384,000.

Is that the pension you would get if you could retire now (at 53) or a projected value at normal retirement age or the pension when you left the scheme or something else?

To the OP - the above question is important to really see how good the CETV offer is . The multiple is best calculated using the pension you would get if you waited until the normal retirement age.

Jxos08

Jxos08 said:

Albermarle said:

The multiple of 50 ( CETV divided by annual pension ) is VERY high , so I think a lot of people would be tempted at that level , as typically it is more in the 30 to 35X range.
Are you sure of your figures? Is the £7500 an up to date figure , or is it the figure you were given when you left the employer some years ago maybe ?

It's actually more than that - this is a recent quote valid until December.  Pension £7,354 a year (£613 a month) and transfer value is £384,000.

The pension at 65 goes in to the quotation 22 times so it's not as high as I thought.

Albermarle

Jxos08 said:

Jxos08 said:

Albermarle said:

The multiple of 50 ( CETV divided by annual pension ) is VERY high , so I think a lot of people would be tempted at that level , as typically it is more in the 30 to 35X range.
Are you sure of your figures? Is the £7500 an up to date figure , or is it the figure you were given when you left the employer some years ago maybe ?

It's actually more than that - this is a recent quote valid until December.  Pension £7,354 a year (£613 a month) and transfer value is £384,000.

The pension at 65 goes in to the quotation 22 times so it's not as high as I thought.

The multiple is only a guideline/easy figure to calculate . It does not pre empt what a full analysis by an IFA might say , although as you have said it is likely to be negative anyway.
Whether you use the pension at normal retirement age, or the pension you could have today to calculate the multiple is an arguable point ( not the first time it is discussed on this forum ) but of course if you took the money today you have to make it last a lot longer if you are hoping to generate a retirement income from it . Especially an inflation linked one .

[Deleted User]

QROPs have a dreadful press and probably for a good reason - I have yet to hear of a real life good story through the lifetime of one.
However because of Spanish tax laws, your TFLS from your SIPP (if you transfer) will be treated as normal income and taxed as such.
This is one of the main reasons I am taking my TFLS in the tax year before I move to Spain (ie I will take it next month), this will then be invested in ISAs/GIAs. I will then sell down the ISAs/GIAs like I would do my SIPP, however the taxation on that becomes quite efficient as it will stop my pension income going into the higher tax brackets in Spain. (ie 37%)
The CGT taxation is equal to the lowest Income tax band. (19%)
Dividend Income is taxed at savings income of 19% for under 6,000.

[Deleted User]

Jxos08 said:

I've been doing some more research and it would seem that a SIPP and  International iSIPP are actually exactly the same apart from the name to attract overseas customers or am I missing something?

Normally the iSIPP is based in the currency you are spending. ie Euros
You can't do that with a UK based SIPP, which will pay the pension payroll in sterling to a UK sterling bank. And then you transfer over in Euros to your Spanish bank using a currency transfer company.
I plan to use a normal SIPP but transfer over once per year for the year.

[Deleted User]

Jxos08 said:

The long term aim is to invest in property.

Out of interest how are you going to invest in property, through a REIT or through withdrawing the money to purchase one.
If it is the latter the Spanish Income tax on a large withdrawal that big is going to be punitive.

Malthusian

pip895 said:

Another possible rout for you is to pretend to be a risk tolerant sophisticated investor with additional retirement funds - perhaps an expected inheritance..  You then accept a transfer into a SIPP of their choosing.  Once it is there you can decide to invest in bonds or what ever you want and in due course transfer it to the SIPP/iSIPP provider of your choice.   

As the CETV is on the face of it not outstanding value (22x the pension at normal retirement age), chances are good that no IFA would recommend it even if the destination was a sensibly diversified risk-appropriate portfolio.

I wouldn't recommend trying to get a positive recommendation by lying to the IFA about imaginary inheritances because

a) most people are seriously terrible at lying, especially people stupid enough to try it 

b) as future inheritances are inherently potentially worthless, I'm finding it very difficult to think up a scenario where an IFA would recommend a transfer on the basis of a potential inheritance alone anyway.