Transferring out of Defined Benefit pension

bostonerimus

I'm late to this, but the OP is getting a nice payout that's 57x the annual pension payment. The administrators must be using ridiculous rates of return and be desperate to get rid of these DB pensions. Where are they getting the money? I'm sure that the aggregate over all pensioners must be larger than what's in the fund at these multiples. As a comparison in the USA I actually went from a DC pension and bought into a DB plan (it was a public employees union one time negotiated opportunity) and $280k got me a $18k index linked pension starting at 55. So about 16x, but that was good as I went in the opposite direction.

There's been some animated discussion about whether VLSxxx is "best". The average retail investor can be derailed by the worry of trying to invest in the "best" fund and should, rather, look for one of the thousands of "right" funds/portfolios for their circumstances. VLSxx could be one of an large number of perfectly adequate solutions. I'd like to ask "is it good enough" rather than "is it best" just to stop silly arguments. 

A 57x payout is a great deal but if it was me I'd be looking to get the money into a low cost portfolio well away from high fund fees and ongoing advisor fees, particularly when you are taking income of maybe 4% and if your advisor charges 1% you spend a quarter of your income on financial fees. One of the VLS funds could be ok, as would any number of similar funds, however multi-asset funds don't allow you to chose what type of asset to sell so maybe some cash, and a couple of equity and investment grade bond funds would be better. 

Anyway with some common sense and the 1.25% in fees that you'll be ahead,  I think you'd be able to beat most "wealth managers".

TVAS

Prestige Portfolio Management and True Potential you are being ripped off because you have a large fund. I am fed up of people with a large pension fund being offered a DFM. It is just an excuse to charge more fees.   
There is nothing wrong with the normal providers and their range of funds for lower fund charges. On a large fund you should be looking at an ongoing fee for 0.25% = 2k p.a. and yeah they want to charge you 0.75% are charging you fee when they have outsourced this work with a third party. Thieves. 

I love the way you say FCA registered Pension Transfer Advisor like it means something. It does not. The FCA wrote to 1600 of the 2400 IFAs who were registered to transact DB pension transfers because they had identified problems with their pension transfer advice. Many of these FCA registered Pension Transfer Advisors went on masse to Wales to transfer people from British Steel final salary schemes to offshore Irish funds with heavy penalties. 
You also say it is the most sensible option but you have not given specific details. This is a big decision and it does not harm to provide your rationale here even if you still proceed because we might tell you something your IFA or you were not aware so I would welcome this.
I also think you need another adviser. 

dunstonh

I love the way you say FCA registered Pension Transfer Advisor like it means something. It does not. The FCA wrote to 1600 of the 2400 IFAs who were registered to transact DB pension transfers because they had identified problems with their pension transfer advice

Not correct.

The FCA wrote to 1600 advice firms.   Not 1600 IFAs.       And it wasn't about identified problems at those firms but concerns (which may or may not actually be problems but needed to be looked in case they were a risk).

zagfles

bostonerimus said:

I'm late to this, but the OP is getting a nice payout that's 57x the annual pension payment.

Where did you get 57x from? 479/13 = 36.8x

bostonerimus

zagfles said:

bostonerimus said:

I'm late to this, but the OP is getting a nice payout that's 57x the annual pension payment.

Where did you get 57x from? 479/13 = 36.8x

I'm using the OP's first post, 800k/14k = 57ish...it's back at the very beginning before all the silly muscle flexing and name calling began.

salsa1

So can I take it that you all do not think I  should transfer away from my DB Pension please?  Thankyou

xylophone

I'm using the OP's first post, 800k/14k = 57ish...it's back at the very beginning before all the silly muscle flexing and name calling began.

I think some  confusion has crept in. There are two posters.

https://forums.moneysavingexpert.com/discussion/comment/78304042/#Comment_78304042

Above from salsa1

I have a frozen final salary (DB) pension for 28 years service. I have requested a transfer value and it is £479K. My annaul DB pension at 60 would be £13K. 

From the first poster  (wiimixer) https://forums.moneysavingexpert.com/discussion/6230896/transferring-out-of-defined-benefit-pension/p1

My pension scheme is offering a generous CETV if I transfer out, approx £800k in lieu of £14k pa income from 55.

xylophone

So can I take it that you all do not think I  should transfer away from my DB Pension please?  Thankyou

Does below help?

https://www.royallondon.com/media/good-with-your-money-guides/five-good-reasons-to-transfer-out-of-your-company-pension-and-five-good-reasons-not-to/

sandsy

salsa1: are you sure it's £13k at 60? I also have deferred benefits in one of the Aviva DB schemes and they refuse point blank to give me an estimate of the pension income at age 60. They will only give me the amount that I had accrued at the date I left the scheme.  Are you aware that the amount that you  accrued when you left the scheme carries on increasing until it starts paying out (and afterwards)?

bostonerimus

salsa1 said:

So can I take it that you all do not think I  should transfer away from my DB Pension please?  Thankyou

It really depends on the index linking of your pension. If you take 13k at 60 and the pension increases by 2% each year then the total value of your pension payments will be equal to 479k when you turn 88. If you take the 479k you could just put it in the bank and take the same amounts out, but you would have nothing at age 88. Of course that's a silly thing to do. If you put it in a short term investment grade bond fund you might get 2% with not much risk and then you could take out the same income and have 200k left at age 88, and if you had a more aggressive portfolio and got 5% annual return you'd have 860k at age 88. If inflation takes off and your pension increases with it then it will look better. You need to decide if you want a guaranteed lifetime income or if you are ok managing your own money and your own risk. This will also depend on what other income sources and retirement savings and ISAs you have.