Transferring old workplace pension into a SIPP

Dale72

So I'm essentially back where I started, I have to pay out around £3000 to be able to do what I want with my own money. The words 'over regulated' seem appropriate. This doesn't need any replies, I'm just thinking out loud.

Dale72

Sorry, my final question on this if anyone will indulge me. I understand that a stakeholder pension would have to accept a transfer, if this is correct, then can I do this without taking advice, and if not, what would stop me doing it, given that they would have to accept it?

LHW99

Dale72 said:

Sorry, my final question on this if anyone will indulge me. I understand that a stakeholder pension would have to accept a transfer, if this is correct, then can I do this without taking advice, and if not, what would stop me doing it, given that they would have to accept it?

My understanding is that if the CETV is over £30k, then you have to get and pay for full transfer advice, which you are entitled to ignore if it is no, and you still wish to go ahead. You would be an insistant customer.

So I'm essentially back where I started, I have to pay out around £3000 to be able to do what I want with my own money.

Respectfully it is not "your own money" as such, it is a pay-off to get the expensive promise (to you, of an inflation linked income + spouse protection) off their books.

xylophone

I understand that a stakeholder pension would have to accept a transfer, if this is correct, then can I do this without taking advice, and if not, what would stop me doing it, given that they would have to accept it?

If you seek to transfer a DB pension valued at over £30,000 to a DC arrangement, by law you must  obtain the advice of a Pension Transfer Specialist although you are not compelled to take it.

The  Trustees  of the DB pension will not authorise a transfer out without confirmation in their prescribed format that you have obtained the advice of a Pension  Transfer Specialist. They do not require to know whether or not the advice was positive.

Dale72

LHW99 said:

Dale72 said:

Sorry, my final question on this if anyone will indulge me. I understand that a stakeholder pension would have to accept a transfer, if this is correct, then can I do this without taking advice, and if not, what would stop me doing it, given that they would have to accept it?

My understanding is that if the CETV is over £30k, then you have to get and pay for full transfer advice, which you are entitled to ignore if it is no, and you still wish to go ahead. You would be an insistant customer.

So I'm essentially back where I started, I have to pay out around £3000 to be able to do what I want with my own money.

Respectfully it is not "your own money" as such, it is a pay-off to get the expensive promise (to you, of an inflation linked income + spouse protection) off their books.

Sorry I don't understand your last statement, if their happy to get me off their books, and I've heard that comment here before, then why the bloody hell are they in the business of managing pensions?

justme111

Because that is the law.  They have to. 

AlanP_2

Dale72 said:

LHW99 said:

Dale72 said:

Sorry, my final question on this if anyone will indulge me. I understand that a stakeholder pension would have to accept a transfer, if this is correct, then can I do this without taking advice, and if not, what would stop me doing it, given that they would have to accept it?

My understanding is that if the CETV is over £30k, then you have to get and pay for full transfer advice, which you are entitled to ignore if it is no, and you still wish to go ahead. You would be an insistant customer.

So I'm essentially back where I started, I have to pay out around £3000 to be able to do what I want with my own money.

Respectfully it is not "your own money" as such, it is a pay-off to get the expensive promise (to you, of an inflation linked income + spouse protection) off their books.

Sorry I don't understand your last statement, if their happy to get me off their books, and I've heard that comment here before, then why the bloody hell are they in the business of managing pensions?

They are in the business of managing pensions as you put it, although it is normally 1 pension that the trustees are managing not many e.g. the scheme for Employer A, as when the scheme was setup by Employer A many years ago as a benefit for their staff the law said the funds need to be held in trust (i.e. not in Employer A's normal business bank account / P&L statement) and managed by trustees. A number of the trustees would be Employer A executives and some would be staff / union nominations typically.

It is a separate legal entity from the sponsoring employer and they hold all the assets and invest them with the aim of paying out the agreed pension paymemnts over the next Day to 100+ years probably. You do not have any assets and so do not have a "pot", all you have is a call on the income generated after you retire. If the investment income is not high enough to cover the promises made the employer stumps up more cash earned through their "day job".

You gave the trustees your money, via payroll, and asked them to invest it alongside the company's and to pay it back to you over the years you are retired, accepting the risk that you may get less back than you paid after adjusting for investment returns because you die a few weeks / months after retiring and have no spouse possibly. They accept the risk that you will live for 40 years after retirement and have a spouse who is 20 years younger and  who will still be claiming 65+ years after you retired. Many posters on here seem to forget that and think they have a pot of money somewhere with their name on it as if it was a DC pension.

Current legislation allows you to request a CETV and the actuatries employed by the trustees will attempt to value what your future benefits equate to if all paid in one go, today.

There are various caveats around that to protect those members who do not take the CETV and those who may still be contributing to ensure an overall level of "fairness".

CETV values change as interest rates, investment returns, inflation etc. change and as the forecasts for them change. Different people with the same years service and on the same salary will get different CETVs based on their age and time to normal scheme retirement age etc.

As to whether they want you off their books or not, who knows, but I would suspect many employers would much rather not have an ongoing pension liability detracting from their Balance Sheet position and weighing on their share price. BT for example has been described as a Pension Fund that happend to run telephone networks the potential pension liabilities are so large. From their point of view paying out £x now compared to the risk of paying out £x+/- over the rest of your life (and your spouse's possibly) after an unknown amount of inflation / interest rate falls and rises / investment returns variability over possibly 40/70 years has defined what the +/- against £x is the preferred option if you, as a deferred member, are happy to take that risk on instead is to say yippee.

hyubh

Dale72 said:

Sorry I don't understand your last statement, if their happy to get me off their books, and I've heard that comment here before, then why the bloody hell are they in the business of managing pensions?

Exactly, companies with legacy DB pension liabilities don't wish to be in the business of managing pensions. Alas, but the fact pesky legislation says they must abide by their previous pension promises means they kind of are.

Thrugelmir

jamesd said:

Thrugelmir said:

GingerPrince18 said:

I mean, I've been investing for a number of years and am happy to take the risk of taking the transfer pot + topping up monthly myself in a SIPP.

As a general observation that's the greatest danger currently. A combination of factors has seemingly made the stock market a one way bet. The higher it rises. The greater the level of investor complacency.  There's a generation of investors who have never experienced a sizable long term correction. 

And provided safe withdrawal rates are used it doesn't matter, because those rates would have succeeded in the worst cases in the last hundred plus years.

It is a worry for those not using SWRs.

Which raises the question why isn't this plastered across the front pages of the financial press?   If it's that rudimentary. 

Albermarle

Dale72 said:

So I'm essentially back where I started, I have to pay out around £3000 to be able to do what I want with my own money. The words 'over regulated' seem appropriate. This doesn't need any replies, I'm just thinking out loud.

Maybe will make you feel better if you consider that most people do not have the huge benefit of an employer who operates a DB scheme, and have to manage with a much inferior DC scheme . Typically an employer might contribute say 3 to 10 % to a DC scheme. Whilst with a DB scheme it will be over 25% .
So you are only in this position of having to pay £3K to get your hands on this large sum , because you have such a good pension scheme in the first place.