Transfer to private pension

Ellisonn

Hi, my previous employer recently closed our automotive plant and specified that only employees who were 45 or over could access their final salary pensions at 55, and any employee younger than this (regardless of service) will have to wait until they’re 65. 

For this reason a number of us have looked at transferring out to a private pension however; I’ve been advised by a number of financial advisors that because of the my age (43), and regardless of the fact they agree with me, the government have almost made it almost impossible for me to do this. 

The reason I’m so eager to transfer out is because the transfer value is very high at the moment, although it has dropped by nearly £130k in the past fortnight, which again is why I’m eager to transfer out and avoid any further drops. 

Has anyone had the same experience, but r can offer any advise of a way around this? 

Regards,

dunstonh

the government have almost made it almost impossible for me to do this. 

The Government have not.   The regulator has both directly and indirectly (its actions have scared the PI insurers and their premiums have risen significantly which makes it damned expensive to carry on that sort of business).  The regulator is not the Government.  Indeed, the regulator has often disregarded government wishes and argued with the Treasury.

It is certainly not impossible.  IFAs have more scope over FAs but there are still plenty of transfers being carried out.  Just not the same scale of distribution that there was.

Has anyone had the same experience, but r can offer any advise of a way around this? 

If you want to do it then you can still do it.  Use someone like Fidelity.

AlanP_2

A £130k drop in CETV value sounds phenomenal. I guess it must be up in the 7 figure region?


At that level the £3-5k transfer fee is a drop in the ocean if it makes sense for you to give up the guaranteed benefits.

ewaste

There are literally dozens of threads covering this to death and back. Everything from getting advice, even if it's not recommended to transfer, to meet the legal requirement and transferring regardless as an insistent client to one of the few providers that will accept. If you are an insistent client it's not all that difficult and Yes it will cost thousands to get advice meeting the legal requirement even if it's not a positive recommendation.

That's once you've carefully thought through and planned everything to ensure that for your personal circumstances it's the best course of action. Quite a few of the threads on here are essentially folk getting sticker shock and start dreaming up ways to use 'their' money without having thought through why the scheme will offer you so much money to no longer be their problem.

Do you have any specific queries?

hyubh

Ellisonn said:

Hi, my previous employer recently closed our automotive plant and specified that only employees who were 45 or over could access their final salary pensions at 55, and any employee younger than this (regardless of service) will have to wait until they’re 65.

In the first instance I'd suggest getting clarification on that point. I may be wrong, but my guess is that the previous policy was that retirees from active could take an unreduced pension from 55, whereas for younger members that was changed so that drawing your pension from 55 would be subject to an actuarial reduction for going earlier than the normal pension age of 65.

Personally I wouldn't consider this to be a primary reason to transfer out, and definitely so if you can in fact leave employment and take your pension early-but-reduced. Nevertheless, it might be a possible reason amongst others, given personal circumstances. (That said, I would expect your CETV, compared to one for an older member, to reflect the fact it can't be taken earlier from 65 unreduced.)

Marcon

Ellisonn said:

The reason I’m so eager to transfer out is because the transfer value is very high at the moment, although it has dropped by nearly £130k in the past fortnight, which again is why I’m eager to transfer out and avoid any further drops. 

It sounds as if you are looking at some sort of online calculator which gives an indication of your possible CETV, rather than a guaranteed CETV. I'd contact those responsible for day to day administration of the scheme to check, giving them details of the two values you have and the dates of each, and ask them for more information about the dramatic drop. Could simply be an error.

Thrugelmir

Ellisonn said:

The reason I’m so eager to transfer out is because the transfer value is very high at the moment, although it has dropped by nearly £130k in the past fortnight, which again is why I’m eager to transfer out and avoid any further drops. 

Is this a mistype. I'm struggling to believe that figure along with the fact that you've obtained transfer figures just 2 weeks apart. 

jamesd

The legal requirement is that the DB scheme must receive proof that you have taken full regulated transfer advice. They don't have to know what that advice was and you don't have to follow it.

You should become familiar with the material in Drawdown: safe withdrawal rates, which explains how much can safely be taken as income from an investment pot.

Albermarle

https://forums.moneysavingexpert.com/discussion/6254257/defined-benefit-transfer/p1
https://forums.moneysavingexpert.com/discussion/comment/78035166#Comment_78035166

TVAS

What you said does not make any sense. If you transfer to another plan you can take payment at any age as long as it is not below the minimum pension age at the time. 

Is this a DB scheme? If you have had more than one tv do you get this from an online system? 

Have you asked the employer what they intend to do with he scheme. They may transfer their liability to an insurance company known as a bulk buy out and secure your DB benefits.  

I cannot see the over 45s retiring at 55 unless there is a bulk employer transfer of the over 45s and the receiving scheme agrees that they have a protected pension age of 55.

You are age 43 so if you take benefits at 65 you have time to ride out the stock market. That will be the only positive factor to a DB transfer. However the general consensus is it transfer when you are taking benefits i.e. deferring the transfer of risk for as long as possible, So although you should take benefits at 65, many will go early say 55 for argument's sake the time to ride out the stock market is halved so not looking as good as 22 years in total. 

You have not provided us with a good argument why you want to transfer risk and cost from your employer to yourself. 

The transfer value is IRRELEVANT. What matters are the BENEFITS you would be giving up. If the transfer value is falling this is an indication NOT to transfer because the growth rate required by the receiving scheme to match the benefits you are giving up is likely to be high, meaning you would have to take high risk and you may not have a high attitude to risk, nor may you not have the capacity to take on such risk. In order to get benefits such as increasing pension, spouse pension you need a higher growth rate. So without knowledge of the factor the pension at 65 divided by the current transfer value, it looks like this transfer is a non starter.

You say the IFA's agrees with you, yet knowing your circumstances they can't even come up with a rationale which exemplifies why IFA's have given duff advice on DB transfers. They always agree as they do not get any money if you do not transfer. 

The reason why the FCA, not the government is making it difficult to transfer from DB to non DB is because so many past cases have been disasters. I know because I review these cases and pay out compo in previous roles again, again and again.

Marcon

TVAS said:

Is this a DB scheme? If you have had more than one tv do you get this from an online system? 


I cannot see the over 45s retiring at 55 unless there is a bulk employer transfer of the over 45s and the receiving scheme agrees that they have a protected pension age of 55.

OP has said it is a final salary scheme.

The increase in minimum pension age to 57 kicks in from April 2028, so any member currently aged 48 or more will still be able to retire at 55.

It is not for the receiving scheme/buy out provider to agree a protected pension age; that needs to be in the current rules.