DB transfers

candie01

Hi. I'm 47, no children and no spouse. I'm have a DB pension that ended in 2015 when the common then started us with a DC pension. 
I recently got a transfer value for the DB pension and it was 350k. The annual pension would be £7000. 
Several colleagues have transferred their pensions over the last five years and were discussing it in the office. There's lots of talk that the company may go bust over the next few years. 
I've read about transfer values and it would seem that X 50 is a very good offer. I have also been told this is due to historically low gilt rates and as they go up my transfer value is likely to go down. 
Over the last three weeks I've spoken to 15  financial advisers. Most said come back when you are 50. Two have said they will advise me. One charges £11500 and will not assist with th transfer is they recommend not to transfer. The other will charge me £8500 and will assist whether the report is transfer or not and told me AJ bell would accept me either way. 
I felt I was 100% sure I wanted to transfer as I feel I could have that money in a SIPP and whilst I know it can go to and down to over ten years it's likely to go up. And even if it did go down a bit I would still have a lot more than what I would get from £7000 per year even if I lived to 97, that's 30 years of £7000 per year, so £210k. 
My dad has a SIPP and I have looked at his figures and his money overall is doing well. 50% increase in 5 years. 
With so many financial advisers telling me. It to move it it's putting a black cloud over me. Bit I also know they clearly are only insured for over 50 so that's why they are turning me away. Cc an I have experiences please from people who have moved their DB transfer and how they feel now and I'd it worked out well and who they used etc? 

Manchesterunited1

Hi, 
your frozen dB pension scheme will still be earning interest at the current yearly RPI rate so it wouldn’t stay at £7k it would increase slightly year on year until the schemes retirement date. Are the gilt rates still at a historic low rate, I can’t see a date you posted this? 

Kind regards 
paul 

TVAS

£7,000 at age 47 or age 65? If the latter the pension will revalue each year until 65 so it will probably be a higher starting pension.

I can tell if a person should transfer from a DB to DC in 5 minutes by looking at their fact find. A financial adviser should also be able to to do this. Instead they do all the work request the transfer statement and other info from a scheme, do a transfer analysis report to find the growth rate required in the new pension that will match the scheme benefits given up on transfer, write a recommendation letter blah blah blah. If the figures don't work they still want to get paid.

Do not use the adviser that charges £11,500 and will not assist or recommend the transfer.
Do not use the adviser that charges £8,500 and will allow you to transfer even if they do not recommend it.

AJ Bell Why? Advisers always recommend a more expensive SIPP provider because you have a large fund. There are cheaper providers Vanguard, Nutmeg. 

If I was reviewing your case I wold fail it because you are nowhere near the minimum pension age (currently 55) when you can take benefits. Why take the risk and bear the charges now when you do not need to? The wait til your 50 is nonsense you cannot take benefits at 50. You say there is a rumour the company may go bust in a few years time:

1. Have you looked at the company accounts during the last 5 years to see if they have made a profit?
2. If the pension scheme is in deficit is the employer making high contributions to make good the shortfall. 

You say markets go up and down? Do you have equity based products such as a Stocks and Shares ISA. If you did, did you see it halve in value in 2008?

If you come to take benefits at let's say 57 and your fund reduced from £500,000. What would you do?

You have a DC plan so I would recommend monitoring that performance.   

You have not provided a good reason to transfer other than is seems generous. People are always happy when their fund increases when it crashes not so much. There is NO need to take any action now. If you get seriously ill where you might die, then it would make sense to transfer because on death you can leave your fund to your next of kin tax free, dad niece, nephew, charity, etc.

Your dad is still alive so it sounds like you have good health in your family. 

candie01

I have only just joined and don't know how to reply to specific comments. I do have a stocks and shares ISA but am not experienced at all. I started it only 7 months ago. 

candie01

TVAS said:

£7,000 at age 47 or age 65? If the latter the pension will revalue each year until 65 so it will probably be a higher starting pension.

I can tell if a person should transfer from a DB to DC in 5 minutes by looking at their fact find. A financial adviser should also be able to to do this. Instead they do all the work request the transfer statement and other info from a scheme, do a transfer analysis report to find the growth rate required in the new pension that will match the scheme benefits given up on transfer, write a recommendation letter blah blah blah. If the figures don't work they still want to get paid.

Do not use the adviser that charges £11,500 and will not assist or recommend the transfer.
Do not use the adviser that charges £8,500 and will allow you to transfer even if they do not recommend it.

AJ Bell Why? Advisers always recommend a more expensive SIPP provider because you have a large fund. There are cheaper providers Vanguard, Nutmeg. 

If I was reviewing your case I wold fail it because you are nowhere near the minimum pension age (currently 55) when you can take benefits. Why take the risk and bear the charges now when you do not need to? The wait til your 50 is nonsense you cannot take benefits at 50. You say there is a rumour the company may go bust in a few years time:

1. Have you looked at the company accounts during the last 5 years to see if they have made a profit?
2. If the pension scheme is in deficit is the employer making high contributions to make good the shortfall. 

You say markets go up and down? Do you have equity based products such as a Stocks and Shares ISA. If you did, did you see it halve in value in 2008?

If you come to take benefits at let's say 57 and your fund reduced from £500,000. What would you do?

You have a DC plan so I would recommend monitoring that performance.   

You have not provided a good reason to transfer other than is seems generous. People are always happy when their fund increases when it crashes not so much. There is NO need to take any action now. If you get seriously ill where you might die, then it would make sense to transfer because on death you can leave your fund to your next of kin tax free, dad niece, nephew, charity, etc.

Your dad is still alive so it sounds like you have good health in your family. 

Yes my mum.and dad are both I've, aged 71 and 73. 
I feel like I won't be offered such a good transfer value in the future which is why I'm feeling a pressure to move it out now. 

candie01

Manchesterunited1 said:

Hi, 
your frozen dB pension scheme will still be earning interest at the current yearly RPI rate so it wouldn’t stay at £7k it would increase slightly year on year until the schemes retirement date. Are the gilt rates still at a historic low rate, I can’t see a date you posted this? 

Kind regards 
paul 

I requested a transfer value in September last year which expired in December and I have requested one again in March which I am expecting to be lower. 

dunstonh

I've read about transfer values and it would seem that X 50 is a very good offer. I have also been told this is due to historically low gilt rates and as they go up my transfer value is likely to go down. 

That has possibly already started.   There was a gilts crash recently and CETVs went down on the whole.   However, gilt yields are only one part of the calculation.  There are a range of things that influence the CETV

Over the last three weeks I've spoken to 15  financial advisers. Most said come back when you are 50. Two have said they will advise me. One charges £11500 and will not assist with th transfer is they recommend not to transfer. The other will charge me £8500 and will assist whether the report is transfer or not and told me AJ bell would accept me either way. 

Those fees suggest that they dont really want to do the DB transfers and are priced effectively as a passive blocker.  i.e. a price to put you off.

My dad has a SIPP and I have looked at his figures and his money overall is doing well. 50% increase in 5 years. 

The last 5 years would include a post-recovery from the 2016 crash and a boom period.    50% would be about right for a medium risk portfolio in that period but probably closer to double the level of expectation over the long term.

Bit I also know they clearly are only insured for over 50 so that's why they are turning me away.

That won't be the case.

I have experiences please from people who have moved their DB transfer and how they feel now and I'd it worked out well and who they used etc? 

Did any of them go through a major long drawn out negative period such as the dot.com crash or credit crunch?

The last time DB pensions went through a boom in transfers and were seen as a no brainer to transfer, it wasnt until 10-20 years later that it was realised what a poor decision it was, with hindsight.     Asking someone who transferred a couple of years ago during a big growth period in the markets will give you some very positive responses.  Ask someone that saw their values nearly halve and take a decade to recover only for it to nearly halve again will give you a very different response.   

candie01

TVAS said:

£7,000 at age 47 or age 65? If the latter the pension will revalue each year until 65 so it will probably be a higher starting pension.

I can tell if a person should transfer from a DB to DC in 5 minutes by looking at their fact find. A financial adviser should also be able to to do this. Instead they do all the work request the transfer statement and other info from a scheme, do a transfer analysis report to find the growth rate required in the new pension that will match the scheme benefits given up on transfer, write a recommendation letter blah blah blah. If the figures don't work they still want to get paid.

Do not use the adviser that charges £11,500 and will not assist or recommend the transfer.
Do not use the adviser that charges £8,500 and will allow you to transfer even if they do not recommend it.

AJ Bell Why? Advisers always recommend a more expensive SIPP provider because you have a large fund. There are cheaper providers Vanguard, Nutmeg. 

If I was reviewing your case I wold fail it because you are nowhere near the minimum pension age (currently 55) when you can take benefits. Why take the risk and bear the charges now when you do not need to? The wait til your 50 is nonsense you cannot take benefits at 50. You say there is a rumour the company may go bust in a few years time:

1. Have you looked at the company accounts during the last 5 years to see if they have made a profit?
2. If the pension scheme is in deficit is the employer making high contributions to make good the shortfall. 

You say markets go up and down? Do you have equity based products such as a Stocks and Shares ISA. If you did, did you see it halve in value in 2008?

If you come to take benefits at let's say 57 and your fund reduced from £500,000. What would you do?

You have a DC plan so I would recommend monitoring that performance.   

You have not provided a good reason to transfer other than is seems generous. People are always happy when their fund increases when it crashes not so much. There is NO need to take any action now. If you get seriously ill where you might die, then it would make sense to transfer because on death you can leave your fund to your next of kin tax free, dad niece, nephew, charity, etc.

Your dad is still alive so it sounds like you have good health in your family. 

£7000 is what it was given as on my latest transfer value documents. 

Marcon

candie01 said:

I recently got a transfer value for the DB pension and it was 350k. The annual pension would be £7000. 
Several colleagues have transferred their pensions over the last five years and were discussing it in the office. There's lots of talk that the company may go bust over the next few years. 
 

Your pension will be far more than that by the time you get to retirement.

If the company does go bust, the Pension Protection Fund will be there to step in and protect a good slug of your benefits.

candie01 said:

I felt I was 100% sure I wanted to transfer as I feel I could have that money in a SIPP and whilst I know it can go to and down to over ten years it's likely to go up. And even if it did go down a bit I would still have a lot more than what I would get from £7000 per year even if I lived to 97, that's 30 years of £7000 per year, so £210k. 

Your SIPP could go up or down. Your DB pension will definitely go up.

It isn't 30 years at £7,000; your pension will increase both in deferment (i.e. from the time the scheme closed until the time you access your benefits) and once in payment.

You have huge gaps in your understanding, so perhaps digging out that old scheme booklet, or looking at the latest statement from your DB scheme, would be useful.

Albermarle

This is possibly the most common topic on this forum .

If you spend some time scrolling through a few pages of the forum there are regular threads about DB transfers , problems finding an IFA etc etc.
For example , a link to one of many https://forums.moneysavingexpert.com/discussion/6259993/defined-benefit-transfer-value/p1

£7K guaranteed income going up with inflation every year ( after 30 years inflation it could well be £14K ) is not to be given up lightly , although if it really was 50X ( I suspect it isn't. or there is some fact missing )) it would be tempting I guess .

candie01

Marcon said:

candie01 said:

I recently got a transfer value for the DB pension and it was 350k. The annual pension would be £7000. 
Several colleagues have transferred their pensions over the last five years and were discussing it in the office. There's lots of talk that the company may go bust over the next few years. 
 

Your pension will be far more than that by the time you get to retirement.

If the company does go bust, the Pension Protection Fund will be there to step in and protect a good slug of your benefits.

candie01 said:

I felt I was 100% sure I wanted to transfer as I feel I could have that money in a SIPP and whilst I know it can go to and down to over ten years it's likely to go up. And even if it did go down a bit I would still have a lot more than what I would get from £7000 per year even if I lived to 97, that's 30 years of £7000 per year, so £210k. 

Your SIPP could go up or down. Your DB pension will definitely go up.

It isn't 30 years at £7,000; your pension will increase both in deferment (i.e. from the time the scheme closed until the time you access your benefits) and once in payment.

You have huge gaps in your understanding, so perhaps digging out that old scheme booklet, or looking at the latest statement from your DB scheme, would be useful.

Thanks for your comment. I do understand that the £7000 will rise with inflation but if I put that lump sum in investments it could grow more than the rate of inflation. Am I missing something here?