Final Salary Pension Transfer Advice Required

carn9698

From an old job I had in the 80/90s at 65 I am due £3.3K per annum until I die.

If I transfer this pension to a SIPP, they lump sum that would hit my SIPP would be £133K.

Does it sound like a good idea to transfer out or should I just leave it and take the £3.3K per annum at 65(if I make that!)?

I am nearly 54 and want to retire at 58 or 59. Looking at options.

Thanks

Marcon

carn9698 said:

From an old job I had in the 80/90s at 65 I am due £3.3K per annum until I die.

If I transfer this pension to a SIPP, they lump sum that would hit my SIPP would be £133K.

Does it sound like a good idea to transfer out or should I just leave it and take the £3.3K per annum at 65(if I make that!)?

I am nearly 54 and want to retire at 58 or 59. Looking at options.

Thanks

Endless threads on just this topic - have a browse through and read some of them. 

You may have problems finding someone to give the advice, and expect to pay upwards of £5K for it. Your transfer value is likely to be out of guarantee by the time the IFA has been through the necessary process, so you'll need a requote (assuming your scheme is prepared to give more than one quote in any 12 month period - and if they are, you may have to pay, typically around £500 + VAT).

TVAS

If you want to retire at 58 or 59 wait until a year before your intended date that you want to take benefits.
One of the reasons final salary pension transfers fail is because there was no need to transfer NOW.
So that is my advice get a transfer statement each year and when you have decided to take benefits you need an early retirement quote from the scheme compared with the likely (non guaranteed) income you can take from a drawdown plan.
IFA charges are negotiable. 
FYI you no longer need to give up work to claim pension benefits.

Albermarle

If you divide the transfer value by the pension , you get what is called the multiple . It is a rough guide to how generous the transfer offer is . Yours is 40 which is high. However to be clear can you say 
1) Is this 3.3K pa the latest figure supplied to you that you will get when you are 65 ( within the last 12 months )?
2) Does the pension include a minimum 50% spouse pension if you die?
3) Is the pension uprated annually by inflation until you die ?
4) What investment experience do you have ?
Also you can have a look at this 
https://www.royallondon.com/media/press-releases/2018/may/five-good-reasons-to-transfer-and-five-good-reasons-not-to-royal-london/

DairyQueen

Also, to add to Albermarle's questions:

- Do you have a spouse/dependants. if the former, what are your partner's pension arrangements?
- Do you have any other guaranteed retirement income (other than SP)?
- What other retirement income sources are available to you?
- Are you in good health? Do you anticipate a long life or is your life expectancy impaired?

Note that private sector schemes often refuse transfers in the year immediately prior to reaching the scheme retirement age. Also, transferring is not straightforward or cheap. You must take IFA advice and It is highly unlikely that you will receive a positive recommendation to transfer. Transferring as an 'insistent client' involves another set of obstacles and challenges as few pension providers will accept such transfers-in.

Bottom line is that, in 90+% cases, best interests are served by staying with the DB. Of course, you may be one of the exceptions but even that minority are now facing an uphill struggle given the regulator's clampdown.

I speak as one of the minority who received a positive recommendation, and who managed to transfer, a few years ago. 

[Deleted User]

DairyQueen said:

Bottom line is that, in 90+% cases, best interests are served by staying with the DB. 

I speak as one of the minority who received a positive recommendation, and who managed to transfer, a few years ago. 

No, I think 90% is inaccurate, DQ.
dunstonh now reckons it is about 60%, I believe. 
Of course, the challenge for posters with a vested interest (those employed in the financial services industry) is to try to marry  current advice with the reality; which is that advisers approve almost 70% of transfers. 

That's what you get when you appoint a gatekeeper to the process. The gatekeeper acts in his own interest.

Silvertabby

ZingPowZing said:

DairyQueen said:

Bottom line is that, in 90+% cases, best interests are served by staying with the DB. 

I speak as one of the minority who received a positive recommendation, and who managed to transfer, a few years ago. 

No, I think 90% is inaccurate, DQ.
dunstonh now reckons it is about 60%, I believe. 
Of course, the challenge for posters with a vested interest (those employed in the financial services industry) is to try to marry  current advice with the reality; which is that advisers approve almost 70% of transfers. 

That's what you get when you appoint a gatekeeper to the process. The gatekeeper acts in his own interest.

Probably because some DB transfers can be circa 40 times the annual pension given up.

LGPS transfer factors, however, are set by GAD and cetvs of less than 20 times pension are not unheard of.  Yet people still transfer out, with IFA approval.

theoretica

ZingPowZing said:

DairyQueen said:

Bottom line is that, in 90+% cases, best interests are served by staying with the DB. 

I speak as one of the minority who received a positive recommendation, and who managed to transfer, a few years ago. 

No, I think 90% is inaccurate, DQ.
dunstonh now reckons it is about 60%, I believe. 
Of course, the challenge for posters with a vested interest (those employed in the financial services industry) is to try to marry  current advice with the reality; which is that advisers approve almost 70% of transfers. 

That's what you get when you appoint a gatekeeper to the process. The gatekeeper acts in his own interest.

But that will be 70% of people who themselves think it might be beneficial to transfer - people who think they are better off not transferring won't ask an adviser to approve a transfer.

[Deleted User]

theoretica said:

ZingPowZing said:

DairyQueen said:

Bottom line is that, in 90+% cases, best interests are served by staying with the DB. 

I speak as one of the minority who received a positive recommendation, and who managed to transfer, a few years ago. 

No, I think 90% is inaccurate, DQ.
dunstonh now reckons it is about 60%, I believe. 
Of course, the challenge for posters with a vested interest (those employed in the financial services industry) is to try to marry  current advice with the reality; which is that advisers approve almost 70% of transfers. 

That's what you get when you appoint a gatekeeper to the process. The gatekeeper acts in his own interest.

But that will be 70% of people who themselves think it might be beneficial to transfer - people who think they are better off not transferring won't ask an adviser to approve a transfer.

Well that is a valid perspective, theoritica, and it makes a nonsense of Dairy Queen's 90% baseline.

DairyQueen

ZingPowZing said:

DairyQueen said:

Bottom line is that, in 90+% cases, best interests are served by staying with the DB. 

No, I think 90% is inaccurate, DQ.
dunstonh now reckons it is about 60%, I believe. 
 I haven't seen that figure quoted but am happy to defer to dunstan's superior knowledge and experience.

Of course, the challenge for posters with a vested interest (those employed in the financial services industry) is to try to marry  current advice with the reality; which is that advisers approve almost 70% of transfers. 
 I find this difficult to believe but am open to persuasion from industry insiders. If correct, and given the current regulator climate, this suggests that only blatantly inadvisable cases are denied a positive recommendation. Ergo, insistent clients must be barking mad.

That's what you get when you appoint a gatekeeper to the process. The gatekeeper acts in his own interest.
(I'm sure you meant 'their own interest'. The use of  a gender exclusive pronoun in this context could cause offence.)
It is my understanding that the 'gatekeepers' are more likely to act in their own interest by refusing to advise on DB transfers. Too risky and expensive. Again, I am happy to be corrected by someone in the know.

Comments embedded.

[Deleted User]

Yes, apologies, I was referring to an older dataset.
Latest:
https://www.fca.org.uk/data/defined-benefit-pension-transfers-market-data-october-2018-march-2020

Data summary

• 1,965 firms held the DB transfer advice permission as at 31 March 2020.
• 1,797 firms (91%) responded to our data request. For the firms who did not respond, we will cross reference with other market data to establish each firm’s transaction levels. Where necessary, we will follow up directly with firms to obtain a response. As a reminder, all firms with DB transfer permissions must report this data via RMAR regulatory return to the FCA every 6 months from April 2021. We expect every firm who has DB transfer advice permissions to respond to our data requests.

Of those firms who responded:

• 1,310 firms gave DB transfer advice over the 18-month period
• 103 firms (6%) are new to the market since our previous request
• 87,491 clients received advice between October 2018 and March 2020. Of those, 
• 49,456 clients were provided with a personal recommendation to transfer or convert their pension (57%) 
• 38,035 clients were recommended not to transfer or convert their DB pension (43%) 
• of those clients advised not to transfer, the total number of clients the firm arranged a pension transfer or conversion for on an insistent client basis was 2,936 (8%)
• some firms may have larger numbers of clients being recommended to transfer as they operate a triage service which results in fewer clients proceeding to take advice on a transfer. 943 firms reported data which showed that 20,633 clients decided not to proceed to advice after the initial triage discussion. This means that when triage services are taken into account, a total of 108,124 clients considered transferring their DB pension, of whom 46% were recommended to transfer.
• 121 firms (9% of the firms that gave DB transfer advice) facilitated transfers for 2,936 insistent clients
• 63 firms (5% of the firms that gave DB transfer advice) reported that they had accepted introductions from unauthorised introducers
• 785 firms (60% of the firms that gave DB transfer advice) in the market used contingent charging between October 2018 and March 2020
• 108 firms (8% of the firms that gave DB transfer advice) arranged 500 transfers into a workplace pension
• firms advised on a total value of £30.3bn between October 2018 and March 2020. This is made up of £20.1bn in recommendations 'to transfer' and £10.2bn in recommendations 'not to transfer'

So, depending on which measure is taken, it's about 50/50.
Which is not to say that the right half are recommended transfer.