Final Salary Pension Transfer

RoadToRiches

NoMore said:

RoadToRiches said:

arty688 said:

RoadToRiches said:

As of today yes I can, that’s not to say they will at a later time decide to change their minds like AJ Bell did.

So who are they ?

You've not even begun the process, posting who are they at this time is of no use to you.  Disclosing who they are on here will only inevitably result in them doing a AJ Bell as believe it was down to this forum that resulted in them pulling the plug.  Some big influencers on here by the looks of it that don't want us going against advice. 

You really are a tease!! You really think AJ Bell stopped it due to a few forum posters. Ridiculous, they probably stopped it when they did a risk review because they are now publicly traded and concluded they had too much risk in taking any further insistent clients on.

Fair enough, I'll name them when my funds land, hopefully in the next few weeks, then you can do what you want it wont affect me, but could for someone else later down the line when the same thing happens..

arty688

it all sounds a bit fishy to me, I personally have given up on idea. The funny thing is regulations like these are probably pushing people to the darker side of the pension industry.

Cus

What I find troubling is the disconnect between the often used 4% withdrawal rule and how that cannot fail based on X number of years analysis, versus the fact that the DB pension funds are giving such high CETV values representing how much it costs them to guarantee the future payments.

Its retail people's expectation based on history, versus institutional people's reality of today's market.

Perhaps it all points to a long long period of declining returns for the future, where the new normal is a lot lot lower returns (sub zero even) 

robatwork

The way this is working seems counter-productive.

Surely parliament's thinking was to stop people transferring their fantastic DB 25k per year benefit and blowing it all on a Maserati, 6 months in Bermuda and a bitcoin.

The 2.5k per year benefits surely make a lot more "sense" to transfer given full knowledge and adequate provision elsewhere. 

But with fees from IFAs being many thousands, the only people who will think it's worthwhile transferring are the very (Maserati) people it's supposed to protect, and locking out those with much smaller transfer values. 

RoadToRiches

arty688 said:

it all sounds a bit fishy to me, I personally have given up on idea. The funny thing is regulations like these are probably pushing people to the darker side of the pension industry.

DB schemes have to check where they’re sending the funds, this should stop most scams if that is what you mean. They have to initially land somewhere bonafide, e.g. registered with HMRC. 

Pablo7474

arty688 said:

it all sounds a bit fishy to me, I personally have given up on idea. The funny thing is regulations like these are probably pushing people to the darker side of the pension industry.

Just out of interest, does the income you mention step up? 

arty688

Yes I have allowed for 2% increase per year in my plan. Although I will have to re visit the plan now the transfer is now off the table due the ridiculous system. 

Just spoken to a mate who is trying to do the same so I’ll see how he gets on . Strangely they have asked for his wife’s pension details as well. Seems odd to me as I’m sure your spouse doesn’t have to share their  financial details . 

jamesd

Cus said:

What I find troubling is the disconnect between the often used 4% withdrawal rule and how that cannot fail based on X number of years analysis, versus the fact that the DB pension funds are giving such high CETV values representing how much it costs them to guarantee the future payments.

Its retail people's expectation based on history, versus institutional people's reality of today's market.

Perhaps it all points to a long long period of declining returns for the future, where the new normal is a lot lot lower returns (sub zero even) 

Both DB pensions and annuity firms tend to use government bonds because they are obliged to ensure that their payments will never fall short (except the freedoms introduced some flexibility in that, if used),

By contrast, an individual usually has spending flexibility and if they do see something worse than the US worst case (4% of capital) or average case (7% of capital, both increasing with uncapped inflation, UK rates about those minus 0.3). As an individual you can also defer the state pension to get extra guaranteed income with uncapped inflation increases at 5.8% instead of around half that for annuity rates.

Both are reflections of today's market but one is paying a very high cost for added certainty against conditions not seen in the last 120 or so years.

The price of certainty is very high and not really delivered by DB schemes where the sponsoring company may fail and pensioners suffer a substantial losses if the Pension Protection Fund is used, due to initial reduction and paying only the legal minimum inflation increases. The magnitude of the potential losses to a PPF situation is something that the FCA largely glossed over, though maybe they have government unfunded pensions that are effectively immune from this risk, unlike those in the private sector.

Aretnap

RoadToRiches said:

arty688 said:

RoadToRiches said:

As of today yes I can, that’s not to say they will at a later time decide to change their minds like AJ Bell did.

So who are they ?

You've not even begun the process, posting who are they at this time is of no use to you.  Disclosing who they are on here will only inevitably result in them doing a AJ Bell as believe it was down to this forum that resulted in them pulling the plug.  Some big influencers on here by the looks of it that don't want us going against advice. 

AJ Bell is a huge company with a market cap of £1.8 billion and £62 billion of assets under management. The notion that they would change their policy out of fear of what half a dozen anonymous people on the internet have to say, or because they do their due diligence by reading a web forum, is frankly a little silly. I really WISH I could wield that sort of influence by posting my brain dribblings here.

It seems much more likely that they simply concluded that the amount of money they were bringing in from insistent client transfers (a fairly small amount, for a £1.8 billion company) did not justify the regulatory and reputational risk associated with the transfers. Given that (almost?) every other major pension provider had already come to that conclusion, the surprise would have been if AJ Bell had NOT followed the same logic eventually.

There might well be some influential people in the financial services industry who would like to see DB transfers against advice shut down. But if they're powerful enough to do something about it, they're unlikely to need the help of a few random loudmouths on an internet forum (no disrespect to present company ;p ).

jamesd

RoadToRiches said:

Pablo7474 said:

Or Arty688, you can set up a SSAS, this is easy to do for someone with a good understanding of pensions.

Interesting, do you need a limited company to do a SSAS though?

No need. Today they can be used for things like holding peer to peer lending inside a pension, something that's quite challenging to find supported by mainstream packaged products.

There are plenty of firms that take on the management for you and leave you to get on with just investing as normal.

Back before the last batch of pension freedoms there was something called the GAD limit which limited how much most people could draw from a pension to less than required for retirement before state pension age. A workaround for that was using something called a "scheme pension".

If it does get to the point where SSAS is the only viable way to go against advice then there will be a very clear market failure to deliver the intent of the DB part of the pension freedoms.