Final Salary Pension Transfer

Aretnap

arty688 said:

It’s purely observational based on my parents, in-laws,  aunties , uncles etc.. most of whom have or had decent pensions.  There is also a generational frugality but by the time they were 80ish they had stopped foreign holidays , driving and generally going out for meals so often etc..

Have you spoken to them in detail about how much they actually spend? You might be surprised. The State Pension by itself is really not much more than subistence-level. Living on it alone means hanging around the supermarket waiting for them to put reduced labels on food, worrying about whether you can afford to put the heating on (actually worrying, not just being grumpy about putting it on in October like me), and being terrified of the washing machine breaking down because you can't afford to replace it. And not eating out at all, let alone less often.

Are they doing that? Or are they living comfortably, shopping at Waitrose, going on holiday with their families in the UK, and spoiling the grandchildren rotten? There's a big gap between "going on an exotic foreign holiday every three months" and "spending just about the state pension".

Also as you get past 80 you might stop spending money on some things, but other things will appear. If you've had to stop driving, being able to afford taxis will make a big difference to your independence. If your joints ache and you don't have the energy you once did, being able to pay someone to do your cleaning and gardening must start to look like pretty good value. And if you can afford to redo your bathroom and replace your bath with a walk-in shower, that sort of thing will help keep you out of a care home for a few more years...

HappyHarry

arty688 said:

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 . 

Of course the spouse does not need to share their pension details. 

However, if someone had a spouse with a £50k pa civil service pension, and the pair of them had joint expenditure of £40k pa, then recommending a transfer of a £5k pa DB scheme becomes a lot easier.

Pablo7474

Often people who want to withhold information because they want to be difficult and not comply generally end off worse as the IFA does not have the full picture. 

As for my step up question, I was referring to GMP age and not the 2% increase. Make sure you really understand what you are giving up. Perhaps take some time to listen rather than ranting against the system. 

RoadToRiches

Pablo7474 said:

Often people who want to withhold information because they want to be difficult and not comply generally end off worse as the IFA does not have the full picture. 

I told my IFA everything, including I was single no dependents yet they still did a comparison report as though I had a partner who would inherit a 2/3 pension on my demise. This obviously made his case stronger, a fact I discounted on reading the final report to come to my own conclusion/decision. This was not the only reason by the way.

Pablo7474

In this case it sounds like the IFA should have done more work 

arty688

The 80 expenses thing is just based on my personal  experience. Although there is not much data on men as not many males have made it to 80 and those that have are in Poor health or in a care home. I agree the state pension is not enough to live comfortably but there is money in the plan for post 80 but I would still expect my expenses to be less at that age.

Not convinced I have ranted also not sure what you are asking ref the GMP age , the DB pension has a starting age of 60 and goes up by rpi or something equivalent. 

Out of interest if someone was to offer you £120k now or £2.5k per year in five years time going up with rpi what would you take?

Ibrahim5

RoadToRiches said:

Pablo7474 said:

Often people who want to withhold information because they want to be difficult and not comply generally end off worse as the IFA does not have the full picture. 

I told my IFA everything, including I was single no dependents yet they still did a comparison report as though I had a partner who would inherit a 2/3 pension on my demise.

It's called cut & paste.

RoadToRiches

arty688 said:

Out of interest if someone was to offer you £120k now or £2.5k per year in five years time going up with rpi what would you take?

£120K every time because

RPI is a unknown but lets Roll back the clock to 1991. if you had started out with £2,500 back then in real terms this would be worth £5,740 today - https://www.hl.co.uk/tools/calculators/inflation-calculator

Let's take the average = £4,120 x 30 years = £123,600 is what the pot is worth but does not take into account investment growth.

Now lets invest £120,000 in the S&P 500 which on average has returned 7% (Taking into account Crashes over this period - past performance does not equal the future) and a drawdown of £400 per month with RPI running at 2.5%

Your pot would still be worth £343,052 after drawing down £400 per month for 30 years - https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

arty688

You mean it’s a no brainer:)

LEP

I've been offered a transfer value of x39 compared to taking my DB aged 60.

Given the fact the chances of me living to 100 are virtually zero considering my family history it seems like a no brainer to transfer. Indeed I spent an hour crunching the numbers and tbh it made little sense not to transfer it.

Plus factor in that I want to enjoy my retirement before I start 'p1ssing my pants' and therefore more income in my 60s make more sense than in my 90s if I even make it that far.

I also have another DB pension and two rental properties plus a house worth £325k (well above the average price in Wakefield) that will be mortgage free by retirement.

The fear of paying thousands to be told not to transfer just puts me off completely though.