DB Pension Transfer Advice

Albermarle

arty688 said:

so for example Bill and Bob both start work at 20 and retire at 60 with a finishing salary of £50k

Bill has a DC pension Bob has a DB pension

Both contribute 10% to there pension but Bill company matches to 10%

Both are on average schemes who would be better off?

Normally to fund a DB pension , the employer has to add around 25% as far as I know, and if the employee adds 5% means 30% in total . It is just a ball park figure though.
10% from employer in a DC scheme is at the generous end, and probably only possible if working for a large company or one needing to keep/recruit  specialised staff.

So in your example Bob  with his DB pension is very likely to be better off in nearly all possible scenarios.
However if Bill was able to increase his contribution to 20% ( not so expensive to do if a higher rate taxpayer for example ) it would be more equal and if investments did well , he might end up better off and with  more flexibility on how to use the pot ( and no stress about CETV's or negative transfer recommendations  )However still nothing would be guaranteed.

arty688

sorry got no idea on the market , I have an old DB scheme but have no idea what the rules were at the time. and  all the companies I have worked(apart from my own ) for have had the 10% contribution thing. So I have obviously lived a charmed life in regards to pensions.
Although I am trying to track down my first jobs pension ATM the online tool seems to have pointed me to Mercer who know nothing about it (EMI group pension fund) , I think they are digging in the archives and will get back to me.

Albermarle

arty688 said:

sorry got no idea on the market , I have an old DB scheme but have no idea what the rules were at the time. and  all the companies I have worked(apart from my own ) for have had the 10% contribution thing. So I have obviously lived a charmed life in regards to pensions.
Although I am trying to track down my first jobs pension ATM the online tool seems to have pointed me to Mercer who know nothing about it (EMI group pension fund) , I think they are digging in the archives and will get back to me.

In my experience with Mercer , I would not hold your breath for a response...

xylophone

(EMI group pension fund) , 

https://www.pensionsage.com/pa/new-buyout-record-with-emi-pensions-deal.php

https://www.pensioncorporation.com/about-us/our-clients/

I wonder whether PIC might help?

jimi_man

arty688 said:

so for example Bill and Bob both start work at 20 and retire at 60 with a finishing salary of £50k

Bill has a DC pension Bob has a DB pension

Both contribute 10% to there pension but Bill company matches to 10%

Both are on average schemes who would be better off?

It's an interesting conundrum. If we assume the slightly unrealistic starting at £11,000 per year in 1980 and increasing by £1000 every year to £50,000 40 years later.

With Bob, his is fairly straightforward. At 1/60th per year then he's got 2/3 of £50000 which is £33,333 for life, index linked at (we'll say 5% as that was bandied around earlier).

With Bill he builds up a pot (with 5% growth every year) of £618K. Using a quick drawdown calculator with a cautious portfolio and 2% inflation, and middling growth assumptions, that shows him running out of money in year 22, taking the same £33,333 pension.

With the higher Employer contributions of 20%, so 30% in total, the pot increases to £920K and the same drawdown looks better and runs out of money in year 37. 

With more pessimistic growth then it's 21 and 33 years respectively and coupled with higher inflation (4%) then that knocks it down to 17 and 25 years.

arty688

Albermarle said:

arty688 said:

sorry got no idea on the market , I have an old DB scheme but have no idea what the rules were at the time. and  all the companies I have worked(apart from my own ) for have had the 10% contribution thing. So I have obviously lived a charmed life in regards to pensions.
Although I am trying to track down my first jobs pension ATM the online tool seems to have pointed me to Mercer who know nothing about it (EMI group pension fund) , I think they are digging in the archives and will get back to me.

In my experience with Mercer , I would not hold your breath for a response...

Well they came back to me within the hour to tell me they no longer administer that scheme and it's now run by Premier with an email address of thornlighting@premiercompanies so my quest continues. The trouble is I don't know if I even put into the pension wasn't interested at the time (18) on £3.5k a year thinking I was minted...

Durhamborn

arty688 said:

Albermarle said:

arty688 said:

sorry got no idea on the market , I have an old DB scheme but have no idea what the rules were at the time. and  all the companies I have worked(apart from my own ) for have had the 10% contribution thing. So I have obviously lived a charmed life in regards to pensions.
Although I am trying to track down my first jobs pension ATM the online tool seems to have pointed me to Mercer who know nothing about it (EMI group pension fund) , I think they are digging in the archives and will get back to me.

In my experience with Mercer , I would not hold your breath for a response...

Well they came back to me within the hour to tell me they no longer administer that scheme and it's now run by Premier with an email address of thornlighting@premiercompanies so my quest continues. The trouble is I don't know if I even put into the pension wasn't interested at the time (18) on £3.5k a year thinking I was minted...

Mercer are the 2nd worst pension admin iv ever experienced.Premier are THE worst.Iv had to deal with them a few times when leaving employers to transfer into my SIPP and they make mistake after mistake.Not selling when i asked,asking for two photo IDs when they only need one by law etc etc.Iv had to threaten the ombudsman twice with them to get a transfer done,both took nearly 5 months.

The whole DB transfer area is a disaster for consumers.I dont blame advisors at all,its not their fault what they have to deal with.I got mine done in time,though the advisor told me to wait as time was on my side.Clearly its not and the money landed right at the bottom of the Corona crash,luck that il take.However my partner never got hers done as the trustees introduced a 40% reduction to CETVs so it was pointless.The recovery plan does look like it should be removed just as she hits 55,but with even AJ Bell not taking insistent clients its getting very tricky to get done.She has enough with her council DB pension that she would never transfer,so she might be good for a yes.We might have to get a dodgy illness signed off though so it looks like she has a very low life expectancy as well.The other option is to use high fee IFAs and let them think they will be managing it with full advice forever,then launch a transfer the day the money arrives.

This is what you have to deal with because a few idiots at British Steel used theirs to buy land in Outer Mongolia or pink diamonds.

Pablo7474

“The other option is to use high fee IFAs and let them think they will be managing it with full advice forever,then launch a transfer the day the money arrives.”

I don’t think this will make any difference. I think a lot of people have to accept they have missed the boat. 

Durhamborn

Pablo7474 said:

“The other option is to use high fee IFAs and let them think they will be managing it with full advice forever,then launch a transfer the day the money arrives.”

I don’t think this will make any difference. I think a lot of people have to accept they have missed the boat. 

Yes its going to be very tricky.My partner might be good for a yes given she will meet her needs from state pension and Council DB pension.However she will need to say she intends to work until SPA etc.She will also say she is single and that there is nobody to benefit from the 50% spouse pension and she wants to pass capital to her granddaughter through a pension.
Its a complete farce from all sides.
You can understand why its a terrible choice to transfer for a lot of people,they cant manage money,but on the other side are the people who have invested all their lives.The IFA i used didnt know i was going to transfer into my SIPP once done as i acted like they would be managing so they gave me a no but said it wasnt reckless so did it with them as an IC .I then launched a transfer.However the plan they came up with would of been very balanced etc,its just the fees of near 2% with platform and fund fees were huge.

Thrugelmir

Durhamborn said:

Pablo7474 said:

“The other option is to use high fee IFAs and let them think they will be managing it with full advice forever,then launch a transfer the day the money arrives.”

I don’t think this will make any difference. I think a lot of people have to accept they have missed the boat. 

You can understand why its a terrible choice to transfer for a lot of people,they cant manage money,but on the other side are the people who have invested all their lives.

I have no intention of actively managing my funds in my latter years. As much as I enjoy doing it. Consumes an enormous amount of time. Nor does it come without considerable risk. I'd settle for a decent secure income any day over the vagaries of the stock markets. Having experienced several cycles. Interesting to see how over confidence surfaces and then ebbs into panic with the flows of the market.