Pension has finally landed - As an insistent client acting against advice -*DOORS CLOSED 03/09/2021*

grumiofoundation

Dale72 said:

Pablo7474 said:

Dale72 said:

Pablo7474 said:

With the lottery win, Bob is arriving with nothing and choosing option A or B, whichever is worse it doesn’t matter as they are both a win.

With a pension transfer you are arriving with A and asking for B, giving up A you already have.

It would be like comparing the guessing on the £32k question on who wants to be a millionaire and getting it wrong and dropping from £16k to £1k to someone walking into a bookies and putting £15k on a horse. 

I think your getting a little confused. When you swap your DB scheme, as long as you have a decent understanding of what your doing then you end up with something much better.

That is wrong. If that was the case then I am sure more providers would be willing to accept transfers regardless of advice. 

No, its right, its just maybe not enough people bother to get a good understanding of what their doing.

Maybe some people understand that not all defined benefit pensions are the same? 

Hence your guarantee that someone will “end up with something much better” if they “swap”* their DB scheme will be much harder/impossible to achieve in some/many cases. 

* don’t really think the best choice of phrase - but obviously anyone with a decent understanding will know what you mean, so why be precise when you can be imprecise?

Prism

Dale72 said:

Pablo7474 said:

Dale72 said:

Pablo7474 said:

With the lottery win, Bob is arriving with nothing and choosing option A or B, whichever is worse it doesn’t matter as they are both a win.

With a pension transfer you are arriving with A and asking for B, giving up A you already have.

It would be like comparing the guessing on the £32k question on who wants to be a millionaire and getting it wrong and dropping from £16k to £1k to someone walking into a bookies and putting £15k on a horse. 

I think your getting a little confused. When you swap your DB scheme, as long as you have a decent understanding of what your doing then you end up with something much better.

That is wrong. If that was the case then I am sure more providers would be willing to accept transfers regardless of advice. 

No, its right, its just maybe not enough people bother to get a good understanding of what their doing.

You might well end up with something better but its possible if you are unlucky with the markets that you don't. All of us that have DC pensions have to accept that we are not fully in control of the outcome.

arty688

QrizB said:

arty688 said:

out of interest if Bob won the lottery and the prize was £100k (25% tax free) or £2.5k (all taxed) per year index linked which would people go for? say you are 60 year old.

The £100k is really only worth £69k to me due to tax (£25k tax free plus £75k at my marginal rate).

I'll take an index-linked £2500 pa please (worth £2k pa at my marginal rate).

OK so assuming you take don't withdraw all the money at once , to simplify Bobs choice it £85k tax free and £2k per year tax free Indexed linked .

Do you still go for the £2k ? If so how much would the amount have to be before you took the lump sum?

Malthusian

Diplodicus said:

Malthusian said:
 That sounds like a faff 

Your words. Considering the "9 essential steps" guide pasted earlier, chances of being able to set up a SSAS in the window between a negative recommendation and a CETV deadline appear dicey to the client prepared in advance to scale the route and completely unfeasible to the average client. 

The average client doesn't want to transfer out of their DB scheme in the first place. If one of the extremes thinks they want to but can't be bothered, is free country. Why would you only start the process when you receive the negative recommendation?

arty688

I would assume the average client that is willing to spend £Xk to engage a IFA wants to transfer otherwise they wouldn't start the process.
Can't be bothered is harsh most people have busy lives and maybe don't have the time ? EG new heating system would you do it yourself? if No is that because you can't be bothered ? Probably less than 9 simple steps?

Malthusian

arty688 said:

I would assume the average client that is willing to spend £Xk to engage a IFA wants to transfer otherwise they wouldn't start the process.
Can't be bothered is harsh most people have busy lives and maybe don't have the time ?

Too busy to do something that they think will leave them hundreds of thousands better off? If that's how they feel it's a free country.

If there is a route available to do something but someone doesn't want to do it that means they can't be bothered, not that it is impossible. It may be impossible for them because if you think something is impossible for you then you will be right, but it is not "impossible" in the context of an open discussion.

EG new heating system would you do it yourself?

No, I'd pay a professional. If I couldn't find any professional willing to install the particular heating system I want because they all say that it's unsuited to my property and too likely to flood it or burn it down, I would either install it myself or forget about it. Not run around the Internet saying that the Government and the plumbing industry are infringing on my rights as a homeowner and somebody somewhere should be compelled to install it for me because I can't be bothered.

(This is of course not a perfect analogy, because in the pensions world, there actually is a kind of boiler care plan you can take out where the firm can be legally compelled to install whatever new heating system you want, albeit only one company is believed to offer them to customers without a professional intermediary.)

arty688

Thought you might say that, how about if current heating you have no control over but is guaranteed for life so you may have to take cool showers and wear a jumper. You however want control of your heating take warm showers and have a nice warm house but you will need to look after it in order for it to last for your lifetime(control).  This means you have to get a heating eng to do a detailed report as you can't be trusted to make the decision without 100 pages of stuff about heating and hot water use, this report however the heating eng could get sued/struck off if they recommend a new heating system and due to your miss use of it you blow yourself up. What do you think the report will recommend?

Malthusian

arty688 said:

Thought you might say that, how about if current heating you have no control over but is guaranteed for life so you may have to take cool showers and wear a jumper. You however want control of your heating take warm showers and have a nice warm house but you will need to look after it in order for it to last for your lifetime(control).  This means you have to get a heating eng to do a detailed report as you can't be trusted to make the decision without 100 pages of stuff about heating and hot water use, this report however the heating eng could get sued/struck off if they recommend a new heating system and due to your miss use of it you blow yourself up. What do you think the report will recommend?

Well, in your scenario, the heating engineer would recommend I install a new heating system and I would follow his advice. You've described a scenario where any fool can see the old solution is unsuitable and the new one is better.

Unfortunately your analogy has skipped away from the point you want to make in its attempt to force me into the answer you want, because if a DB pension means cold showers then cashing it in still means cold showers. (Or possibly hot showers for a few years followed by no water whatsoever.) Whether or not some people think that they can just cash it in and invest in Bitcoin and it's jacuzzis to infinity.

The idea that an annual DB pension is a pittance whereas the CETV represents financial security is lottery winner syndrome. Actuaries do not hand out lottery wins.

Pablo7474

If Arty688 spent half the time he spends on creating analogies he could have a SSAS and understand GMP. 

arty688

cool not cold and warm not hot big difference.