What would make you consider DB to DC transfer

Cypruseast

I know there are an absolute multitude of discussions on here about transferring pensions out of DB schemes, so I am coming at this from a different angle. 

Let’s be honest for lots of very sound reasons the general consensus on here is to keep monies that are in DB pensions there. I understand the rationale for it and can see the reasoning behind it.

However, if someone was to consider it what do you wise old owls believe are some of the conditions or rationale for actually considering a transfer, as I do believe there are some personal circumstances whereby it should be given serious consideration. 

NB for the benefit of this I am querying this on the basis of someone approx 13-20 years away from pension of good health.

eskbanker

There's a summary of reasons for and against in this article, but personal circumstances are inevitably, er, personal, so reasons that apply to others may not apply to you, and vice versa....

https://www.royallondon.com/media/good-with-your-money-guides/five-good-reasons-to-transfer-out-of-your-company-pension-and-five-good-reasons-not-to/

As you'll probably have seen in many of the other threads, if you share your thoughts on your reasons, you'll get (hopefully constructive) feedback on which of them, if any, are valid and relevant.

Pablo7474

NB for the benefit of this I am querying this on the basis of someone approx 13-20 years away from pension of good health.

What does this mean?

Thrugelmir

13 years is a longer period of time than the current bull market has run. Why the rush to make a decision now?  

sandsy

Pablo7474 said:

NB for the benefit of this I am querying this on the basis of someone approx 13-20 years away from pension of good health.

What does this mean?

It means there's little reason to consider a transfer at this point in time. Advisers would generally ask 'why now?' 

tacly

I am 54 years old and in good health.  I got a quotation last year and finished the DB transfer earlier this year.  The reasons I did it were:

1) 10 years treasury yield was at an all time low and therefore the transfer value was really high.

2) I can withdraw the money from age 55 rather than wait till my DB scheme pension age of 63.

3) I already have another DC pension, a SIPP, some commercial properties and an ISA. I am mortgage free and debt free. I also only got 2 more years of NI contribution to make in order to qualify for a full state pension at 67. So I don't really depend on the DB pension in retirement. However, the DB pension will allow me to travel/live a more luxurious lifestyle. After the transfer, I can withdraw as much or as little as I like.

4) I am ok with managing investments in the stock market as I have managed my ISA and SIPP for many years.

5) The money can be passed down as inheritance, whereas the DB pension will die with me.

6) The 25% tax free lumpsum can be used to help my adult children to get on the property ladder or I can buy a Ferrari.

If your DB pension is your main source of income at retirement then a good financial advisor is unlike to sign off the transfer.

Albermarle

tacly said:

I am 54 years old and in good health.  I got a quotation last year and finished the DB transfer earlier this year.  The reasons I did it were:

1) 10 years treasury yield was at an all time low and therefore the transfer value was really high.

2) I can withdraw the money from age 55 rather than wait till my DB scheme pension age of 63.

3) I already have another DC pension, a SIPP, some commercial properties and an ISA. I am mortgage free and debt free. I also only got 2 more years of NI contribution to make in order to qualify for a full state pension at 67. So I don't really depend on the DB pension in retirement. However, the DB pension will allow me to travel/live a more luxurious lifestyle. After the transfer, I can withdraw as much or as little as I like.

4) I am ok with managing investments in the stock market as I have managed my ISA and SIPP for many years.

5) The money can be passed down as inheritance, whereas the DB pension will die with me.

6) The 25% tax free lumpsum can be used to help my adult children to get on the property ladder or I can buy a Ferrari.

If your DB pension is your main source of income at retirement then a good financial advisor is unlike to sign off the transfer.

Some valid points but just on  Point 5) .
If you had taken the DB income , you would have taken less from the existing DC/SIPP , so maybe a similar amount left in the end. Depending on longevity, investment performance etc .
Also the ability to pass on DC pensions , and not include them in IHT calculations , might not exist forever .
It is a really a sort of loophole and does not make logical sense. Pensions are there to provide a retirement income, not really as a vehicle to avoid IHT . So maybe one day this anomaly will be addressed by new legislation in some way .

NedS

No or very limited protection against inflation would be one of the main factors I would consider.

Albermarle said:

Also the ability to pass on DC pensions , and not include them in IHT calculations , might not exist forever .
It is a really a sort of loophole and does not make logical sense. Pensions are there to provide a retirement income, not really as a vehicle to avoid IHT . So maybe one day this anomaly will be addressed by new legislation in some way .

That makes a lot of sense, and is probably less likely to be met with fierce resistance than other tax raising measures as you'll be dead.

shinytop

A multiplyer of more than 50 would have made me seriously consider it.  With the 28x on offer I didnt even work it out.     

On-the-coast

shinytop said:

A multiplyer of more than 50 would have made me seriously consider it.  With the 28x on offer I didnt even work it out.     

Almost exactly my logic too…

Marcon

tacly said:

 

If your DB pension is your main source of income at retirement then a good financial advisor is unlike to sign off the transfer.

They don't have to. Provided you receive the advice (and the adviser who has given the advice is required to confirm that you have), you can then decide whether you actually follow it. You can still transfer out as an 'insistent client' to any scheme which will accept the transfer - PensionBee, for example.