DB Pension transfer..a no brainer?

marlot

C_Mababejive said:

I cant say exactly without checking but benefit to date might be around 24k pa without taking a TFLS. ...

I'd suggest getting a current value before deciding anything else.

Pablo7474

I think you seriously need to consider the difference between having a guaranteed pension, that although may be rigid will provide you with your retirement needs with the option of transferring which may work out better or worse, but carries lots of risk. At age 80 imagine the potential worry investments have not performed as expected. I think many would agree these good times of investments cannot last forever. 

Diplodicus

Well it's a tough one. Do you think you could manage 2.4% pa drawdown without running out of money in retirement? Dividends alone should cover it in a tax-free environment.

sandsy

DB transfer and no brainer is an oxymoron. It always requires considerable analysis and thought about giving up a guaranteed increasing lifetime income for a lump sum immediately. 

While the lump sum can seem eye wateringly attractive, it also requires time and money to make sure it is managed in a way that meets your needs. Is there something specific about receiving a DB pension that doesn't meet your needs?

Might be helpful to do some reading up:

https://www.fca.org.uk/consumers/pension-transfer-defined-benefit

https://www.fca.org.uk/consumers/pension-transfer/advice-what-expect

Malthusian

Diplodicus said:

Much of the inflated fee is justified by citing risk insurance but, by recommending no transfer, the adviser is avoiding that risk.  

Not correct. A recommendation not to transfer is regulated financial advice and requires PI insurance same as a recommendation to transfer.

cfw1994

eskbanker said:

marlot said:

>> Investment at medium risk started in July 2020 and has returned around 9% so far.
Hmm.  Maybe I'm taking a bit more risk, but I've done rather better than that.

That was what I was thinking when querying the 'exceptional' comment - a couple of representative mid-range multi-asset funds (VLS60 and HSBC Global Strategy Balanced) over that timeframe are somewhat better:

Indeed….9% since July 2020 is exceptionally poor, I would have thought, even on a medium risk.  

@grocerjack - I would delve deeper into what medium risk funds your IFA has put you in…..sounds decidedly more low risk to me.

I often wonder if IFAs chose relatively low risk funds for clients - after all, it would be unconscionable for them to allow a client to run out of money, so in their shoes, I would play things safe 🧐

FWIW, my DC pot is up over 22% since 05Jul20 (which itself was of course at the Covid dipping point).  Actually a bit more, since I started taking drawdown 2 months ago,  must figure out how to measure that more accurately….or perhaps just monitor and adjust accordingly 🤪

@C_Mababejive, it sounds like this topic is grinding your gears….but since you said here you don’t want to manage a pot, why not revel in the fact you have a decent DB pension, & figure out how to make the most of it: your IFA already effectively said it was a no-brainer to leave it alone.

Albermarle

And herin lies the problem of only having 2 db pensions, the lack of flexibility.

If I had just one DB pension ( and I have ) I would not really consider transferring it . However with two, I think there is a good case to transfer one of them . Having a DB and a DC pension pot is probably the best of both worlds.

GunJack

Albermarle said:

And herin lies the problem of only having 2 db pensions, the lack of flexibility.

If I had just one DB pension ( and I have ) I would not really consider transferring it . However with two, I think there is a good case to transfer one of them . Having a DB and a DC pension pot is probably the best of both worlds.

it could be, but not necessarily.... my point was that it would cost a lot to find out (if the cetv was considered high enough to even look closely at it being an option).

Malthusian

cfw1994 said:

@grocerjack - I would delve deeper into what medium risk funds your IFA has put you in…..sounds decidedly more low risk to me.

I often wonder if IFAs chose relatively low risk funds for clients - after all, it would be unconscionable for them to allow a client to run out of money, so in their shoes, I would play things safe 🧐

Research has consistently shown that people tend to overestimate their own risk profile, i.e. someone DIYing their investments will pick a higher risk fund than an advised client. The proof of this can be seen any time there is a market drop (big or small) and threads start appearing in the MSE forums (and elsewhere) along the lines of "Should I sell my investments until things are less volatile / uncertain (which will never happen)".

Other things being equal, a low risk investment is more likely to run out of money because it will grow more slowly. Higher growth doesn't help anyone however if you are out of the market as a result of being invested above your risk profile and panicking. Nor is a slight increase in spending ability worth sleepless nights.

FWIW, my DC pot is up over 22% since 05Jul20 (which itself was of course at the Covid dipping point).  Actually a bit more, since I started taking drawdown 2 months ago,  must figure out how to measure that more accurately…

An IRR calculator would do the job if you can be bothered plugging all the figures and dates in.

Dazza1902

Albermarle said:

And herin lies the problem of only having 2 db pensions, the lack of flexibility.

If I had just one DB pension ( and I have ) I would not really consider transferring it . However with two, I think there is a good case to transfer one of them . Having a DB and a DC pension pot is probably the best of both worlds.

Totally agree,  dB and DC gives flexibility. It seems every other post is someone grinding an axe because they can't sell off the crown jewels. Surely those with substantial dB pensions either take the hit of reductions to take them early or save alongside to retire before the scheme NPA.
Half of us lament the lack of dB pensions the other half want rid.