Defined Benefit Transfer Block by IFA

LindseyLula

Just to add, sorry I do own the property I currently live in (small outstanding mortgage) but don't own any other property. Thanks

eskbanker

LindseyLula said:

I do own the property I currently live in (small outstanding mortgage)

LindseyLula said:

I do have other pensions (DCs and a full state pension contribution)

So retaining a DB pension should complement those nicely....

Marcon

LindseyLula said:

I would be grateful for some advice please?

I would like to transfer my Deferred Defined Benefit Pension (private company) to a SIPP or similar at age 55 (I'm currently 53), I've received a very attractive CETV from my pension scheme (6 figures) and have sought independent financial advice (no fee at this stage). the problem I have is that the advice that I have received seems to be is erring on the side of the transfer not being recommended and if this happens I will be stuck with paying a considerable advice fee (£10k) to be told that I won't be able to transfer my pension. This seems ludicrous and is in complete contradiction to my (what I thought) pension freedoms. Is there anything you can advise/signpost me to?

One of the financial advisors that i have dealt with has indicated that there is an insistent claimant route (if it is recommended not to transfer), but in the end there is still a clause where I could in a position of not being able to transfer; this seems so unfair.

Any advice gratefully received.

Why are you taking advice now if you aren't going to be transferring for another two years? Your CETV has a guarantee period which will be expiring in the next few months (or possibly sooner - the date will be shown on the paperwork) and the advice you receive now will only relate to the CETV you have now. You'll need to go through the whole process again in two years, with whatever CETV is current at the time - and you'll have to pay again.

LindseyLula

I guess that what they are risk assessing is, if I transfer my DB before my normal retirement age 65 (for my private pensions) and 67 for state pension and then i blow/lose it all what financial position will I be in?

LindseyLula

But by retaining my DB pension, I can't retire early, which is the whole point. 
And I wanted to get the transfer sorted out now ready for when i am 55, it is doable from the age of 50. I'm trying to plan, little did I know that i would be hitting brick walls at every turn. Thanks

Audaxer

LindseyLula said:

I guess that what they are risk assessing is, if I transfer my DB before my normal retirement age 65 (for my private pensions) and 67 for state pension and then i blow/lose it all what financial position will I be in?

You do know that you will be able access your DC pensions at 55, even although the normal retirement age for them may state 65?

Albermarle

 I have £370000 tied up in a pension 

That is not correct , there is no specific money in the pension linked to you directly.

What you have is a DB pension that will guarantee you a certain annual income for your retirement until you die . The income being related to your employment salary and your years of service. It will most likely rise each year due to inflation.

Separately the pension scheme is currently offering you £370K to buy you out of the scheme , to get rid of the liability off their books ( there is a reason they want to do that of course as providing a guaranteed inflation linked pension for life is very expensive) . This figure can/will change every time you ask for an update .

daveyjp

And £370,000 isn't that much considering it may need to provide an income for 40-50 years.

Invest at the wrong time and that £370,000 could halve in a very short period of time.  When its worth £185k who does the person who wanted a transfer go bleating to?

That's why IFAs are cautious to back tranfers,

NedS

Are you aware that you can normally take your DB pension early from age 55 with actuarial reduction?

That £370,000 may realistically give you around £13,000 per year at a conservative 3.5% withdraw rate (no guarantees). How does that compare with the DB income/lump sum you will be giving up? Have you considered the possibility that your money runs out by age 85 but you live to 95 or more with only a state pension for income?

Anyway, the reality is you are unlikely to receive a positive recommendation and under those circumstances no pension provider will touch the transfer. You would be better focusing on maximising your DC pensions in your last few years of work to build sufficient assets to fund your retirement through to when you can reasonably access your DB/SP.

dunstonh

That £370,000 may realistically give you around £13,000 per year at a conservative 3.5% withdraw rate 

You wouldn't want to take 3.5% draw rate in your 50s.  Especially if you have no other investments/savings to your name.  30-40 years of life remaining and inflation to be concerned about.  Maybe 2% a year at the moment and gradually increase it over time.