Claim for historical pension advice

slb2020

Albermarle said:

The reason for my concern is that the transfer value out of the pension was less than the projected income from the pension in the first year of retirement.

If I take your statement literally , it says that if the projected annual  starting  pension from the DB pension was £X K pa , then the CETV ( transfer value) was less than £XK? 

Surely that can not be right . A typical transfer value today would be £XK  multiplied by 30 . Even if it would have been less in 1996 .

I assume I have misunderstood , can you clarify exactly what you mean ?

To quote from the advice I received: projected annual income at 65 if I did not transfer: £21500. Transfer value: £17890

Thrugelmir

What rate of inflation was used to "project" the pension at 65?  Would only have been a forecast in no way a guaranteed amount. What was your defered penson at the date you left employment? 

slb2020

Thrugelmir said...

Would only have been a forecast in no way a guaranteed amount. Agreed
What rate of inflation was used to "project" the pension at 65? 5%
What was your deferred pension at the date you left employment? £3727

The advice is extremely detailed and discussed GMP benefits vs excess benefits and the differing treatment of contributions pre and post 1988. I'm sure they were trying to be thorough but the level of detail is a bit overwhelming.

With hindsight the assumptions on inflation, investment performance and annuity rates were all wrong but I accept that none of that is relevant. The question remains were the assumptions made by the advisors reasonable assumptions at that time?

QrizB

slb2020 said:

With hindsight the assumptions on inflation, investment performance and annuity rates were all wrong but I accept that none of that is relevant. The question remains were the assumptions made by the advisors reasonable assumptions at that time?

Here's a table of FTSE100 index growth beginning in 1988:

https://www.1stock1.com/1stock1_764.htm

In the 90s, double-digit growth was the norm. (I'm sure we all remember Gordon Gekko and Loadsamoney.)

dunstonh

The advisors claimed that compound growth  would make up for this. Specially, the advice states that, to match the pension I was transferring out of, investment growth would need to be:

* 9.92% per annum for retirement at at 65

* 10.15% per annum for retirement at at 60

Is that would or could? - one letter difference but a different meaning overll.

Also, the fact you have the figures quoted for the required growth rate actually indicates the advice is good. i.e. that is what you expect to see with good advice.   The bad quality ones tend to be light on detail and don't mention target growth rates etc.

In 1996, double-digit growth was the norm and annuity rates were much much higher.  

There is also a comment in the advice that "if annuity rates fall, then the level of pension benefit would also fall". This is buried in the small print and there is no explicit statement that falling annuity rates is a risk for personal pensions but not for defined benefit pensions.Did the print actually change size?  Risk warnings are not normally known for using reduced font size.

slb2020

dunstonh said:

 the fact you have the figures quoted for the required growth rate actually indicates the advice is good. i.e. that is what you expect to see with good advice.   The bad quality ones tend to be light on detail and don't mention target growth rates etc.

In 1996, double-digit growth was the norm and annuity rates were much much higher.  

Well that is really the crucial point. If I were to claim, it would have to be on the basis that the growth figures were overoptimistic. Two of you have said that the figures were appropriate for the time. So I was perhaps unlucky but not poorly advised. Fair enough, it's not worth pursuing this, thanks for the advice.