Modelling the future / Pension decisions (eg Transfer my deferred DB ?)

optoutDB

bostonerimus said: I'd put income diversity high on your priority list which argues for keeping the DB pension. You have DC and general account money that you can use in emergencies or to pass on as an inheritance and you can generate a guaranteed income floor with the DB pension and state pension. You can save and invest any excess. Do a budget and have a medical check up, but the variety of your current finances is enviable. I'm sure all the retirees without DB pensions are jealous right now as they see their pots fall by 10% or 20% 

Yes, I think I'm quite well hedged/diversified. My position is better than I thought it was, and I have probably been scrimping a bit too hard the last 10 years.  I have been living on my earnings, about £12k  (£6k after rent+energy).

AlanP_2

hmmm I don't see why it should take an IFA 3months, what do they do?  They must have their models set up, and I can give them all the specific to me info in 1 day.

The slow part will be the numerous back and forth questions between your IFA and the scheme administrators.

The IFA will need to know the minutiae of exactly how it works, your full details re pension, GMP etc.

I transfered one last year using the IFA firm that the trustees had a deal with, so a subsidised fee. They had a good knowledge of the scheme and had carried out quite a few assessments.

I contacted them prior to getting the CETV and had my first fact find phone call 2 days after CETV arrived. 

Final paperwork to accept offer was sent back to scheme administrators about 8pm the day the CETV expired 3 months later.

If you don't have an IFA lined up I don't think you will meet the deadline on this CETV. 

 

kinger101

optoutDB said:

Pat38493 said:

Based on quite a few of the other threads I've seen here, you will generally find it hard or next to impossible  to get an IFA to recommend doing this, but the potentially life shortening condition that you mentioned might be a factor, depending on the condition and the known statistical risk of early death.

I had (probably) 25 years of unspotted massively high cholesterol due to familial hypercholesterolemia. Borderline hyper-tension for many years (not advised to me by my GPs). The consultant 10 years ago had no answer to how much damage/build up is likely to have accrued in my arteries and hence whether it would improve after my cholesterol was under control. This is what I need to look into, maybe I can find someone to assess my arteries.

I wouldn't automatically assume your life will be reduced by this. Particularly if diet + medication has reduced the cholesterol levels. I'm a "worrier" and have convinced myself on more than one occasion I've had a serious condition.  I wouldn't take a lack of answer from a consultant as a poor prognosis (you're still here 10 years later).  To me, it's just a consultant being honest that he has no crystal ball.

Short version - unless you have a definite terminal illness, just get on with your life rather than planning your death.  

Marcon

optoutDB said:

Marcon said:

If you've already got a CETV and the clock is ticking, it's probably already too late to find an IFA who is willing to plough through all the necessary legwork which would at least put you in a position where a transfer could (at least technically/legally) proceed. They will need the whole 3 months to do what has to be done, if you want the full advice process which would give the ceding scheme the necessary confirmation that you have taken full advice. You could get abbreviated advice (cheaper and quicker), but would still need to proceed to full advice before the DB scheme could pay over any transfer.

Will your scheme give you another CETV within 12 months, and how much would you have to pay? £500 or so is typical if you request a further CETV within a 12 month period.

The IFA will have to follow the guidelines laid down by the relevant regulatory authorities (including stringent guidance from the FCA) so no, your model won't count for much.

Thanks. I can get another CETV for £175, but presumably that will come back lower. 

hmmm I don't see why it should take an IFA 3months, what do they do?  They must have their models set up, and I can give them all the specific to me info in 1 day.

Are the FCA guidelines available?

IFAs don't charge thousands of pounds (and expect to pay at least £5K for full advice) for doing as little as many believe! A DB transfer is a difficult area, and even more risky for the adviser than the client.

Have a look at https://www.fca.org.uk/consumers/pension-transfer/advice-what-expect and also look at https://www.fca.org.uk/consumers/pension-transfer-defined-benefit/advice-checker

You might then have a much better grasp of just why there are now so few firms in the market who offer advice on transfers out of DB schemes. Many of those still in the market don't guarantee to complete the process in 3 months, simply because it is so exhaustive - and getting all the required information out of scheme administrators can take a very long time.

bostonerimus

optoutDB said:

bostonerimus said:

I'd put income diversity high on your priority list which argues for keeping the DB pension. You have DC and general account money that you can use in emergencies or to pass on as an inheritance and you can generate a guaranteed income floor with the DB pension and state pension. You can save and invest any excess. Do a budget and have a medical check up, but the variety of your current finances is enviable. I'm sure all the retirees without DB pensions are jealous right now as they see their pots fall by 10% or 20% 

Yes, I think I'm quite well hedged/diversified. My position is better than I thought it was, and I have probably been scrimping a bit too hard the last 10 years.  I have been living on my earnings, about £12k  (£6k after rent+energy). 

Frugal habits pay dividends at all stages of life. When you are working you can save more and when you are retired and in drawdown, you don’t put as much pressure on your savings and investments. Having some head room for emergencies and years when inflation is above 10% has the benefit of keeping your blood pressure down and letting you actually enjoy retirement. I know this from experience. There’s also the joy of being able to help out family or give to charities. Being frugal also often leads to a simple life which I find keeps me sane.

optoutDB

So, I've more or less ruled out trying to go forward with the transfer. There is a comfort in having a never ending stream that doesn't rely on investment performance. But I will have to suck up the current losses to inflation and hope the Bank of England start doing their job sometime soon.


I'm still interested in modelling my finances because they are looking very rosy at the moment, ie I can afford to spend a lot more than I do on food+transport+entertainment. 

So I'm still looking for more information on the usual assumptions made for the various indexing factors. The most critical is Equity returns versus inflation. 

Albermarle

So I'm still looking for more information on the usual assumptions made for the various indexing factors. The most critical is Equity returns versus inflation. 

That is the critical bit for many people and it is unpredictable. This year they are around 10% down and then with 10% inflation on top.

The question is discussed on here regularly and probably the consensus view is to plan around 1% above inflation for the next decade. However it is unlikely to be correct.

optoutDB

My brother's DC pension advisor uses 3%,5%, and 7% for potential growth estimates. With inflation at 2.5%.  Obviously he has to emphasize potential good returns.

1% above inflation seems a reasonable conservative value.

squirrelpie

Advisors have to use standard rates set by the government, so take no notice of whatever your adviser says. At least that is my understanding of the situation - I hope somebody knows better and can say I'm wrong.

dunstonh

My brother's DC pension advisor uses 3%,5%, and 7% for potential growth estimates. With inflation at 2.5%.  Obviously he has to emphasize potential good returns.

3,5 & 7% are the old-fashioned defaults for DC pensions.   Along with inflation at 2.5%.   They haven't been that way for a while. However, unlike providers, advisers can vary the rates to what they feel is justifiable as long as the provider illustrations comply with FCA rules.  (and the rates you mention are not complaint if relevantly recent)