Being forced to use a Financial Advisor to transfer pension to pension.

scoobyjones1

Prism said:

scoobyjones1 said:

 I would like to think we can grow more than 5% ourselves because we HAVE already done so for 10 years and the amount she is being offered per annum is not really going to help her much.

The thing is that the last 10 years have been incredibly easy investing, where making 10-15% returns with almost no effort has been easy. We haven't had a real crash for 15 years now, and that time we all got bailed out with QE. Are you so sure that will happen next time. The previous bad time, many of us can barely remember, was 2000 into a small recovery followed by 2008 - almost a decade and a half of below inflation equity returns. All of this could happen again. Wouldn't it be nice to have a small DB pension paying out if it does.

It has not been easy. Trump caused a big pullback when he almost caused WWIII blowing up Iranian Generals...we pulled out of the market at that time. Covid caused a massive crash but some stocks boomed...then crashed after Covid, then we had Ukraine which caused a huge spike in oil prices with supply chain issues...we have had the Fed flooding the market with cash but then over tightening and now talk of easing. 2022 was a down year but 2023 is looking good at the moment.
Not easy at all but if you look at the markets over our lifetimes they have gone up before and after any crashes. It takes time and patience but easy? I would disagree. We have beaten the S&P though, every year.
We have other pensions between us and we would like to use this small one to invest with. Sadly it seems we can't. This type of DB pension is dying out and I can see why people want to leave them. We certainly do!

scoobyjones1

xylophone said:

That's a good suggestion and I will ask them but they gave us 3 options, defer, start the pension at 2,300 per annum or take the pot of 12 kish and receive 2k a year. 

Have a look at this under  DB Schemes /Commuting Pension for cash.

https://techzone.abrdn.com/public/pensions/Tech-guide-tax-free-cash

I suspect that the £12,000 is the maximum available if the scheme is using the formula

(20 x pension before commutation) / (3 + 20/CF)

That's what they told her but we will certainly double check if there would be an option to take a further lump sum, which would be taxed. They have so many rules I would be surprised if it's possible. It's a dinosaur of a pension!

dunstonh

It has not been easy. Trump caused a big pullback when he almost caused WWIII blowing up Iranian Generals...we pulled out of the market at that time.

It has been the best 10 year period for US equities, for Sterling investors, for generations.   

. Covid caused a massive crash but some stocks boomed

.But still only the third biggest loss period in the last 25 years and it recovered very quickly. Too quickly it turned out as the main gains unwound late 2021.   However, the fall in Sterling masked a lot of that.

then we had Ukraine which caused a huge spike in oil prices with supply chain issues.

But within a month of Ukraine being invaded, the markets were higher again.

For context, here is the last 10 years:



Normally, you are happy doubling in 10 years.  US equity, for UK investors is up 230%

Now look at the 10-year period at the start of the millennium.



Now that is what you can call not being easy.   After 9 years, it was still over 40% down.

You said you have been investing around 8 years.   Look at this recent 8 year period when its over 52% down:



You have never had it so good and if you think your period of investing in US equitie has been hard then you are in for a rude awakening.

GDB2222

scoobyjones1 said:

Prism said:

scoobyjones1 said:

 I would like to think we can grow more than 5% ourselves because we HAVE already done so for 10 years and the amount she is being offered per annum is not really going to help her much.

The thing is that the last 10 years have been incredibly easy investing, where making 10-15% returns with almost no effort has been easy. We haven't had a real crash for 15 years now, and that time we all got bailed out with QE. Are you so sure that will happen next time. The previous bad time, many of us can barely remember, was 2000 into a small recovery followed by 2008 - almost a decade and a half of below inflation equity returns. All of this could happen again. Wouldn't it be nice to have a small DB pension paying out if it does.

It has not been easy. Trump caused a big pullback when he almost caused WWIII blowing up Iranian Generals...we pulled out of the market at that time. Covid caused a massive crash but some stocks boomed...then crashed after Covid, then we had Ukraine which caused a huge spike in oil prices with supply chain issues...we have had the Fed flooding the market with cash but then over tightening and now talk of easing. 2022 was a down year but 2023 is looking good at the moment.
Not easy at all but if you look at the markets over our lifetimes they have gone up before and after any crashes. It takes time and patience but easy? I would disagree. We have beaten the S&P though, every year.
We have other pensions between us and we would like to use this small one to invest with. Sadly it seems we can't. This type of DB pension is dying out and I can see why people want to leave them. We certainly do!

Having reached retirement age with a couple of DB pensions, I’m quite pleased to have some income from a source where I don’t have to worry about the investment. 

It’s worth noting that the CETV is 24 times the pension entitlement. If your wife has a retirement age of 60 under the plan, the CETV doesn’t strike me as good value.  I suspect strongly that you could pay for advice and be told that your wife is far better off leaving the pension where it is. 

I am quite interested to hear what sort of analysis your wife has made in order to decide that she wants to transfer the money? 

scoobyjones1

GDB2222 said:

scoobyjones1 said:

Prism said:

scoobyjones1 said:

 I would like to think we can grow more than 5% ourselves because we HAVE already done so for 10 years and the amount she is being offered per annum is not really going to help her much.

The thing is that the last 10 years have been incredibly easy investing, where making 10-15% returns with almost no effort has been easy. We haven't had a real crash for 15 years now, and that time we all got bailed out with QE. Are you so sure that will happen next time. The previous bad time, many of us can barely remember, was 2000 into a small recovery followed by 2008 - almost a decade and a half of below inflation equity returns. All of this could happen again. Wouldn't it be nice to have a small DB pension paying out if it does.

It has not been easy. Trump caused a big pullback when he almost caused WWIII blowing up Iranian Generals...we pulled out of the market at that time. Covid caused a massive crash but some stocks boomed...then crashed after Covid, then we had Ukraine which caused a huge spike in oil prices with supply chain issues...we have had the Fed flooding the market with cash but then over tightening and now talk of easing. 2022 was a down year but 2023 is looking good at the moment.
Not easy at all but if you look at the markets over our lifetimes they have gone up before and after any crashes. It takes time and patience but easy? I would disagree. We have beaten the S&P though, every year.
We have other pensions between us and we would like to use this small one to invest with. Sadly it seems we can't. This type of DB pension is dying out and I can see why people want to leave them. We certainly do!

Having reached retirement age with a couple of DB pensions, I’m quite pleased to have some income from a source where I don’t have to worry about the investment. 

It’s worth noting that the CETV is 24 times the pension entitlement. If your wife has a retirement age of 60 under the plan, the CETV doesn’t strike me as good value.  I suspect strongly that you could pay for advice and be told that your wife is far better off leaving the pension where it is. 

I am quite interested to hear what sort of analysis your wife has made in order to decide that she wants to transfer the money? 

I am sure you are right, re the advice we would be given. Read the whole thread and hopefully you will see her reasons. In a nutshell, this is a bonus pension, a small amount she did not even know was there until recently. It was not part of our pension planning and she would rather have access to the amount (£60k) now, in her long established SIPP, aged 60 than get a small amount (£166) every month for 20/30 years. We feel we can make it grow and use it in the way we have other investments and savings. This would help us now...while we have some health and mobility left! We will be fine later on...we already have that put by and may even eventually get our State Pensions! You never know...
Also..this DB fund has recently changed it's rules so that it "grows" at inflation level but capped at 5% max. So a lot of members are trying to transfer out but seem to be finding it very expensive....and they have much larger pots, most of them. 

GDB2222

scoobyjones1 said:

GDB2222 said:

scoobyjones1 said:

Prism said:

scoobyjones1 said:

 I would like to think we can grow more than 5% ourselves because we HAVE already done so for 10 years and the amount she is being offered per annum is not really going to help her much.

The thing is that the last 10 years have been incredibly easy investing, where making 10-15% returns with almost no effort has been easy. We haven't had a real crash for 15 years now, and that time we all got bailed out with QE. Are you so sure that will happen next time. The previous bad time, many of us can barely remember, was 2000 into a small recovery followed by 2008 - almost a decade and a half of below inflation equity returns. All of this could happen again. Wouldn't it be nice to have a small DB pension paying out if it does.

It has not been easy. Trump caused a big pullback when he almost caused WWIII blowing up Iranian Generals...we pulled out of the market at that time. Covid caused a massive crash but some stocks boomed...then crashed after Covid, then we had Ukraine which caused a huge spike in oil prices with supply chain issues...we have had the Fed flooding the market with cash but then over tightening and now talk of easing. 2022 was a down year but 2023 is looking good at the moment.
Not easy at all but if you look at the markets over our lifetimes they have gone up before and after any crashes. It takes time and patience but easy? I would disagree. We have beaten the S&P though, every year.
We have other pensions between us and we would like to use this small one to invest with. Sadly it seems we can't. This type of DB pension is dying out and I can see why people want to leave them. We certainly do!

Having reached retirement age with a couple of DB pensions, I’m quite pleased to have some income from a source where I don’t have to worry about the investment. 

It’s worth noting that the CETV is 24 times the pension entitlement. If your wife has a retirement age of 60 under the plan, the CETV doesn’t strike me as good value.  I suspect strongly that you could pay for advice and be told that your wife is far better off leaving the pension where it is. 

I am quite interested to hear what sort of analysis your wife has made in order to decide that she wants to transfer the money? 

I am sure you are right, re the advice we would be given. Read the whole thread and hopefully you will see her reasons. In a nutshell, this is a bonus pension, a small amount she did not even know was there until recently. It was not part of our pension planning and she would rather have access to the amount (£60k) now, in her long established SIPP, aged 60 than get a small amount (£166) every month for 20/30 years. We feel we can make it grow and use it in the way we have other investments and savings. This would help us now...while we have some health and mobility left! We will be fine later on...we already have that put by and may even eventually get our State Pensions! You never know...
Also..this DB fund has recently changed its rules so that it "grows" at inflation level but capped at 5% max. So a lot of members are trying to transfer out but seem to be finding it very expensive....and they have much larger pots, most of them. 

That’s all very interesting, but it’s not a financial analysis. It’s like deciding to buy a car, regardless of price, purely because you like the colour. 

 I’m talking about the many pages of projections that you could have done, allowing for charges, life expectancy, different inflation rates, different investment returns, living shorter or longer than expected, perhaps moving to a less risky investment as your wife ages. That sort of thing. 

Suppose you had made the calculations and they showed that you really needed a CETV of £80,000, rather than the £60,000 on offer, would you still be so keen to transfer?

scoobyjones1

xylophone said:

That's a good suggestion and I will ask them but they gave us 3 options, defer, start the pension at 2,300 per annum or take the pot of 12 kish and receive 2k a year. 

Have a look at this under  DB Schemes /Commuting Pension for cash.

https://techzone.abrdn.com/public/pensions/Tech-guide-tax-free-cash

I suspect that the £12,000 is the maximum available if the scheme is using the formula

(20 x pension before commutation) / (3 + 20/CF)

A question for you, xylophone. The amount of tax free cash is clear, approx £12k and then annual amounts of £12k, rising with CPI...but capped at 5% (not great). But...with a DB pension, might she be able to take a larger lump sum, some taxable, with a lower annual payment, or would that be against the rules or if allowed, still be subject to expensive advice? 

JoeCrystal

scoobyjones1 said:

A question for you, xylophone. The amount of tax free cash is clear, approx £12k and then annual amounts of £12k, rising with CPI...but capped at 5% (not great). But...with a DB pension, might she be able to take a larger lump sum, some taxable, with a lower annual payment, or would that be against the rules or if allowed, still be subject to expensive advice? 

What do the DB pension scheme rules say in this case? There is no point in asking about it if the scheme-specific rules do not allow it.  There are cases, generally in many public sector pension schemes, in which you can commute in exchange for a lower annual pension scheme. Here is NHS pension scheme for example: https://chasedeveremedical.co.uk/the-nhs-pension-scheme-tax-free-lump-sum-explained

scoobyjones1

GDB2222 said:

scoobyjones1 said:

GDB2222 said:

scoobyjones1 said:

Prism said:

scoobyjones1 said:

 I would like to think we can grow more than 5% ourselves because we HAVE already done so for 10 years and the amount she is being offered per annum is not really going to help her much.

The thing is that the last 10 years have been incredibly easy investing, where making 10-15% returns with almost no effort has been easy. We haven't had a real crash for 15 years now, and that time we all got bailed out with QE. Are you so sure that will happen next time. The previous bad time, many of us can barely remember, was 2000 into a small recovery followed by 2008 - almost a decade and a half of below inflation equity returns. All of this could happen again. Wouldn't it be nice to have a small DB pension paying out if it does.

It has not been easy. Trump caused a big pullback when he almost caused WWIII blowing up Iranian Generals...we pulled out of the market at that time. Covid caused a massive crash but some stocks boomed...then crashed after Covid, then we had Ukraine which caused a huge spike in oil prices with supply chain issues...we have had the Fed flooding the market with cash but then over tightening and now talk of easing. 2022 was a down year but 2023 is looking good at the moment.
Not easy at all but if you look at the markets over our lifetimes they have gone up before and after any crashes. It takes time and patience but easy? I would disagree. We have beaten the S&P though, every year.
We have other pensions between us and we would like to use this small one to invest with. Sadly it seems we can't. This type of DB pension is dying out and I can see why people want to leave them. We certainly do!

Having reached retirement age with a couple of DB pensions, I’m quite pleased to have some income from a source where I don’t have to worry about the investment. 

It’s worth noting that the CETV is 24 times the pension entitlement. If your wife has a retirement age of 60 under the plan, the CETV doesn’t strike me as good value.  I suspect strongly that you could pay for advice and be told that your wife is far better off leaving the pension where it is. 

I am quite interested to hear what sort of analysis your wife has made in order to decide that she wants to transfer the money? 

I am sure you are right, re the advice we would be given. Read the whole thread and hopefully you will see her reasons. In a nutshell, this is a bonus pension, a small amount she did not even know was there until recently. It was not part of our pension planning and she would rather have access to the amount (£60k) now, in her long established SIPP, aged 60 than get a small amount (£166) every month for 20/30 years. We feel we can make it grow and use it in the way we have other investments and savings. This would help us now...while we have some health and mobility left! We will be fine later on...we already have that put by and may even eventually get our State Pensions! You never know...
Also..this DB fund has recently changed its rules so that it "grows" at inflation level but capped at 5% max. So a lot of members are trying to transfer out but seem to be finding it very expensive....and they have much larger pots, most of them. 

That’s all very interesting, but it’s not a financial analysis. It’s like deciding to buy a car, regardless of price, purely because you like the colour. 

 I’m talking about the many pages of projections that you could have done, allowing for charges, life expectancy, different inflation rates, different investment returns, living shorter or longer than expected, perhaps moving to a less risky investment as your wife ages. That sort of thing. 

Suppose you had made the calculations and they showed that you really needed a CETV of £80,000, rather than the £60,000 on offer, would you still be so keen to transfer?

As I have said. we were already secure BEFORE this bonus pension became known. She has had analysis done by an IFA before (he gave her VERY bad advice, a cold call... and he later paid back his fees with a "gesture" but that's another story) she has had her 2 main work pensions analysed before being transferred into her SIPP, without these "advice" problems because they were not DB schemes... and also, by law every year the SIPP provider gives an annual pension forecast with all options analysed. We do know where we stand and have made our plans already. Your scenario makes zero sense in her situation because if she did need a CETV of £80k as opposed to 60k she has already retired and could do nothing to change that. CETV values are dropping dramatically as we speak anyway, that much is clear. They are not likely to go up anytime soon.

Dazed_and_C0nfused

Noted, good points but we are trying to transfer from one pension pot to another...no tax bill there. Then when you go into drawdown from your SIPP you pay tax as you go. 

Again you seem to be lacking understanding of what a DB pension actually is.

There is no "pot", there is a promise to pay £x/year for the rest of her life.  Often with spouses pension if she does before you.

than get a small amount (£166) every month for 20/30 years

It's only £166/month in year 1 though.  It will be more in year 2.  And more again in year 3 and so on.

This type of DB pension is dying out and I can see why people want to leave them. We certainly do!

They may well by dying out but I think you will find there are more people trying to get one (local government, NHS, civil service, teachers jobs etc) than there are people wanting to transfer out of them.