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

Cus

Pat38493 said:

scoobyjones1 said:

xylophone said:

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

They may well be dying out but why do you suppose that is?

By way of example, I know somebody  in receipt of a DB pension that was non contributory while he was employed and where the excess over GMP is uncapped RPI.....

I said why...because it costs the firm more..
My Wife's was non contributory while she was employed and hers was originally uncapped...very nice...but then they changed it, presumably due to very high interest rates that were costing them too much. So the person you know was / is better off and sounds pretty happy to be in that DB scheme. Good luck to them.

The reason it costs the firm more is that DB pensions are generally much better than DC pensions due to the guaranteed benefits for life.

Although the db's have to invest in rubbish gilts rather than the S&P 😁

QrizB

JoeCrystal said:

scoobyjones1 said:

QrizB said:

scoobyjones1 said:

Also it would have to have some growth when you take it, ie above inflation. My Wife's one has declined due to not matching recent inflation.

What makes you think that your wife's pension has declined? For pensions that are not yet in payment, the calculation for inflation-based increases isn't especially sensitive to one high-inflation year.

Last year, some people in the same company got a 12.5% rise to their pension and those in the DB scheme, same company got only 5%

That depends on the inflation rules in the scheme rules. Some schemes average out over the period rather than focusing on one year and still come under the limit. For example, if over ten years averaged out at 5% then it is pretty much index-linked. Again, it depends on the scheme rules.

That was the point I was trying to make. We still don't know anything about the scheme, its rules or how pensions increase prior to being put into payment.
And I suspect the OP and OP's wife don't know, either.

GDB2222

I think the op has ably demonstrated why the requirement to have financial advice on DB transfers is so important. 

artyboy

GDB2222 said:

I think the op has ably demonstrated why the requirement to have financial advice on DB transfers is so important. 

However as this thread is now 15 pages and growing, few people are likely to have the stamina to see that point.

And even fewer that fall into the bucket of really needing that advice...

scoobyjones1

QrizB said:

JoeCrystal said:

scoobyjones1 said:

QrizB said:

scoobyjones1 said:

Also it would have to have some growth when you take it, ie above inflation. My Wife's one has declined due to not matching recent inflation.

What makes you think that your wife's pension has declined? For pensions that are not yet in payment, the calculation for inflation-based increases isn't especially sensitive to one high-inflation year.

Last year, some people in the same company got a 12.5% rise to their pension and those in the DB scheme, same company got only 5%

That depends on the inflation rules in the scheme rules. Some schemes average out over the period rather than focusing on one year and still come under the limit. For example, if over ten years averaged out at 5% then it is pretty much index-linked. Again, it depends on the scheme rules.

That was the point I was trying to make. We still don't know anything about the scheme, its rules or how pensions increase prior to being put into payment.
And I suspect the OP and OP's wife don't know, either.

This one is reviewed annually and increased to match the years CPI figure. However it is capped at 5%...not good when inflation reaches 10% or whatever it finally got to recently. As I have stated, many people are trying to leave it because last year colleagues on a different, newer scheme received a 12.5% increase, which clearly suggests a yearly basis and not an average over 10 years if you look at historic CPI figures. I have said many times in this thread, we do not know the rules that well because my Wife only discovered this pension in September. It's from a job she did 30 odd years ago, so a nice bonus in her retirement.
The company in question we will not name but they are being nice and helpful though they have told us that they are snowed under due to the large numbers of people wanting out of this pension, which was one of their older schemes, long since discontinued for any new members.

xylophone

It's from a job she did 30 odd years ago,

The Pension Scheme was contracted out?

 She was a member  post 5/4/88 but pre 6/4/1997?

Does the information from the administrator show her pension amount split between GMP and excess?

If so, what has been said concerning increase on GMP in payment as opposed to excess over GMP?

scoobyjones1

Pat38493 said:

scoobyjones1 said:

xylophone said:

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

They may well be dying out but why do you suppose that is?

By way of example, I know somebody  in receipt of a DB pension that was non contributory while he was employed and where the excess over GMP is uncapped RPI.....

I said why...because it costs the firm more..
My Wife's was non contributory while she was employed and hers was originally uncapped...very nice...but then they changed it, presumably due to very high interest rates that were costing them too much. So the person you know was / is better off and sounds pretty happy to be in that DB scheme. Good luck to them.

The reason it costs the firm more is that DB pensions are generally much better than DC pensions due to the guaranteed benefits for life.

More expensive because the company pays more in than most DC schemes. "much better"? that's subjective and a benefit for life may not be much better if it's a fixed (in real terms), small amount. There are plenty of millionaires that made guaranteed benefits for life..and their children's lives, in other ways.

It is not hard to invest £60k and return 3.8% a year, (approx the £2.3k they are paying) averaged over 10-20 years and still have the original 60k as well, to cash in if ever you wanted to. And anything above that 3.8%, with compound gains, dividends and interest, would grow that original 60k very nicely as well. The SIPP also has a death benefit payout. You can leave it to your spouse or children...or charity...Battersea dogs home...etc. This particular pension has no death benefit, according to their pension advice pack.,,and would leave nothing for the children. It does not seem better to me. We would like to transfer out... and into the SIPP wrapper. 

scoobyjones1

xylophone said:

It's from a job she did 30 odd years ago,

The Pension Scheme was contracted out?

 She was a member  post 5/4/88 but pre 6/4/1997?

Does the information from the administrator show her pension amount split between GMP and excess?

If so, what has been said concerning increase on GMP in payment as opposed to excess over GMP?

Hi Xylo, you're up late!
It's complicated and my Wife has asked me not to post too many details regarding the company but she worked for a firm, I think pre 88, not sure. They were bought out by a bigger company, I don't know the dates. She did not even know that she had the pension because she had not contributed financially...only the company did...those were the days... and her pension was then passed or transferred to the new, big company which she then left for another career. It was a very old pension scheme and the firm soon afterwards scrapped it, at least for new members and switched to DC or other pension types, not long after she left. The original scheme still has members though, most are trying to leave it.

Only when she did a search on the off chance did she find out about this money. The company had not contacted her or made much of an effort to, so it's lucky she found it. So hopefully, some on here might see or understand why she would like to access this "bonus" money....or have more flexible use of it now...after all these years. It was not originally a part of our retirement plans which are well founded, no matter the seemingly low opinion of us, expressed by some that apparently know better. I am astounded by the lack of vision and imagination on here generally. I was hoping to find other folk in the same boat, rather than get lectured to (not by you, Xylo) about security and investments.
That's not what we need! She just wants out.
She has transferred 2 other pensions before (not DB funds), very easily into her SIPP which is growing nicely. Much better than this DB Pension... and inflation.

GDB2222

scoobyjones1 said:

Pat38493 said:

scoobyjones1 said:

xylophone said:

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

They may well be dying out but why do you suppose that is?

By way of example, I know somebody  in receipt of a DB pension that was non contributory while he was employed and where the excess over GMP is uncapped RPI.....

I said why...because it costs the firm more..
My Wife's was non contributory while she was employed and hers was originally uncapped...very nice...but then they changed it, presumably due to very high interest rates that were costing them too much. So the person you know was / is better off and sounds pretty happy to be in that DB scheme. Good luck to them.

The reason it costs the firm more is that DB pensions are generally much better than DC pensions due to the guaranteed benefits for life.

More expensive because the company pays more in than most DC schemes. "much better"? that's subjective and a benefit for life may not be much better if it's a fixed (in real terms), small amount. There are plenty of millionaires that made guaranteed benefits for life..and their children's lives, in other ways.

It is not hard to invest £60k and return 3.8% a year, (approx the £2.3k they are paying) averaged over 10-20 years and still have the original 60k as well, to cash in if ever you wanted to. And anything above that 3.8%, with compound gains, dividends and interest, would grow that original 60k very nicely as well. The SIPP also has a death benefit payout. You can leave it to your spouse or children...or charity...Battersea dogs home...etc. This particular pension has no death benefit, according to their pension advice pack.,,and would leave nothing for the children. It does not seem better to me. We would like to transfer out... and into the SIPP wrapper. 

But it’s NOT 3.8% that you are talking about here. It’s 3.8% + index linking (subject to the 5% limit). 

I’m sorry that you think I am patronising, but you don’t seem to understand that you need to make some effort to compare the CETV with the value of the benefits being given up.  

NoMore

You know the method and likely cost you need to go through to transfer the db pension so either do it or not. I really dont see why you keep railing against everything and everybody on here. It’s not getting you any closer to achieving your desire.