Final salary pension or property?

Marcon

daveyjp said:

You won't be able to cash in your DB pension, but that doesn't mean you can't invest in a property as you have a secure income for life on retirement.

Why not? OP can if they first transfer it to a scheme which permits flexible access.

GDB2222

Buzzardballs said:

Ive been in property management my whole career, so know quite a bit about the mechanics of property and repairs. I have a sizeable final salary pension fund which I can access in 6 years or partly access now with reduced annual pension. I am considering cashing in the whole lot (I know about the tax) and buying a buy to let property which on paper at least would net me the same annual income as my pension, whilst maintaining the valuable asset, which will increase in value. Is this a good or bad idea!?

If you want sensible advice you should say what the figures are. Otherwise, you are just getting knee jerk responses, eg final salary pensions are a good thing and they are not making them any more. 

By the way, I am surprised that the figures work well given the tax aspect. If it is a substantial pot, your tax will be about a third. Essentially, by cashing in in one go you get 25% tax free but most of the balance is taxed at 45%. 

Brie

Marcon said:

daveyjp said:

You won't be able to cash in your DB pension, but that doesn't mean you can't invest in a property as you have a secure income for life on retirement.

Why not? OP can if they first transfer it to a scheme which permits flexible access.

Cashing in a DB scheme is not possible as far as I'm aware unless there are extreme circumstances - such as documented proof of a very limited life expectancy, say 6 months.  

Transferring a DB value to a DC is theoretically possible if one pays to get an IFA's advice.  The advice can cost, so I've heard, up to £10k and the conclusion from the IFA is almost certain to be "no, it's not a good idea".  So money wasted and no further ahead.  A DB scheme has too much security and value compared to the DC schemes subject to the vagarities of financial markets so an attempt to transfer it will fail at that first hurdle.  

dunstonh

The OP hasnt returned to clarify any points but just to clear up some of the replies.

1 - The DB pension cannot be cashed in
2 - A DB pension that is not an unfunded public sector one can be transferred to a DC scheme, and after transferring, the DC scheme can be cashed in. 
3—You can still transfer a pension if an adviser says it is not the best advice (in this scenario, you cannot see an adviser saying it is the best advice as it sounds like a bonkers idea). You may have to use a stakeholder pension to do it though.
4 - The op has said it is sizeable.   That needs context but they are in property management so their train of thought is likely to be in the £500k+ ballpark.   It's unlikely someone knowledgeable about property investing  would refer to the CETV as sizeable if it was much less than that.    So, a 45% tax is almost certainly in play. 

As always, the OP clarifying things would help.

Marcon

Brie said:

Marcon said:

daveyjp said:

You won't be able to cash in your DB pension, but that doesn't mean you can't invest in a property as you have a secure income for life on retirement.

Why not? OP can if they first transfer it to a scheme which permits flexible access.

Cashing in a DB scheme is not possible as far as I'm aware unless there are extreme circumstances - such as documented proof of a very limited life expectancy, say 6 months.  

Transferring a DB value to a DC is theoretically possible if one pays to get an IFA's advice.  The advice can cost, so I've heard, up to £10k and the conclusion from the IFA is almost certain to be "no, it's not a good idea".  So money wasted and no further ahead.  

Which is why I've said - and you've quoted me saying it - that they would need to transfer out.

For the umpteenth time, the requirement is for a DB member to receive advice. They don't have to follow it. A stakeholder pension has to accept transfers from any UK scheme, and it is still possible for an individual to open a stakeholder pension for themself if they don't have one.

This isn't news. I was posting about it four years ago, as were others (eg Brynsam in this thread: https://forums.moneysavingexpert.com/discussion/6211812/opinions-on-cetv/p1) - shot down because 'nobody here reported having done it successfully' and those who'd claimed it wasn't possible couldn't bear to be wrong.

Actually I don't think anyone here reported even trying to do it - nor is this forum the arbiter of what pensions legislation applies at any one time!

dunstonh said:

2 - A DB pension that is not an unfunded public sector one can be transferred to a DC scheme, and after transferring, the DC scheme can be cashed in. 
3—You can still transfer a pension if an adviser says it is not the best advice (in this scenario, you cannot see an adviser saying it is the best advice as it sounds like a bonkers idea). You may have to use a stakeholder pension to do it though.

Could we please finally put this nonsense about financial advisers having the final say to bed once and for all?

Anyone who has paid for advice, got a recommendation that they don't transfer, and been told by the adviser that means they can't transfer should be making a complaint and asking for their money back - not to mention a claim if the transfer value has dropped when they try again...

dunstonh

Could we please finally put this nonsense about financial advisers having the final say to bed once and for all?
Anyone who has paid for advice, got a recommendation that they don't transfer, and been told by the adviser that means they can't transfer should be making a complaint and asking for their money back - not to mention a claim if the transfer value has dropped when they try again...

That is not quite correct.   The adviser is allowed to refuse to facilitate the transfer via them.  However, they are required to sign the declaration that advice has been given.

FIREDreamer

dunstonh said:

Could we please finally put this nonsense about financial advisers having the final say to bed once and for all?
Anyone who has paid for advice, got a recommendation that they don't transfer, and been told by the adviser that means they can't transfer should be making a complaint and asking for their money back - not to mention a claim if the transfer value has dropped when they try again...

That is not quite correct.   The adviser is allowed to refuse to facilitate the transfer via them.  However, they are required to sign the declaration that advice has been given.

If the advice is “No” and the client transfers regardless, the adviser can still be on the hook for compensation if the pension pot of that individual goes pear shaped. Seems very unfair to me.

dunstonh

FIREDreamer said:

dunstonh said:

Could we please finally put this nonsense about financial advisers having the final say to bed once and for all?
Anyone who has paid for advice, got a recommendation that they don't transfer, and been told by the adviser that means they can't transfer should be making a complaint and asking for their money back - not to mention a claim if the transfer value has dropped when they try again...

That is not quite correct.   The adviser is allowed to refuse to facilitate the transfer via them.  However, they are required to sign the declaration that advice has been given.

If the advice is “No” and the client transfers regardless, the adviser can still be on the hook for compensation if the pension pot of that individual goes pear shaped. Seems very unfair to me.

In theory, not any more.  However, the adviser is expected to make it abundantly clear.   Saying its not suitable is not enough.  It needs lots of adjectives added to emphasise it.

If the adviser carries out the transfer, then it puts them at higher risk (e.g. when the person gets buyer remorse or tapped up by a claims company and told to lie to try and get compensation).   However, if the adviser did not carry out the transaction, then they really have nothing to worry about.    

FIREDreamer

dunstonh said:

FIREDreamer said:

dunstonh said:

Could we please finally put this nonsense about financial advisers having the final say to bed once and for all?
Anyone who has paid for advice, got a recommendation that they don't transfer, and been told by the adviser that means they can't transfer should be making a complaint and asking for their money back - not to mention a claim if the transfer value has dropped when they try again...

That is not quite correct.   The adviser is allowed to refuse to facilitate the transfer via them.  However, they are required to sign the declaration that advice has been given.

If the advice is “No” and the client transfers regardless, the adviser can still be on the hook for compensation if the pension pot of that individual goes pear shaped. Seems very unfair to me.

In theory, not any more.  However, the adviser is expected to make it abundantly clear.   Saying its not suitable is not enough.  It needs lots of adjectives added to emphasise it.

If the adviser carries out the transfer, then it puts them at higher risk (e.g. when the person gets buyer remorse or tapped up by a claims company and told to lie to try and get compensation).   However, if the adviser did not carry out the transaction, then they really have nothing to worry about.    

I’m sure I have seen ombudsman decisions where the advisor had to compensate. I may be wrong though.

dunstonh

FIREDreamer said:

dunstonh said:

FIREDreamer said:

dunstonh said:

Could we please finally put this nonsense about financial advisers having the final say to bed once and for all?
Anyone who has paid for advice, got a recommendation that they don't transfer, and been told by the adviser that means they can't transfer should be making a complaint and asking for their money back - not to mention a claim if the transfer value has dropped when they try again...

That is not quite correct.   The adviser is allowed to refuse to facilitate the transfer via them.  However, they are required to sign the declaration that advice has been given.

If the advice is “No” and the client transfers regardless, the adviser can still be on the hook for compensation if the pension pot of that individual goes pear shaped. Seems very unfair to me.

In theory, not any more.  However, the adviser is expected to make it abundantly clear.   Saying its not suitable is not enough.  It needs lots of adjectives added to emphasise it.

If the adviser carries out the transfer, then it puts them at higher risk (e.g. when the person gets buyer remorse or tapped up by a claims company and told to lie to try and get compensation).   However, if the adviser did not carry out the transaction, then they really have nothing to worry about.    

I’m sure I have seen ombudsman decisions where the advisor had to compensate. I may be wrong though.

They did.  They felt the adviser didn't emphasise the fact they shouldn't do it.    Although IIRC later information came out that the consumer either couldn't read or couldn't read well and reading between the lines, they were taken advantage of.

edit to correct typo.  Thanks Firedreamer.