Final salary pension or property?

UrbanAchiever

I have two rental properties and can't wait to sell them when I retire in 3 to 5 years time.

Just a couple of weeks ago while I was on my hands and knees fixing a toilet and doing a full clean after one of my tenants moved out, I couldn't help but think how much simpler life would be if my property equity was invested in the stock market with someone else managing the businesses and dealing with the people issues.

Do you really want to take all that on instead of getting a paycheck each month from your DB pension for doing nothing?

FIREDreamer

dunstonh said:

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 should 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.

@dunstonh I presume “should” in sentence 2 should have read ”shouldn’t”?

enthusiasticsaver

It is not a choice I would make mainly because of the tax disadvantages of taking it all out in one go.  If it is a DB pension you will need to pay for advice.  A property may not necessarily increase in value and you run the risk of tenants who do not pay or who damage the property or of empty periods between tenancies. You also have to pay tax on the rent and maintain the property in the meantime. 

A pension continues to grow while you are drawing on it. No need to maintain it or worry about it not paying out and you can draw it down in a tax efficient manner. Obviously if it is a DB scheme the pot will not grow but normally you get inflation proof increases each year. Guaranteed safe income trumps property speculation for me every time particularly as the government does not seem to encourage BTL or second home ownership any more. 

Pat38493

Marcon said:

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...

That said, why on earth would someone insist on going ahead if a trained financial adviser has said it's not a good idea?

The only thing I can think of is if the person is claiming that they want to spend the money up front in the early years, and they are happy to risk living on other guaranteed income sources later on if the money runs out, even if they might end up with a substantially lower spending power in later years.  Maybe in this situation an IFA is still obliged to advise against it?