Last minute indecision about taking defined benefits pension

dunstonh

Thank you for your reply p00hsticks. I'd have to check with the scheme managers re transferring the pension out now - I actually got the transfer value quote in July 2022 so do you think it will have dropped significantly in that time? 

They are currently in the ballpark of half what they were in late 2021.   So, your could be about 35-40% lower.

Also I have started to go through the other threads but haven't found anything about not being able to transfer to my HL account - if I'm not allowed to do that what do I have to do?

HL won't allow it directly. 

Ordinary_Yet_Unique

In my opinion your initial decision was probably the most appropriate one. 

Carefulspender1

Marcon said:

Carefulspender1 said:

cfw1994 said:

It *feels* to me like your original decision is probably the right one.  DB schemes usually rise well with inflation (maybe check).

Also….having signed things, it *might* well be too late to stop the wheels of the pension company from grinding through 🤷‍♂️

FYI, my MIL had COPD from the early 1970s….& only passed away a couple of years ago, in her mid-80s….take it easy, & good luck 👍

Thank you for your thoughtful comment cfw1994, it's really appreciated.  I think I might be having a last minute wobble of indecision because of what a couple of people have said to me. I know that once the money goes through I can't change it so I thought I better just get some sort of affirmation or otherwise on what I'm doing.

The monthly payments go up by 3% a year as it stands, so just under inflation...maybe it would be a good idea to find out if I can change things now as I'll be worrying unnecessarily if I can't change my decision anyway.🙄

It sounds like your MIL looked after herself well - I hope I can do the same! 😊

Those famous '....a couple of people...' - we all have 'friends' like that, and although frequently well meaning, they are equally frequently hopelessly ill informed, or just banging on about their own preferences.

Find out the facts:

1. can you stop your pension coming into payment next month
2. are you entitled to a CETV (Cash Equivalent Transfer Value) if you are very close to your scheme's Normal Retirement Age
3. if 'yes' to both the above, can you manage without any income from this scheme for some months to come? If you cancel the current application for payment, you are likely to go back to the bottom of the queue...and if you decide to try and seek advice about transferring, it could be early next year before you've worked through that process.

Thanks Marcon for your reply - I've spoken to the administrator who says I still have time to stop it and yes I am entitled to do a transfer but you are absolutely right about delays. They said they have to get the transfer quote from an actuary and that can be 3 months. The more I'm pondering this with the information I'm getting here the more I can see why I made the initial choice I did in the first place. 

Carefulspender1

p00hsticks said:

Carefulspender1 said:

p00hsticks said:

Are you sure that that transfer is still an option ? As you are within  a year of the normal retirement age, I don't think the pension scheme is obligated to permit a transfer out. 

Also when did you get that £65k value ? 
If it was a while ago it may have dropped significantly since then. 

If it hasn't dropped to below £30k then you will need to pay for financial advice before attempting a transfer, which will cost many £1000's, and unless they advise the transfer you wont be able to transfer directly to your HL account - there have been multiple threads regarding transferring out of a DB pension on this board. 

Thank you for your reply p00hsticks. I'd have to check with the scheme managers re transferring the pension out now - I actually got the transfer value quote in July 2022 so do you think it will have dropped significantly in that time? Also I have started to go through the other threads but haven't found anything about not being able to transfer to my HL account - if I'm not allowed to do that what do I have to do? Thank you for taking the time to look at this. I find it all really confusing.

Yes, the CETV (Cash Equivalent Transfer Value) is likely to have dropped significantly since 2022.

If it is still over £30k then legislation forces you to seek advice from a Financial Adviser before transferring - many are now reluctant to take on this sort of business as it is a risky area and they will charge several thousands for it.

If their advice is that it is better for you NOT to transfer out, then the vast majority of pension schemes will not accept a transfer in against such advice. You can become an 'insistent client' and demand a transfer out, but I believe there is only one type of pension that you can set up that is legally obligated to accept a transfer in against advice. 

Thanks again for your reply - looking at other responses as well it doesn't look like a) I'll get anywhere near the amount the transfer was worth back in 2022 and b) HL wont allow the direct transfer in. You and other responders on here have definitely set my mind at ease so thank you for taking the time out to reply - it's best I stick with my initial decision.

Carefulspender1

molerat said:

Carefulspender1 said:

 With regards to your final paragraph, I'm sorry but I don't understand. Do you mean that I use some of the lump sum from the DB pension to contribute to a SIPP and then draw it down again a year later?

Yes.  A well known wheeze.  Pay £2880 into a SIPP.  The taxman adds £720 to that and you withdraw £3600, £900 tax free and £2700 taxable.  As a basic rate taxpayer you end up with £3060 in your bank account so £180 up on the deal, way better than a savings account.  Even better if a non tax payer. Rinse and repeat every year until you are 75, the first year involves a bit of admin but from then on takes no more than around half an hour.

Thanks for the info here molerat - it's good to know, as I assume I could do this with a little of the lump sum I'll get from my 25% tax free payment from the DB pension.

Carefulspender1

dunstonh said:

Thank you for your reply p00hsticks. I'd have to check with the scheme managers re transferring the pension out now - I actually got the transfer value quote in July 2022 so do you think it will have dropped significantly in that time? 

They are currently in the ballpark of half what they were in late 2021.   So, your could be about 35-40% lower.

Also I have started to go through the other threads but haven't found anything about not being able to transfer to my HL account - if I'm not allowed to do that what do I have to do?

HL won't allow it directly. 

Thank you for replying, it's very much appreciated - this is all I need to know as I would have had to wait 3months to get a new transfer value quote and if it was much less, I would just go ahead with my initial decision. So you have really saved me time and money. Thank you again!!

Carefulspender1

Ordinary_Yet_Unique said:

In my opinion your initial decision was probably the most appropriate one. 

Yes it certainly looks like it! Thanks.

Carefulspender1

@dunstonh @p00hsticks @Marcon @Sarahspangles @molerat @Ordinary_Yet_Unique @cfw1994    I just want to say thank you to everyone who has replied here - I was having a real wobble about my decision and you have all set my mind at ease that I have already made the right decision. So thank you to all of you for taking time out of your day to answer my questions

Marcon

...and when your friends insist on telling you that you might have been better transferring, it's time for a sweet smile (fuelled by the knowledge they are wrong) and saying that sticking with a guaranteed income was the best course of action for you - and I'm sure from what you've said it is!

Happy retirement.

Carefulspender1

Marcon said:

...and when your friends insist on telling you that you might have been better transferring, it's time for a sweet smile (fuelled by the knowledge they are wrong) and saying that sticking with a guaranteed income was the best course of action for you - and I'm sure from what you've said it is!

Happy retirement.

Haha, thank you! Sound advice duly noted!! 😂