Defined benefit pension.

bowiesmam

I can see similar posts but wanted to get people’s views on our current situation. 

My husband is eligible to take his DB pension this month. We have obtained a Transfer value and it 128,000. The quote from the scheme is 20,000 lump and 380 a month for life.

I am 12 years younger than my husband and way off retirement. My husband unofficially retired 10 years ago to care for our daughter as she has additional needs. We foresee that she potentially will need support for her lifetime. 

We planned to transfer out of the DB scheme and use the money to purchase an addional property which we would use as an airbnb for addional income in the short term but would also serve as a failsafe if our daughter needs a home of her own at a later date. 

We have spoken with pension wise who’s initial free assessment stated it was unsuitable to transfer the pension and if we wanted to seek further advice the fee was £3,000 but the outcome could still be to advise not to transfer. 

We don’t plan to squander the money. We have plans to reinvest. We understand all the risks. What is the l chance of them declining the transfer and us being stuck with a 3k payout for nothing? 

daveyjp

Wrong end of the telecope approach. 

Your ultimate objective is to purchase a second property, this can be done without cashing in your pension (which will be expensive and difficult to do) so spend time achieving your objective with the resources you have 'in the bank'.

DRS1

Can I suggest that you look at the information on the DB Scheme's website (or in the member's explanatory booklet) about pensions for children after your OH dies.  Usually they stop when the child reaches 18 (or a bit later if they are in full time education) but there may be some provision in there for children who are incapacitated.  I don't know if his scheme has such a provision or if it would apply to your child but it could be something which comes in very handy later.

The chances of you getting positive advice to transfer are very low.  If you have a read of other threads on here you will see there is a way to go ahead with the transfer even in the face of negative advice.  @Marcon explains it somewhere.

Having said that it is a really bad idea to take a transfer from a DB scheme - some of us are very jealous of those who belong to such a scheme.  Most employers closed them down years ago because they are so very expensive.

bowiesmam

daveyjp said:

Wrong end of the telecope approach. 

Your ultimate objective is to purchase a second property, this can be done without cashing in your pension (which will be expensive and difficult to do) so spend time achieving your objective with the resources you have 'in the bank

We don’t have anything in the bank. We currently have no disposable income. I know you can’t rely on inheritance but we will possibly one day have a very healthy bank balance and not need to rely on a pension. We could do with the extra income now and having already run a successful Airbnb (we live in a high tourist area) we know the potential income would far outweigh the monthly income from the pension. Approximately £800 a month more. 

Albermarle

The chance of a positive recommendation is around zero, and would normally cost a lot more than £3K .
The arguments about a possible inheritance and running an airbnb that may or may not be successful just would not wash . Also no other pension provision or savings etc

He would still be able to transfer out, but the vast majority of other pension providers would not accept the transfer.

In any case as far as I know if he is within 12 months of the Normal Retirement Age of the DB pension, he can not transfer out anyway. It needs checking with the scheme rules before you go any further.

bowiesmam

Albermarle said:

The chance of a positive recommendation is around zero, and would normally cost a lot more than £3K .

He would still be able to transfer out, but the vast majority of other pension providers would not accept the transfer.

In any case as far as I know if he is within 12 months of the Normal Retirement Age of the DB pension, he can not transfer out anyway. It needs checking with the scheme rules before you go any further.

We know that it would probably be a negative recommendation and do fully understand all the risks. We know we would then become an insistent client. At that point can we still request the transfer regardless? Is there a point where we would just not be able to access it at all. 

leosayer

With respect, I don't think you do understand the risks, what you will be giving up or the tax implications of what you propose.

There are regulatory guidelines in place that make it next to impossible to enact DB transfers for this very reason, meaning that even people that do understand everything are still unlikely to be able to transfer.

I wish you luck but I suggest you abandon this idea.

DRS1

bowiesmam said:

Albermarle said:

The chance of a positive recommendation is around zero, and would normally cost a lot more than £3K .

He would still be able to transfer out, but the vast majority of other pension providers would not accept the transfer.

In any case as far as I know if he is within 12 months of the Normal Retirement Age of the DB pension, he can not transfer out anyway. It needs checking with the scheme rules before you go any further.

We know that it would probably be a negative recommendation and do fully understand all the risks. We know we would then become an insistent client. At that point can we still request the transfer regardless? Is there a point where we would just not be able to access it at all. 

I think @Albemarle answered your question in the post you are quoting.

Cobbler_tone

OP...the site is full of people who almost get personally offended at the hint that someone may wish to 'cash in' a DB pension, almost like it is their money. Check if the scheme will fund the advice at a heavily reduced rate, unlikely as a deferred member but worth checking. You'll do well to get the advice needed for £3k.
The CETV's are poor but if they are current values the exchange rate isn't bad. 
No options to use the £20k as a deposit and the DB to cover a mortgage on a small B&B?

All the best.

Lowtrawler

bowiesmam

As others have said, you may struggle to get advice for as little as £3,000 and the advice will almost certainly be against making the transfer.

As an insistent customer, you would need to find a stakeholder pension you can open as no other type of pension will allow a transfer against advice. Not many stakeholder pensions are open to new customers.

As Albermarle has said, if he is within 12 months of retirement, the transfer may not even be possible. You will need to check the scheme rules. While checking those rules, you should also check if the scheme contains any beneficial provisions for your child, as per DR1's post.

If the transfer value and benefit quotes you have used are current, it is not a bad offer to transfer but you need to start by checking the scheme rules, find an advisor with low fees, open a stakeholder pension (if you can find one) and be prepared for months of paperwork.

Marcon

DRS1 said:

Can I suggest that you look at the information on the DB Scheme's website (or in the member's explanatory booklet) about pensions for children after your OH dies.  Usually they stop when the child reaches 18 (or a bit later if they are in full time education) but there may be some provision in there for children who are incapacitated.  I don't know if his scheme has such a provision or if it would apply to your child but it could be something which comes in very handy later.

It certainly could and needs checking. Quite a lot of DB schemes have such a provision but it often doesn't appear in the scheme booklet or other information relating to the scheme.

Albermarle said:

In any case as far as I know if he is within 12 months of the Normal Retirement Age of the DB pension, he can not transfer out anyway. It needs checking with the scheme rules before you go any further.

There is no statutory right to a transfer out once a member is within 12 months of getting to NRA, but plenty of schemes permit non-statutory transfers. As you say, it needs to be checked direct with the scheme.