Do I need an IFA for pension advice?

daydream007

I've got a BT (mostly DB) pension that's due to (unless I stop it) start paying out 20K PA this December (when I'm 60). I'm also still working full time for TfL that has a very good DB scheme. I expect to stay another two years at which time the TfL pension will pay out approx 12K PA. I've got 7K of AVS with BT scheme and £25K with TfL's. 

My question is - since I've been told Pensionwise can't/won't help with DB schemes - should I look for an IFA for advice on my imminent additional (pension) income on whether to take or pause it (it doesn't seem to do much from December onwards in terms of growth).

Thanks. 

QrizB

I don't think you're going to need an IFA, although there's nothing stopping you from approaching one if you wish.

At what age do you plan to retire and what income do you expect to need in retirement?

You'll have your BT pension, your TfL pension and your State Pension? Any other retirement income?

Have you checked your state pension forecast?

https://www.gov.uk/check-state-pension

jimi_man

If it’s a DB pension then there isn’t a lot of useful advice an IFA will give you that you can’t work out for yourself. You have £32k of guaranteed income every year from 60 and depending on your needs that seems a good position to be in. 

If you are going to continue to work then you can take the pension and anything over £50k you can put in a SIPP. But you need to establish what happens to your pension (s) if you don’t take them. Why not post the essential details on here and there are many knowledgeable people who can give some input. 

But realistically you don’t seem to have a complicated situation so personally I can’t see the need for an IFA. 

Marcon

daydream007 said:

I've got a BT (mostly DB) pension that's due to (unless I stop it) start paying out 20K PA this December (when I'm 60). I'm also still working full time for TfL that has a very good DB scheme. I expect to stay another two years at which time the TfL pension will pay out approx 12K PA. I've got 7K of AVS with BT scheme and £25K with TfL's. 

My question is - since I've been told Pensionwise can't/won't help with DB schemes - should I look for an IFA for advice on my imminent additional (pension) income on whether to take or pause it (it doesn't seem to do much from December onwards in terms of growth).

Thanks. 

If you can't find a definite answer in the scheme literature or its online information, ask the scheme to confirm exactly what it 'does' from December onwards. You don't need an IFA to ask on your behalf!

Once you've clarified the facts, it shouldn't be that hard to make your own decisions. There isn't going to much an IFA can add unless you need help with your overall financial planning.

Triumph13

A quick google suggests that the BT scheme doesn't allow for late retirement.  If you don't take the income from the scheme's normal retirement age, the income just piles up and gets paid as a lump sum when you do retire - which is very unlikely to be tax efficient.

It's therefore a no-brainer to take the income from this Dec.  The only question is what to do with it.  as jimi_man suggests, the obvious thing is to contribute enough to a pension to at least avoid higher rate tax.  An even better bet though would be to increase your AVCs in the TFL scheme as you can take all of this out tax free when you retire, leveraging the DB part (max tax free = 25% x (AVC + 20 x DB income).

So in your shoes, unless I needed access to the money now, I'd just take the pension and up my AVCs by £20k gross pa.  That means no change to your income for now, and the BT pension until you retire piles up tax free.

daydream007

Marcon said:

daydream007 said:

I've got a BT (mostly DB) pension that's due to (unless I stop it) start paying out 20K PA this December (when I'm 60). I'm also still working full time for TfL that has a very good DB scheme. I expect to stay another two years at which time the TfL pension will pay out approx 12K PA. I've got 7K of AVS with BT scheme and £25K with TfL's. 

My question is - since I've been told Pensionwise can't/won't help with DB schemes - should I look for an IFA for advice on my imminent additional (pension) income on whether to take or pause it (it doesn't seem to do much from December onwards in terms of growth).

Thanks. 

If you can't find a definite answer in the scheme literature or its online information, ask the scheme to confirm exactly what it 'does' from December onwards. You don't need an IFA to ask on your behalf!

Once you've clarified the facts, it shouldn't be that hard to make your own decisions. There isn't going to much an IFA can add unless you need help with your overall financial planning.

Thanks for this - all very helpful (just like the others who have taken time out to help). I've used the BT pension planner to check the forecast and while it's been good to date, the yearly amounts don't seem to go up by more than a few hundred after my birthday (in December). 

daydream007

Thanks for your response, QrizB (I can't respond directly - presumably because I'm 'new') - it makes sense once you see (someone else has written it) in black and white.

I'm thinking to carry on working until 62ish, so another couple of years yet, and five years (fingers crossed) before the (full) state pension kicks in. 

I'm lucky enough to have a couple of rental properties ticking away, but the $M question is (as I'm sure asked by many others) how much do I really need in retirement. As my old mum used to say; 'you're a long time dead', so I guess it's about biting the bullet and getting used to a new lifestyle.

Thanks again.

GrumpyDil

Have a good look on the BT pensions website. There should be information on there about your options once you've reached the scheme retirement age and an explanation on how the pension will increase if deferred.

I have a small DB pension, £3000 ish a year, due to pay out in December as well which has deferred payment factors on the website. My plan is to let the pension go into payment and pay the money into a DC pension.

daydream007

Triumph13 said:

A quick google suggests that the BT scheme doesn't allow for late retirement.  If you don't take the income from the scheme's normal retirement age, the income just piles up and gets paid as a lump sum when you do retire - which is very unlikely to be tax efficient.

It's therefore a no-brainer to take the income from this Dec.  The only question is what to do with it.  as jimi_man suggests, the obvious thing is to contribute enough to a pension to at least avoid higher rate tax.  An even better bet though would be to increase your AVCs in the TFL scheme as you can take all of this out tax free when you retire, leveraging the DB part (max tax free = 25% x (AVC + 20 x DB income).

So in your shoes, unless I needed access to the money now, I'd just take the pension and up my AVCs by £20k gross pa.  That means no change to your income for now, and the BT pension until you retire piles up tax free.

I think you've provided some sage advice ref AVCs. I'm already in the higher tax rate and (thankfully or otherwise) won't slip into the 45% rate even with the BT pension and rental income. That said, it makes sense for me to up my AVC from the current £400 PM I contribute (my salary is a scratch under 70K) now. Lots of for for thought, thank you. 

daydream007

GrumpyDil said:

Have a good look on the BT pensions website. There should be information on there about your options once you've reached the scheme retirement age and an explanation on how the pension will increase if deferred.

I have a small DB pension, £3000 ish a year, due to pay out in December as well which has deferred payment factors on the website. My plan is to let the pension go into payment and pay the money into a DC pension.

Thanks for this. While the TfL pension site includes lots of info on deferring (an 8% bonus!), the same doesn't apply to the BT pension as I believe it's more geared up for people who still work there (mine was part DB part DC - they changed it a couple of years before I left). 

I guess it's whether I can make some gains by paying from the BT pension into a DC pension for a couple of years (until I do actually retire).

Albermarle

but the $M question is (as I'm sure asked by many others) how much do I really need in retirement. As my old mum used to say; 'you're a long time dead', so I guess it's about biting the bullet and getting used to a new lifestyle.

This topic is discussed regularly on the forum, in addition to the more technical issues about pensions etc.
Maybe worth keeping an eye on the forum from time to time .