Annuity or take the CETV

Linton

Marcon said:

murphy10fs said:

If anything we to happen to me in the next 10 years, the pot would still be there for partner and children.

...and if you aren't married, subject to IHT after the expected changes come in from 2027.

murphy10fs said:

What do people think, annuity or CETV? What would you do?

But nobody here IS you, so what anyone here would do is totally irrelevant.

Have a browse on this forum and read some of threads about transferring out of a DB scheme.

SVaz said:

Has anyone *ever* come back on here who has managed to transfer their DB?
I remember plenty of talk of transferring to a Stakeholder over the last few years but I can’t remember anyone actually doing it. 

Just became people haven't posted here doesn't mean it isn't being done, and I've certainly seen it happen more than once. The situation is unchanged: stakeholder pensions must accept any transfer from a UK registered pension scheme. If the transfer value is £30K+ and the scheme has safeguarded benefits, then advice is mandatory before the ceding scheme can pay over the transfer.

If a company is happy to accept insistent DB transfers why dont they advertise the fact?  Surely there is a highly lucrative business opportunity here?  Why keep it a secret?

Rather more likely is that if a significant number of people applied the option would soon be closed off.

flaneurs_lobster

Linton said:

If a company is happy to accept insistent DB transfers why dont they advertise the fact?  Surely there is a highly lucrative business opportunity here?  Why keep it a secret?

Rather more likely is that if a significant number of people applied the option would soon be closed off.

A guess - there's little or no profit to be had.

Marcon

Linton said:

Marcon said:

murphy10fs said:

If anything we to happen to me in the next 10 years, the pot would still be there for partner and children.

...and if you aren't married, subject to IHT after the expected changes come in from 2027.

murphy10fs said:

What do people think, annuity or CETV? What would you do?

But nobody here IS you, so what anyone here would do is totally irrelevant.

Have a browse on this forum and read some of threads about transferring out of a DB scheme.

SVaz said:

Has anyone *ever* come back on here who has managed to transfer their DB?
I remember plenty of talk of transferring to a Stakeholder over the last few years but I can’t remember anyone actually doing it. 

Just became people haven't posted here doesn't mean it isn't being done, and I've certainly seen it happen more than once. The situation is unchanged: stakeholder pensions must accept any transfer from a UK registered pension scheme. If the transfer value is £30K+ and the scheme has safeguarded benefits, then advice is mandatory before the ceding scheme can pay over the transfer.

If a company is happy to accept insistent DB transfers why dont they advertise the fact?  Surely there is a highly lucrative business opportunity here?  Why keep it a secret?

Rather more likely is that if a significant number of people applied the option would soon be closed off.

A sentiment a lot of people keep trotting out on this forum, but no sign of it happening yet...maybe stakeholders continue to be offered because they are a good option for a certain group of people (especially those who can only afford to make small payments at irregular intervals) and that's where much of the custom is coming from - enough to make it worthwhile for the provider.

No reputable insurance company is going to 'advertise' as you suggest for two reasons:

1. what sort of message does it send consumers (and regulators) to read something along the lines of 'have you been advised it's not in your interests to transfer out of your DB scheme? Come to us, we can help you get round legislation designed to protect you. You can replace guaranteed benefits with risky ones by coming to us!'; and
2. why deliberately make themselves a stepping stone for an onward transfer to a SIPP or other 'preferred' provider? A shedload of work for no commercial return.

Marcon

chuffinnora said:

Marcon said:

chuffinnora said:

Also if you did manage to take the CETV you'd only benefit by £103k as it stands today. Would that be enough to replicate £4.5k indexed linked income and provisions for your spouse if you die early? 

Where does the £103K come from? Transfer advice is expensive, but not £24K expensive!

The CETV is £127K and that's the amount which would be transferred, assuming OP and their adviser manage to plough through the whole process before the 3 month guarantee period expires.

Because as it stands he gets £24k LS. So with a CETV of £127k, he's really only getting 103 more than now to cover the equivalent benefit in an annuity or drawdown. Yeah the full £127k can be used but then the £24k LS is lost. Either way not a good deal. 

If the transfer proceeds OP could take 25% of it as tax free cash, so hardly 'lost' - it would only leave slightly less with which to buy(!) matching benefits.

It's not clear if the figures quoted by OP are the pension at the time they left the scheme, the reduced pension they'd get if they took it 'today' (ie early) or the pension they'd get at the scheme's normal retirement date. Whatever the answer to that, I completely agree with you it's not looking like a good deal.

murphy10fs

Marcon said:

chuffinnora said:

Marcon said:

chuffinnora said:

Also if you did manage to take the CETV you'd only benefit by £103k as it stands today. Would that be enough to replicate £4.5k indexed linked income and provisions for your spouse if you die early? 

Where does the £103K come from? Transfer advice is expensive, but not £24K expensive!

The CETV is £127K and that's the amount which would be transferred, assuming OP and their adviser manage to plough through the whole process before the 3 month guarantee period expires.

Because as it stands he gets £24k LS. So with a CETV of £127k, he's really only getting 103 more than now to cover the equivalent benefit in an annuity or drawdown. Yeah the full £127k can be used but then the £24k LS is lost. Either way not a good deal. 

If the transfer proceeds OP could take 25% of it as tax free cash, so hardly 'lost' - it would only leave slightly less with which to buy(!) matching benefits.

It's not clear if the figures quoted by OP are the pension at the time they left the scheme, the reduced pension they'd get if they took it 'today' (ie early) or the pension they'd get at the scheme's normal retirement date. Whatever the answer to that, I completely agree with you it's not looking like a good deal.

The figures are today's figures, the cevt is guaranteed for the next 3 months, and the pension quote is as if I took it now (early) at 56. Thank you for your response.

Isthisforreal99

At age 56 that makes considering a transfer a rather unsensible thing.

A man currently 56 will live, on average, to 84 and a woman 87.

dunstonh

A sentiment a lot of people keep trotting out on this forum, but no sign of it happening yet...maybe stakeholders continue to be offered because they are a good option for a certain group of people (especially those who can only afford to make small payments at irregular intervals) and that's where much of the custom is coming from - enough to make it worthwhile for the provider.

It has largely happened already.   From 2001, the vast majority of new businesses went into stakeholder pensions and virtually all providers active in pensions had a stakeholder pension.

A quick check on Defaqto, shows just 3 stakeholder pensions are open for new business at this time.    One is only available via a tied salesforce. So, wouldn't be available for DB transfers.  So, just two are available for DIY.

Both of those are perceived to be on borrowed time because they sit on legacy systems.   However, one of them is quite unique in being a provider that keeps its fingers in every pot when others have pulled out.  So, it may become last man standing long after the rest of gone.

No reputable insurance company is going to 'advertise' as you suggest for two reasons:

1. what sort of message does it send consumers (and regulators) to read something along the lines of 'have you been advised it's not in your interests to transfer out of your DB scheme? Come to us, we can help you get round legislation designed to protect you. You can replace guaranteed benefits with risky ones by coming to us!'; and
2. why deliberately make themselves a stepping stone for an onward transfer to a SIPP or other 'preferred' provider? A shedload of work for no commercial return.

In 2019 (onwards), the FCA diverted 25% of the levy costs from intermediaries to providers, as it recognised that providers had benefited and perhaps promoted their products as a destination for DB transfers and had to take a share of the responsibility.

One provider in particular has an anecdotal reputation for reaping significant value by becoming the default destination for DB transfers by several firms that have faced regulatory action.

Linton

Marcon said:

Linton said:

Marcon said:

murphy10fs said:

If anything we to happen to me in the next 10 years, the pot would still be there for partner and children.

...and if you aren't married, subject to IHT after the expected changes come in from 2027.

murphy10fs said:

What do people think, annuity or CETV? What would you do?

But nobody here IS you, so what anyone here would do is totally irrelevant.

Have a browse on this forum and read some of threads about transferring out of a DB scheme.

SVaz said:

Has anyone *ever* come back on here who has managed to transfer their DB?
I remember plenty of talk of transferring to a Stakeholder over the last few years but I can’t remember anyone actually doing it. 

Just became people haven't posted here doesn't mean it isn't being done, and I've certainly seen it happen more than once. The situation is unchanged: stakeholder pensions must accept any transfer from a UK registered pension scheme. If the transfer value is £30K+ and the scheme has safeguarded benefits, then advice is mandatory before the ceding scheme can pay over the transfer.

If a company is happy to accept insistent DB transfers why dont they advertise the fact?  Surely there is a highly lucrative business opportunity here?  Why keep it a secret?

Rather more likely is that if a significant number of people applied the option would soon be closed off.

A sentiment a lot of people keep trotting out on this forum, but no sign of it happening yet...maybe stakeholders continue to be offered because they are a good option for a certain group of people (especially those who can only afford to make small payments at irregular intervals) and that's where much of the custom is coming from - enough to make it worthwhile for the provider.

No reputable insurance company is going to 'advertise' as you suggest for two reasons:

1. what sort of message does it send consumers (and regulators) to read something along the lines of 'have you been advised it's not in your interests to transfer out of your DB scheme? Come to us, we can help you get round legislation designed to protect you. You can replace guaranteed benefits with risky ones by coming to us!'; and
2. why deliberately make themselves a stepping stone for an onward transfer to a SIPP or other 'preferred' provider? A shedload of work for no commercial return.

Surely accepting DB transfers against advice either is or is not an acceptable risk.  Of course companies may take different views on this and some could be proved wrong.  It is of interest that all the main players have concluded the risk is too high for the increased business it would create.  The only ones that have not are the few (single digits, perhaps 1) running old Stakeholder pensions that accept direct customer initiated transfers. Even then they only do this within their stakeholder business rather than more widely.

One does not need inappropriate advertising, simply stating the fact in their published documentation would be sufficient.  It is not as if accepting DB transfers is illegal.

chuffinnora

Marcon said:

If the transfer proceeds OP could take 25% of it as tax free cash, so hardly 'lost' - it would only leave slightly less with which to buy(!) matching benefits.

Jeez relax somewhat obnoxious, my point is perfectly valid. 

ian16527

chuffinnora said:

Marcon said:

If the transfer proceeds OP could take 25% of it as tax free cash, so hardly 'lost' - it would only leave slightly less with which to buy(!) matching benefits.

Jeez relax somewhat obnoxious, my point is perfectly valid. 

It is a bit of a 'Red Flag to a Bull ' topic on here.  

It is now very hard to transfer the DB pension as many have been scammed in the past. 

Many people including myself looked at it a few years ago but kept the DB pension as generally a bit of fixed income is nice to have. I also bought a small annuity so i have a 50/50 mix. Its nice to see the fixed income rolling in and increasing each year.
 
Why not wait a few years until 60 and see how things are then