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Transfer Final salary questions.

29 replies 1.3K views
Morning all.

I work for a well knownish UK company who froze the pension scheme at the end of last year, many people have allready transfered or are in the process of doing so, due to the generous enhanced value, (between 30-40x) no idea why the values  vary, the younger guys seem to be getting the higher amounts.

My situation is ive got 25 years paid up and the pension is worth around £16k a year at 60,i believe it goes up with the retail index(??) up to maximum of 2.5% annually. im aged 50 currently and am awaiting a CETV.

Im expecting 500K + transfer value, i have 50k in a sipp and the new DC scheme the company has given us gives me 1500ish a month, the companys contribution is very generous and i expect to (hope to) be in this for 7 years, maximum 10 years, its salary sacrafice and i will be contributing more as time goes by, in short i have a target of 150k with SIPP and DC pension which is when i will start planning to retire, be it at 55 or more towards 60.

So this brings me to the DB transfer, im single which is my main reason to be thinking of the transfer, if i get hit by a bus in the next hour the ££ is gone, no spouse pension as i havent got one, i would like to be able to leave it to familly if the worse happened, mainly 2 children,(young adults) as it would set them up for life.
I expect to have 10 years of growth with whatever i transfer, i understand the risks.
I will have full state pension at 67.
A lot of the people at work have used the same company to facillitate the transfers, a smallish company local to me.

1.  When you transfer your pension with a company they obviously invest it for you, but where is the money physically held, IE if the small  company went bancrupt has your money gone with them,or is it protected, guaranteed?
2. Do any of the big companys handle DB transfers IE Fidelity/Hargreaves, i would be more comfortable with my money being handled by the big boys and that its insured.
3. I understand  the stock market risk of the pot diminishing, however my concern is losing the cash from some sort of issue with the investment company/funds collapsing, is invested money of the above amount insured?

I am not going to do anything untill i get my CETV and will get financial advice if i decide to explore the transfer, dependant on the amount.

Many thanks

H





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Replies

  • LHW99LHW99 Forumite
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    If the company has IFA's, is on the FCA Register and has the right approvals, they should have insurance in case of problems. Most will want to manage things if they do the transfer, but once its is DC, you could transfer elsewhere to DIY if that's what you want as it would be DC to DC.
    Does your employer offer / pay for advice?
  • AlbermarleAlbermarle Forumite
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    and will get financial advice if i decide to explore the transfer, dependant on the amount.
    You have no choice in the matter, you have to take financial advice, or no possibility to transfer.
    The IFA handling the transfer  will be able to explain a lot of these issues to you .Couple of points though.
    The IFA themselves should never have possession of the money , it should go straight from your employers pension scheme to the nominated scheme. As long as the receiving scheme is a mainstream pension provider and the money is in mainstream funds ( not Bolivian rubber plantations) the chance of your money disappearing is almost non existent .
    However if the IFA recommends that you do not transfer ( which is often the case ) then you still can, but some mainstream SIPP providers , like HL & Fidelity will not accept the transfer ( they are scared if it all goes wrong then you will sue them )
    I 'expect' to have 10 years of growth with whatever i transfer, i understand the risks.
    A more correct way of saying this would be I 'Hope' to have 10 years of growth 
  • dunstonhdunstonh Forumite
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    1.  When you transfer your pension with a company they obviously invest it for you, but where is the money physically held, IE if the small  company went bancrupt has your money gone with them,or is it protected, guaranteed?

    The advising firm provides the advice. You do not invest in the advising firm.

    2. Do any of the big companys handle DB transfers IE Fidelity/Hargreaves, i would be more comfortable with my money being handled by the big boys and that its insured.
    Advisers can use Fidelity but Fidelity is not an adviser.   HL do DB transfers but HL is a restricted service and you are best not using restricted advisers.  You should use an IFA (and the IFA will use platforms that are cheaper than HL).  
    3. I understand  the stock market risk of the pot diminishing, however my concern is losing the cash from some sort of issue with the investment company/funds collapsing, is invested money of the above amount insured?
    In most routine investments, you will hold 0.x% in any one company.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MarconMarcon Forumite
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    Morning all.

    I work for a well knownish UK company who froze the pension scheme at the end of last year, many people have allready transfered or are in the process of doing so, due to the generous enhanced value, (between 30-40x) no idea why the values  vary, the younger guys seem to be getting the higher amounts.

    My situation is ive got 25 years paid up and the pension is worth around £16k a year at 60,i believe it goes up with the retail index(??) up to maximum of 2.5% annually. im aged 50 currently and am awaiting a CETV.

    Im expecting 500K + transfer value, i have 50k in a sipp and the new DC scheme the company has given us gives me 1500ish a month, the companys contribution is very generous and i expect to (hope to) be in this for 7 years, maximum 10 years, its salary sacrafice and i will be contributing more as time goes by, in short i have a target of 150k with SIPP and DC pension which is when i will start planning to retire, be it at 55 or more towards 60.

    So this brings me to the DB transfer, im single which is my main reason to be thinking of the transfer, if i get hit by a bus in the next hour the ££ is gone, no spouse pension as i havent got one, i would like to be able to leave it to familly if the worse happened, mainly 2 children,(young adults) as it would set them up for life.
    I expect to have 10 years of growth with whatever i transfer, i understand the risks.
    I will have full state pension at 67.
    A lot of the people at work have used the same company to facillitate the transfers, a smallish company local to me.

    1.  When you transfer your pension with a company they obviously invest it for you, but where is the money physically held, IE if the small  company went bancrupt has your money gone with them,or is it protected, guaranteed?
    2. Do any of the big companys handle DB transfers IE Fidelity/Hargreaves, i would be more comfortable with my money being handled by the big boys and that its insured.
    3. I understand  the stock market risk of the pot diminishing, however my concern is losing the cash from some sort of issue with the investment company/funds collapsing, is invested money of the above amount insured?

    I am not going to do anything untill i get my CETV and will get financial advice if i decide to explore the transfer, dependant on the amount.

    Many thanks

    H





    There are plenty of threads on this forum about transferring out of a DB scheme, so have a look at those.

    Once you get your CETV, you only have 3 months in which to take a decision. That might sound plenty of time, but an IFA will be hard pressed to get through all the hoops, so make sure you have one lined up in case of need BEFORE you get a CETV. There may be a delay before you get the CETV; many schemes are holding off issuing them following announcements from the Pensions Regulator about the wisdom of doing so in the current market conditions.
  • AlbermarleAlbermarle Forumite
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    Advisers can use Fidelity but Fidelity is not an adviser.  

    It looks like Fidelity do offer a restricted FA service, also for DB transfers :

    https://www.fidelity.co.uk/fidelity-retirement-service/value-retirement-advice/

  • ThrugelmirThrugelmir Forumite
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    I expect to have 10 years of growth with whatever i transfer, i understand the risks.


    People often don't. Even more so given the current economic situation. Which is very different to the events of 2006-2008.
    Nor do they appreciate a £16k plus (it will have risen by the time you are 60) index linked guaranteed pension for life. I know which I would choose given a choice. 

    “Markets have been so good for so long, that many investors are trivialising the advanatages of actively managing portfolio risk" - Gervais Williams
  • Heisenberg01Heisenberg01 Forumite
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    Thanks men.


  • Heisenberg01Heisenberg01 Forumite
    47 posts
    10 Posts First Anniversary

    I expect to have 10 years of growth with whatever i transfer, i understand the risks.


    People often don't. Even more so given the current economic situation. Which is very different to the events of 2006-2008.
    Nor do they appreciate a £16k plus (it will have risen by the time you are 60) index linked guaranteed pension for life. I know which I would choose given a choice. 

    I appreciate what you are saying, however the main reason for me considering the transfer is the worst case scenario of something happening to me in the next ten years and losing the lot.
    The current economic situation is also weighing heavilly on my thinking, 2 young adult children one who just lost her job and the other in full time education, its gonna be a long struggle ahead for the younger generation, an inheritance of that size is life changing for them.

    H
  • AlbermarleAlbermarle Forumite
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    One issue is that with the transfer sum and £150Kalready  in a SIPP, you are fully exposed to the whims of the market.
    One possibility is to use part of the transfer money to buy an annuity so you have at least some guaranteed fixed income , whilst still leaving part of the transfer sum as a potential inheritance.
    The current economic situation is also weighing heavilly on my thinking, 2 young adult children one who just lost her job and the other in full time education, its gonna be a long struggle ahead for the younger generation, an inheritance of that size is life changing for them.
    T
    his is a double edged sword. If the global economy struggles to recover and stagnates for years , then your now enlarged pension pot will also struggle to keep its value . Then if you do not go under the proverbial bus, and live to the average age of late eighties or quite possibly beyond , you will regret having given up a guaranteed inflation linked pension income .

  • ThrugelmirThrugelmir Forumite
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    I expect to have 10 years of growth with whatever i transfer, i understand the risks.


    People often don't. Even more so given the current economic situation. Which is very different to the events of 2006-2008.
    Nor do they appreciate a £16k plus (it will have risen by the time you are 60) index linked guaranteed pension for life. I know which I would choose given a choice. 

    I appreciate what you are saying, however the main reason for me considering the transfer is the worst case scenario of something happening to me in the next ten years and losing the lot.
    The current economic situation is also weighing heavilly on my thinking, 2 young adult children one who just lost her job and the other in full time education, its gonna be a long struggle ahead for the younger generation, an inheritance of that size is life changing for them.

    H
    That's a far wider issue than the pension alone. Perhaps review all your financial affairs if you consider that a high possibility. 
    “Markets have been so good for so long, that many investors are trivialising the advanatages of actively managing portfolio risk" - Gervais Williams
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