Final Salary Pension -take as is, or look for alternative financial product?

googler
googler Posts: 16,103 Forumite
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in Pensions, annuities & retirement planning
Received quotation from pension provider late last year, indicating levels of cash sum and pension / pension only etc.

Haven't given my pension much thought up till this arrived, and I've heard tell that financial advisors can charge something of the order of 2% of the pension pot value for advising on alternatives, and/or carrying out process of switching to alternative investments; is this accurate/current?

What have other folks done? Any recommendations?
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Comments

  • googler
    googler Posts: 16,103 Forumite
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    I'm off to look at the sticky at the top of this board ...
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    Why do you think giving up the security of a final salary pension is something to be considered?

    There are sometimes valid reasons for this but often it's not a great idea. What makes you think it is something which might be better for you??
  • cloud_dog
    cloud_dog Posts: 6,043 Forumite
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    googler wrote: »
    Received quotation from pension provider late last year, indicating levels of cash sum and pension / pension only etc.
    Does this mean a CETV quote or simply the TFLS you would be entitled to take in addition to an annual pension? If not, and you are serious you will need to request a CETV from your trustees.

    Without a CETV you cannot make even a simple assessment as the benefits one way or another.

    And, in order to offer some informed opinions you are going to need to confirm
    • The pension amounts (taking the TFLS (cash))
    • The pension amounts (without TFLS (cash)); therefore the commutation rate
    • What inflation rules will be applied to the pension
    • Is there a spouse payment in the event of your death (do you have a spouse; is this relevant to you?)
    • Do you have any life limiting medical conditions?
    • <<yada, yada, yada...>>
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • googler
    googler Posts: 16,103 Forumite
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    Dazed_and_confused wrote: »
    Why do you think giving up the security of a final salary pension is something to be considered?

    There are sometimes valid reasons for this but often it's not a great idea. What makes you think it is something which might be better for you??

    I don't have an opinion on whether or not this would be better. As I said, I've not given my pension much thought until the statement arrived.

    I'm looking for viewpoints on doing it, perhaps experiences from folks who have done this, or those who haven't (and the why in both cases)

    Clearly, you're in the 'haven't' camp
  • googler
    googler Posts: 16,103 Forumite
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    It's not a Transfer Value quote. It details, mainly;

    The pension amounts (taking the TFLS (cash))
    The pension amounts (without TFLS (cash)) and
    Inflation rules (increases) which will be applied to the pension

    I'm in the dark as to what kind of financial product(s) the transfer value could be applied to / paid in to.

    Does anyone have a link to some kind of list or high-level guide to what the options could be?
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    Why don't you give us a clue? Age, sex, married, health, long or short lived family, other retirement income, other capital, any debt, ..........
    Free the dunston one next time too.
  • NoMore
    NoMore Posts: 1,081 Forumite
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    You need to back up and understand what pension you have at the moment before you even think about what to do with it.

    You have a defined benefit pension. Basically you have a guaranteed inflation linked yearly income from this pension. You have a statement of these future benefits, not a valuation.

    Although the stance appears to be softening due to people getting large CETV valuation w.r.t. to the benefits, its usually not a good idea to give up a Defined Benefit Pension
  • Silvertabby
    Silvertabby Posts: 9,014 Forumite
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    googler wrote: »
    It's not a Transfer Value quote. It details, mainly;

    The pension amounts (taking the TFLS (cash))
    The pension amounts (without TFLS (cash)) and
    Inflation rules (increases) which will be applied to the pension

    I'm in the dark as to what kind of financial product(s) the transfer value could be applied to / paid in to.

    Does anyone have a link to some kind of list or high-level guide to what the options could be?


    We're all the dark without the actual CETV (transfer value) which you would have to specifically reequests from your pension provider. Which scheme are you in? If it's public sector (with the exception of the LGPS) then a transfer out isn't an option - which cuts down your decision to just bigger pension/smaller lump sum or smaller pension/bigger lump sum.
  • Marcon
    Marcon Posts: 10,617 Forumite
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    Googling on 'transfer defined benefit pension' gets you lots of helpful links (and no sarcastic replies!). Try https://www.moneyadviceservice.org.uk/en/articles/transferring-out-of-a-defined-benefit-pension-scheme
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • cloud_dog
    cloud_dog Posts: 6,043 Forumite
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    googler wrote: »
    Does anyone have a link to some kind of list or high-level guide to what the options could be?
    I know you said you are in the dark about pensions but....You are completely missing the point.

    Without the CETV there is absolutely no way of understanding what may or may not be an appropriate option. Without knowing more about your DB pension (amounts, inflation increases, spouse pension (is that relevant), whatever is posted on this thread is meaningless (having no meaning or significance).

    As an example, I requested my CETV in Q1 last year and I wasn't 'hoping' for anything but I had undertaken some due dilligence with regards to expenditure, retirement age, etc, etc, and had CETV ratio (CETV amount divided by annual DB pension) of about 30 times. When I finally got my CETV (it can take up to 3 months), the ratio was 17. Now, this 'number' is only relevant to myself, my scheme, and the assumptions around future financial environment at the time the quote was provided. It didn't matter that this 17x was still a very large number, it was not enough to forsake the lifetime benefits for myself and my wife of the DB scheme.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
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