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  • FIRST POST
    • Kempstongirlsboy
    • By Kempstongirlsboy 20th Aug 19, 8:04 PM
    • 5Posts
    • 2Thanks
    Kempstongirlsboy
    DB pension transfer......update
    • #1
    • 20th Aug 19, 8:04 PM
    DB pension transfer......update 20th Aug 19 at 8:04 PM
    So I posted recently whilst away about a potential DB transfer to SJP and was advised to add some specific details so here we go.
    DB scheme was closed by my company after 29 years of contributions. I then started a DC pot.
    Iím 53 with a view to retire at 60.
    My reason for considering a transfer out is I want more flexibility and the option to leave the children some funds after we pass away.
    My wife is 8 years younger than me and has no pension to mention so the transfer out would also ensure her financial position should I pass away. Sheíd only get 2/3rds of my DB if we left it in and the kids get nothing.
    So then the numbers, CETV is £1.2m, DB pension is offering £36k annual pension or £180k lump and £27k. My DC pot will be worth c.£175k at 60 assuming very modest annual growth. There should also be c. £100k cash/shares at 60 plus full state pension later on in 60ís.
    So my question is, general thoughts about SJP, fees, lock ins and anything else given some things Iíve been reading about them recently.
    Appreciate thoughts on the above.
    Thanks, DG
Page 1
    • SonOf
    • By SonOf 20th Aug 19, 8:22 PM
    • 1,444 Posts
    • 1,715 Thanks
    SonOf
    • #2
    • 20th Aug 19, 8:22 PM
    • #2
    • 20th Aug 19, 8:22 PM
    My reason for considering a transfer out is I want more flexibility and the option to leave the children some funds after we pass away.
    Can you afford that flexibility?

    So then the numbers, CETV is £1.2m,
    Do you have experience with investing. Even a cautious investment could lose £200,000 in a year. The larger the value, the greater the monetary changes are when going up and down. No-one bats an eyelid when it goes up but how are you going to feel when it goes down?

    So my question is, general thoughts about SJP, fees, lock ins and anything else given some things I’ve been reading about them recently.
    Loads of threads on them recently. So, not much point repeating those as nothing has changed. They are still one of the most expensive firms out there. Their investments are still nothing special and some are downright awful. And there are concerns over their ethics due to their charging structure which is unique and many feel not in the spirit of the retail distribution review (now one else ties you in and IFAs are not allowed to. Yet SJP FAs do just that).
    • hyubh
    • By hyubh 20th Aug 19, 8:36 PM
    • 2,559 Posts
    • 2,009 Thanks
    hyubh
    • #3
    • 20th Aug 19, 8:36 PM
    • #3
    • 20th Aug 19, 8:36 PM
    My wife is 8 years younger than me and has no pension to mention so the transfer out would also ensure her financial position should I pass away. Sheíd only get 2/3rds of my DB if we left it in
    Originally posted by Kempstongirlsboy
    8 years younger, has no serious pension of her own, and would get 2/3rds your pension for life... that's quite a thing to give up. What are the pension increases like...?

    So then the numbers, CETV is £1.2m, DB pension is offering £36k annual pension or £180k lump and £27k. My DC pot will be worth c.£175k at 60 assuming very modest annual growth.
    As an aside, transferring out will give you a Lifetime Allowance problem that you currently don't have, such is the relative generosity towards DB pension holders - presumably you've factored that in? (Not saying it should be a killer.)
    • hyubh
    • By hyubh 20th Aug 19, 8:38 PM
    • 2,559 Posts
    • 2,009 Thanks
    hyubh
    • #4
    • 20th Aug 19, 8:38 PM
    • #4
    • 20th Aug 19, 8:38 PM
    Do you have experience with investing.
    Originally posted by SonOf
    Or indeed - does the wife have experience with investing if the DB spouse's pension being 'only' 2/3rds is considered a reason to transfer out...!
  • jamesd
    • #5
    • 20th Aug 19, 11:49 PM
    • #5
    • 20th Aug 19, 11:49 PM
    Or indeed - does the wife have experience with investing if the DB spouse's pension being 'only' 2/3rds is considered a reason to transfer out...!
    Originally posted by hyubh
    The DB pays only 3% of the transfer value so the wife would end up with 2%.

    In drawdown the wife gets 100% so with Guyton-Klinger at 5% after 1.5% costs she'd get two and a half times as much. Subject to investment performance during retirement, though. Starting so high getting down to only 2% is unlikely - a 60% drop without recovery which implies equities dropping close to 100% in 60:40 mixture.

    I'd also suggest her deferring her state pension for ten years.

    Two thirds and 8 years younger looks good in a world consisting only of DB and annuities but we're not in that world.
    • Kempstongirlsboy
    • By Kempstongirlsboy 21st Aug 19, 6:45 AM
    • 5 Posts
    • 2 Thanks
    Kempstongirlsboy
    • #6
    • 21st Aug 19, 6:45 AM
    • #6
    • 21st Aug 19, 6:45 AM
    Thanks James, get the 100% piece, completely part of my thinking. Can you explain the Guyton-Klinger at 5% part?
    DG
    • AnotherJoe
    • By AnotherJoe 21st Aug 19, 6:48 AM
    • 15,905 Posts
    • 19,125 Thanks
    AnotherJoe
    • #7
    • 21st Aug 19, 6:48 AM
    • #7
    • 21st Aug 19, 6:48 AM
    So my question is, general thoughts about SJP, fees, lock ins and anything else given some things Iíve been reading about them recently.
    Originally posted by Kempstongirlsboy
    If previous posts on them haven't ruled them out for you, they've certainly done a number on you. They must have made a strong impression on you first time , kudos to their sales tactics.
    One thing to ponder, many have asked you how you'd cope, psychologically, with a big drop in the stock market. I suggest you consider that going with SJP would be like the stock market permanently performing 25% worse than if you went with an IFA. Bearable in boom times, really bad news at all other times. (Though if course wife and kids will still be worse off. A million quid worse off over 30 years on your size of pension.
    Please can you explain why you still have them under consideration? Is it glossy marketing brochures? Swish offices ? The particular adviser? If the latter, consider them like a car salesperson. They can only sell you what that dealership offers even though yiu and they know,that dealership sells pretty c**p cars. Must have been a very good salesperson!
    Or is it just that you haven't found a good Independent adviser yet so SJP seems like the easy choice?
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • SeniorSam
    • By SeniorSam 21st Aug 19, 7:09 AM
    • 1,342 Posts
    • 692 Thanks
    SeniorSam
    • #8
    • 21st Aug 19, 7:09 AM
    • #8
    • 21st Aug 19, 7:09 AM
    This review of SJP may give you a clearer picture of how SJP operate. I hope it helps.
    https://www.youtube.com/watch?v=F-UP-XDUPWM&t=3s
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
    • Kempstongirlsboy
    • By Kempstongirlsboy 21st Aug 19, 7:09 AM
    • 5 Posts
    • 2 Thanks
    Kempstongirlsboy
    • #9
    • 21st Aug 19, 7:09 AM
    • #9
    • 21st Aug 19, 7:09 AM
    The reason Iíve followed the SJP route thus far is that an initial IFA told me to transfer out of the fund if it valued at £3-400k, and that felt wrong.
    I sought a 2nd opinion and was recommended this advisor from a friend who is very happy with his work. Initially the CETV was £900k and he advised me not to do it. 12 months on an a review shows nearly £1.2 and that has swung the decision to being more favorable.
    Iím happy with the DB if it was just me but with my wifeís poor pension, her being much younger and thinking of the kids these elements are steering my thoughts.
    Now looking for a 3rd opinion that isnít tied to SJP to compare costs etc.
    Thanks for all comments itís appreciated.
    DG
    • LHW99
    • By LHW99 21st Aug 19, 9:12 AM
    • 2,177 Posts
    • 2,030 Thanks
    LHW99
    As your wife is 8 years younger, you have time to put money into a pension for her. Even with no earned income that would be over £60k by the time she reaches SPA by my calculation, & then there should be growth on top. That could be used to defer her SP, so that with 2/3 DB to inherit, her SP would be higher to compensate. Also one person can live on less than 2, although not on half the amount. If you / she would worry about finding / maintaining a relationship over many years with an IFA, this would be one solution. Money could continue to be added up to age 75 at a similar level, if there is spare available.
    • hyubh
    • By hyubh 21st Aug 19, 10:28 AM
    • 2,559 Posts
    • 2,009 Thanks
    hyubh
    The DB pays only 3% of the transfer value so the wife would end up with 2%.

    In drawdown the wife gets 100% so with Guyton-Klinger at 5% after 1.5% costs she'd get two and a half times as much. Subject to investment performance during retirement, though.
    Originally posted by jamesd
    The 2/3rds is with zero effort and limited worry. It's nutty to handwave away as 'only' 2/3rds.

    Starting so high getting down to only 2% is unlikely - a 60% drop without recovery which implies equities dropping close to 100% in 60:40 mixture.
    Or stick with the DB and don't spent one minute thinking about such things.

    Two thirds and 8 years younger looks good in a world consisting only of DB and annuities but we're not in that world.
    It looks good in the current world precisely because it's only 'normal' in legacy DB plans. Even modern 'gold plated' public sector pensions typically give survivor pensions of no more than 50%, some (e.g. CARE LGPS) rather less.
    • jimi_man
    • By jimi_man 22nd Aug 19, 9:26 AM
    • 174 Posts
    • 202 Thanks
    jimi_man
    So I posted recently whilst away about a potential DB transfer to SJP and was advised to add some specific details so here we go.
    DB scheme was closed by my company after 29 years of contributions. I then started a DC pot.
    Iím 53 with a view to retire at 60.
    My reason for considering a transfer out is I want more flexibility and the option to leave the children some funds after we pass away.
    My wife is 8 years younger than me and has no pension to mention so the transfer out would also ensure her financial position should I pass away. Sheíd only get 2/3rds of my DB if we left it in and the kids get nothing.
    So then the numbers, CETV is £1.2m, DB pension is offering £36k annual pension or £180k lump and £27k. My DC pot will be worth c.£175k at 60 assuming very modest annual growth. There should also be c. £100k cash/shares at 60 plus full state pension later on in 60ís.
    So my question is, general thoughts about SJP, fees, lock ins and anything else given some things Iíve been reading about them recently.
    Appreciate thoughts on the above.
    Thanks, DG
    Originally posted by Kempstongirlsboy

    Just reading this post makes me want to scream 'for god's sake don't do it'!

    I'm assuming you're in good health. You have other savings and your wife has no pension provision of her own (and is 8 years younger so is likely to benefit from the 2/3 spouse pension). If someone was to design the ideal pension to fit your specific circumstances, I reckon it would look remarkably like what you have now. Hassle and worry free, inflation proofed, decent spousal provision. To my mind you can go out and enjoy retirement and not have to worry about market fluctuations, fees, choice of products.

    I know there are a lot of clever people on here who will quote various figures and different methods of drawdown which is all interesting and useful information. Also that 1.2 Million looks attractive (it's obviously designed to) but to my mind it's nowhere near enough.

    You have a good retirement provision planned. Why mess around with it purely in the pursuit of a few extra pounds and then suffer all the stress and worry of wondering how your investments are doing for the rest of your life? Just enjoy the retirement you've saved for.

    People traded on this premise in the 80's and then paid for it dearly. And now the same thing is happening again. Whether selling DB pensions will go sour... well, we'll just have to wait and see. But I wouldn't consider what you're doing, I think it's foolish.
    • Linton
    • By Linton 22nd Aug 19, 9:51 AM
    • 11,248 Posts
    • 11,653 Thanks
    Linton
    Just reading this post makes me want to scream 'for god's sake don't do it'!

    I'm assuming you're in good health. You have other savings and your wife has no pension provision of her own (and is 8 years younger so is likely to benefit from the 2/3 spouse pension). If someone was to design the ideal pension to fit your specific circumstances, I reckon it would look remarkably like what you have now. Hassle and worry free, inflation proofed, decent spousal provision. To my mind you can go out and enjoy retirement and not have to worry about market fluctuations, fees, choice of products.

    I know there are a lot of clever people on here who will quote various figures and different methods of drawdown which is all interesting and useful information. Also that 1.2 Million looks attractive (it's obviously designed to) but to my mind it's nowhere near enough.

    You have a good retirement provision planned. Why mess around with it purely in the pursuit of a few extra pounds and then suffer all the stress and worry of wondering how your investments are doing for the rest of your life? Just enjoy the retirement you've saved for.

    People traded on this premise in the 80's and then paid for it dearly. And now the same thing is happening again. Whether selling DB pensions will go sour... well, we'll just have to wait and see. But I wouldn't consider what you're doing, I think it's foolish.
    Originally posted by jimi_man

    I must agree completely. As regards your wish to benefit your children: How old are they now? Your life expectancy is perhaps another 35 years, your wife's perhaps 45 years. Surely the children will have sorted out their lives by then and wont need your money. From your ages they could be thinking about retirement themselves. 35-45 years worrying about the next crash is just too much of a sacrifice.
    • jsinc
    • By jsinc 22nd Aug 19, 10:27 AM
    • 199 Posts
    • 99 Thanks
    jsinc
    I wouldn't even consider transferring DB benefits to SJP. But alternatives exist; such as advice from a better IFA.
    • Alexland
    • By Alexland 22nd Aug 19, 10:57 AM
    • 5,762 Posts
    • 5,031 Thanks
    Alexland
    If you want a warm feeling stick with the DB scheme rather than pay high SJP fees creating an LTA problem.

    Would you have any spare lump sum or income from the DB to gift to your children?

    It might be more useful to them now than later in life after you are gone.

    Alex
    Last edited by Alexland; 22-08-2019 at 7:43 PM.
    • GunJack
    • By GunJack 22nd Aug 19, 11:05 AM
    • 10,792 Posts
    • 8,093 Thanks
    GunJack
    If you want a warm feeling stick with the DB scheme rather than pay high SJP fees creating an LTA problem.

    Would you have any spare lump sum or income from the DB to gift to your children?

    It might be more useful to them now than later in life after you are gone.

    Alex
    Originally posted by Alexland
    agreed, and if taking the £180k LS then gifting to kids becomes ridiculously easy.....
    ......Gettin' There, Wherever There is......

    I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
    • jsinc
    • By jsinc 22nd Aug 19, 11:29 AM
    • 199 Posts
    • 99 Thanks
    jsinc
    If you want a warm feeling stick with the DB scheme rather than pay high SJP fees creating an LTA problem.

    Would you have any spare lump sum or income from the DB to gift to your children?

    It might be more useful to them now than later in life after you are gone.
    Alex
    Originally posted by Alexland
    Don't think I'd transfer at all on that multiple, and the £pa is above my projected retirement needs. All these DB transfers, and SJP prevalence, are a little worrying imo. But I'm not the OP and circumstances differ.
    • Brynsam
    • By Brynsam 22nd Aug 19, 12:28 PM
    • 2,310 Posts
    • 1,739 Thanks
    Brynsam
    Iím happy with the DB if it was just me but with my wifeís poor pension, her being much younger and thinking of the kids these elements are steering my thoughts.
    Originally posted by Kempstongirlsboy
    Ever thought of taking out life insurance?
    • Albermarle
    • By Albermarle 22nd Aug 19, 2:24 PM
    • 1,556 Posts
    • 991 Thanks
    Albermarle
    Don't think I'd transfer at all on that multiple
    If you assume that the DB pension of £36K is what it will pay at 60, then if he took it early ( say for sake of argument at 55) it would be significantly less, which gives a rather more striking multiple.
    According to expert opinion on another thread this is strictly how the multiple should be calculated .

    On the other side another poster was right to point out that some of the gloss could come off , due to incurring LTA penalties . especially as he already has a DC pot .
    • sandsy
    • By sandsy 22nd Aug 19, 2:57 PM
    • 1,502 Posts
    • 918 Thanks
    sandsy
    Try watching these:

    https://cdn.moneyalive.io/player/pfs/

    https://www.fca.org.uk/news/news-stories/fca-publishes-video-help-consumers-understand-pension-transfer-advice
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