Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
Page 1
  • CannySaver
    • #2
    • 23rd Mar 12, 5:47 AM
    • #2
    • 23rd Mar 12, 5:47 AM
    Hi

    I've been offered the Store First investment and did quote a bit of research into it. I concluded the following:

    1. The investment isn't a scam, it does exist, and is clearly based here in the UK unlike many of these alternative investments, however I didn't invest

    2. Why didn't I invest? Because I didn't Feel comfortable that the returns would be there in the long term. I was pretty convinced about the short term returns because of the way the scheme is set up and monies ring fenced to provide the guaranteed income in the first couple of years, however after that its just projections. I was also uncomfortable with the illiquid nature of the investment, when I want out I have to find someone to buy me out, that might be a tough as

    3. RE the OP's specific cicrumstances, whilst they don't say which Final Salary scheme they are a member of speaking generally why on earth would you want to come out of a scheme which provides (a.) a guaranteed income with no investment risk and (b.) an index linked pension. There is no now possible way this is a good idea (imho)

    Be careful of the people who peddle these schemes, they are generally unregulated and if a transfer is made there is no comeback to anyone whatsoever.

    This takes me onto a wider point though, I believe that some people in Final Salary or Defined Benefit schemes don't understand how good the benefits are. Having a guaranteed, index linked pension, with no investment risk is massive and can rarely be beaten outside of that environment. Yes, at retirement there might be the odd case were they are better taking benefits in an alternative way rather than from the scheme and I have friends who have transferred out to buy commercial property and have done well. But for the vast vast majority sticking with the scheme is much better and some members need educating of this...........

    I shall now descend slowly from my soap box!

    The Canny Saver
    Always looking for a good deal on my savings, generally risk averse, but always interested in new ideas and new ways of doing things.
  • CannySaver
    • #3
    • 23rd Mar 12, 5:50 AM
    • #3
    • 23rd Mar 12, 5:50 AM
    One last thought, for people looking at alternative investments a new site has been launched providing reviews of selected schemes:

    http://www.sippinvestmentplatform.co.uk/

    The reports are not the cheapest but they could save someone from making a costly mistake.

    The Canny Saver
    Always looking for a good deal on my savings, generally risk averse, but always interested in new ideas and new ways of doing things.
  • manuman
    • #4
    • 23rd Mar 12, 6:00 AM
    store first
    • #4
    • 23rd Mar 12, 6:00 AM
    Thanks for the reply canny saver I was thinking of the 8% cash advance from the first year guarantee as I really need some cash as I am unemployed due to me leaving my job 2 years ago to look after my wife and we are struggling big time. I thought that I would join the scheme and add some money and be able to retire around 56 and have a bigger lump sum to take out of the pot (25%) allowed to take out.
  • CannySaver
    • #5
    • 23rd Mar 12, 6:21 AM
    • #5
    • 23rd Mar 12, 6:21 AM
    Thanks for the reply canny saver I was thinking of the 8% cash advance from the first year guarantee as I really need some cash as I am unemployed due to me leaving my job 2 years ago to look after my wife and we are struggling big time. I thought that I would join the scheme and add some money and be able to retire around 56 and have a bigger lump sum to take out of the pot (25%) allowed to take out.
    Originally posted by manuman
    How old are you?

    Taking the 8% in advance? This might be hard.

    If you are below 55 then the 8% would have to be paid personally e.g. via a commission share or simply 8% to you and not the pension to you and would be an indirect benefit from your pension and taxed as such my HMRC. The IFAs on here will be able to say what the tax rate is but 55% comes to mind.

    If you are over 55 then you could technically go into income drawdown and take some of the money as a tax free lump sum, but please don't you will lose out in the long run.

    Re the bigger lump sum, what growth rate have you calculated you need to get a bigger lump sum on the SIPP than you do on the Final Salary scheme?

    If you are unsure, go see a suitabily qualified and experienced IFA, pay them to do a transfer analysis, will cost circa 1,000 - 1,500 and let them tell you not to do this!

    If you don't want to pay the fee, do a straw poll on here and see how many people suggest that transfering from a Final Salary scheme to a complex property investment (which I would wager would be your first such investment) is a good idea.

    You need to divorce the two issues of being skint now and your pension. Just because you have money in a pension doesn't mean it's the answer to your situation now, which I have 100% sympathy with.

    The Canny Saver
    Always looking for a good deal on my savings, generally risk averse, but always interested in new ideas and new ways of doing things.
    • taking stock
    • By taking stock 23rd Mar 12, 6:26 AM
    • 143 Posts
    • 177 Thanks
    taking stock
    • #6
    • 23rd Mar 12, 6:26 AM
    • #6
    • 23rd Mar 12, 6:26 AM
    well, after the first 2 years, they offer another fixed rate, which "will be higher than the previous rate" and ongoing "every subsequent two years" (quoted from their website).

    completely unsustainable - which is why the small-print allows the option for store first to "break the lease every two years". errrrm, so the initial promise ....isn't!!

    another point to note is that it's all well and good making a return of 8% a year for a couple of years, but if the underlying investment is then worthless, what's the point.

    either way, the OP would have to be mad to transfer out of s FS scheme to indulge in this nonsense. To the OP - that's the point where we all agree.
  • manuman
    • #7
    • 23rd Mar 12, 6:34 AM
    • #7
    • 23rd Mar 12, 6:34 AM
    I am 48 the 25% of 137k is aprox 34k if i invested then with the projected growth then i would have added to the pot so would have a larger % am i being stupid here
  • CannySaver
    • #8
    • 23rd Mar 12, 6:52 AM
    • #8
    • 23rd Mar 12, 6:52 AM
    I am 48 the 25% of 137k is aprox 34k if i invested then with the projected growth then i would have added to the pot so would have a larger % am i being stupid here
    Originally posted by manuman
    Not sure stupid is the word, perhaps not fully researched would be a better description

    Yes, if the 34k grows by 8% a year, you will have a larger tax free lump sum, you can't argue against that....but....

    1. Are you saw it will grow at 8% a year and then the predicted rates thereafter? How much research have you done? Who are providing the guarantees? I did my research, which almost went as far as visitng one of the sites and didn't invest, how much have you done or just fallen for the sales patter

    2. And probably most imporantly, what is the tax free lump sum from the final salary scheme? This might still be higher than the tax free lump sum from the SIPP, you have to compare what you are moving to with what you had.

    Have you had projections from your current scheme showing the income in retirement and the tax free lump sum (it isn't as simple as taking 25% of the fund value from a final salary scheme and it will get rerated each year).

    Seek advice, or just don't do it, there is no way you will transfer the scheme and not live to regret it, irrelevent of the investment (Store First or otherwise) you choose.

    The Canny Saver
    Always looking for a good deal on my savings, generally risk averse, but always interested in new ideas and new ways of doing things.
  • manuman
    • #9
    • 23rd Mar 12, 6:55 AM
    • #9
    • 23rd Mar 12, 6:55 AM
    Thanks for advice guys much appreciated
    • dunstonh
    • By dunstonh 23rd Mar 12, 8:31 AM
    • 98,597 Posts
    • 66,999 Thanks
    dunstonh
    It is not a scam at first glance. It is very unattractive as an investment though compared to a final salary scheme. Just to indicate how bad, what is the critical yield required to beat the final salary scheme? It is the one piece of vital information more than anything else that is required to be known when transferring a final salary scheme (not the only thing but a key thing)

    and you get the first years paid to you in cash
    Which would be an unauthorised payment under HMRC rules and make you subject to a tax penalty of upto 55% and being required to pay it back to the pension.

    Given the unauthorised payment seems to be attracting those that want money from their pension and given HMRC currently targeting such schemes, it does nudge towards the area of scam or at least doing things in a dodgy way. The FSA treat final salary scheme transfers as mis-sales unless proven otherwise. I would love to see the justification on transferring with this one. That assumes a regulated company is even involved or is even aware of where the money is ending up. A good way to spot the validity of these things is if they start using multiple companies to handle different things. i.e. an introducer who then passes it to a genuine firm which completes the transfer in good faith but after that another unregulated company gets involved and moves the investments. The unregulated firms tend to do the dodgy stuff.
    Last edited by dunstonh; 23-03-2012 at 8:36 AM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • manuman
    store first
    The first year is the 8% guaranteed in cash instead of the money going into your pension pot. If you dont take the cash you are guaranteed the second year at 8% too from then on it is just a forecast. The reason for the increase in forecast is that the store pod s rent will rise so the income rises.
  • CannySaver
    The first year is the 8% guaranteed in cash instead of the money going into your pension pot. If you dont take the cash you are guaranteed the second year at 8% too from then on it is just a forecast. The reason for the increase in forecast is that the store pod s rent will rise so the income rises.
    Originally posted by manuman
    You can't take the cash personally for reasons stated previously.

    Whatever the 'guarantees' are (by the way have you looked into how thse are provided?) transfering a final salary scheme into a SIPP and investing in this is a monumentally bad idea!

    The Canny Saver
    Always looking for a good deal on my savings, generally risk averse, but always interested in new ideas and new ways of doing things.
  • manuman
    what do u mean by how these are provided ?
  • CannySaver
    what do u mean by how these are provided ?
    Originally posted by manuman
    Ok, a better way of putting it, who stands behind the guarantee? If no one rents a Store First unit or pod or Store First goes under who provides the guarantee?

    For example, if a UK bank goes under we know the guarantee is provided by the FSCS, which is ultimately funded by the government.

    What's the chain with Store First?

    The Canny Saver

    PS are you still considering the transfer and investing?
    Always looking for a good deal on my savings, generally risk averse, but always interested in new ideas and new ways of doing things.
  • ChrisWilkinsRSFS
    I come at this from a being a qualified pension professional, and have been asked to look over it by a client who has been recommended by another company.

    My concerns are, regardless of rights or wrongs of switching from a final salary scheme (which by the way is madness - cannysaver makes some valid points here):

    You pay VAT on the purchase price. One of the exit strategies is to sell back at the original price - but I doubt that will include your VAT. So you buy at 10,000, pay 12,000 sell back at 10,000, losing 2k in the process.

    The investor is liable to business rates.

    Think about things logically, when interest rates are 0.5%, the country is in recession, inflation is above Bank of England target but still only around 5% - how on earth can any one guarantee 8% / 10% / 12% per year growth. If that's the return, why offer it to the public - surely the people running the scheme would take it all for themselves.

    If you had 100,000 cash in your hand, and that was all you had and likely to have, would you put it all into one of these units?
  • discos
    Hi I keep on getting phone calls from this company wanting me to invest, making me feel they are in great need to get new clients, maybe needing to sell to some old investors who want to pull out of it. who knows

    I have told them not to ring me up a few times but they keep ringing me up.

    I got the phone call out of the blue, and like many of these they knew all my details, and sent me a DVD which I not even watched and don't want to.

    So the old saying goes if you did not enter a competition or ring up your self it could well be a scam or not worth investing.

    Don't be put off by investing but just be careful
    • brewerdave
    • By brewerdave 24th Apr 13, 7:26 AM
    • 5,597 Posts
    • 2,489 Thanks
    brewerdave
    I've had similar phone calls - I now tell them all that I only have one pension pot worth less than 10k,and don't get a State pension - they lose interest pretty quickly
    • kidmugsy
    • By kidmugsy 24th Apr 13, 10:58 AM
    • 12,480 Posts
    • 8,852 Thanks
    kidmugsy
    I believe that some people in Final Salary or Defined Benefit schemes don't understand how good the benefits are.
    Originally posted by CannySaver
    Aye, you have to wonder whether these terribly expensive pensions are an effective way to attract and retain staff. But every time I say so there are howls of outrage.
    • taking stock
    • By taking stock 21st May 13, 7:17 AM
    • 143 Posts
    • 177 Thanks
    taking stock
    reported as spam
    • bilbo51
    • By bilbo51 21st May 13, 7:58 AM
    • 511 Posts
    • 250 Thanks
    bilbo51
    reported as spam
    Originally posted by taking stock
    Why would you do that?
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

198Posts Today

1,506Users online

Martin's Twitter
  • So how much work do I actually do on the MSE weekly email these days, now I?m in the exhaulted position of ?Executi? https://t.co/b8XWxPiUwn

  • Dear gumtree - I feel I've been sold a kipper. You're advertising has my face on it but I don't do adverts. If yo? https://t.co/kJAuziloOM

  • RT @MoneySavingExp: ????This chap ????@MSE_GuyAnker is responsible for delivering MSE's Weekly Email to 14 million people, 52 weeks of the year.?

  • Follow Martin