store first

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

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 wrote: »

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

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

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.