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  • FIRST POST
    • famous5
    • By famous5 12th May 18, 9:24 PM
    • 4Posts
    • 1Thanks
    famous5
    Final salary transfer
    • #1
    • 12th May 18, 9:24 PM
    Final salary transfer 12th May 18 at 9:24 PM
    Hello all
    I am almost 57 and looking to finish work. I have a good final salary scheme which would pay around £40K at normal retirement or £32K if I went early soon. The CETV offer is around £1 million. I have little financial experience so have talked to an IFA who has advised me to take the transfer and finish. Where everyone’s views please? Appreciate any thoughts.
Page 1
    • xylophone
    • By xylophone 12th May 18, 9:33 PM
    • 26,496 Posts
    • 15,735 Thanks
    xylophone
    • #2
    • 12th May 18, 9:33 PM
    • #2
    • 12th May 18, 9:33 PM
    https://www.royallondon.com/Global/documents/GoodWithYourMoney/COMPANY-PENSIONS-FIVE-REASONS-TO-TRANSFER-OUT-AND-FIVE-REASONS-NOT-TO.pdf
    • kidmugsy
    • By kidmugsy 12th May 18, 10:02 PM
    • 11,599 Posts
    • 8,124 Thanks
    kidmugsy
    • #3
    • 12th May 18, 10:02 PM
    • #3
    • 12th May 18, 10:02 PM
    Hello all
    I am almost 57 and looking to finish work. I have a good final salary scheme which would pay around £40K at normal retirement or £32K if I went early soon. The CETV offer is around £1 million. I have little financial experience so have talked to an IFA who has advised me to take the transfer and finish. Where everyone!!!8217;s views please? Appreciate any thoughts.
    Originally posted by famous5
    Are you given to anxiety? Your eventual State Pension? Married? Wife's pension arrangements? Your ambitions for retirement? Mortgage already paid off? Any current or prospective costs involving children? Or parents or parents-in-law?

    What's the minimum after-tax annual income you seek?
    Last edited by kidmugsy; 12-05-2018 at 10:10 PM. Reason: last sentence
    Free the dunston one next time too.
    • Brynsam
    • By Brynsam 12th May 18, 10:30 PM
    • 1,601 Posts
    • 1,157 Thanks
    Brynsam
    • #4
    • 12th May 18, 10:30 PM
    • #4
    • 12th May 18, 10:30 PM
    Why do you think strangers are better placed to comment than a professional adviser who has done a full fact find? This sort of uninformed straw poll is just stupid.
    • dunstonh
    • By dunstonh 12th May 18, 10:50 PM
    • 94,542 Posts
    • 62,496 Thanks
    dunstonh
    • #5
    • 12th May 18, 10:50 PM
    • #5
    • 12th May 18, 10:50 PM
    Where everyone!!!8217;s views please?
    It will either be a good idea or a bad idea. Not able to tell based on the limited information given.
    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.
    • Dox
    • By Dox 13th May 18, 12:36 AM
    • 938 Posts
    • 719 Thanks
    Dox
    • #6
    • 13th May 18, 12:36 AM
    • #6
    • 13th May 18, 12:36 AM
    What are you trying to achieve? What's your attitude to risk? Spouse? Children? Mortgage? IHT concerns? Worried about employer covenant?

    Why bother to talk to a professional when you can have guesswork from people who know nothing about you or your circumstances.
    • famous5
    • By famous5 13th May 18, 6:58 AM
    • 4 Posts
    • 1 Thanks
    famous5
    • #7
    • 13th May 18, 6:58 AM
    • #7
    • 13th May 18, 6:58 AM
    OK so I realsed I didn't give enough information.
    I expect to receive full state pension when the time comes, I am married but wife has no pension other than state. Children are grown up and essentially little support required and mortgage will be paid off in a couple of months time. I am looking for a comfortable retirement but nothing extravagant. I am healthy as is my wife.
    • MK62
    • By MK62 13th May 18, 8:27 AM
    • 239 Posts
    • 169 Thanks
    MK62
    • #8
    • 13th May 18, 8:27 AM
    • #8
    • 13th May 18, 8:27 AM
    It's a tough question to answer tbh, given the info.

    What are the death benefits of your current pension?
    Given that your wife has only the state pension, then provision for her would need to a be priority imho.
    • Daniel54
    • By Daniel54 13th May 18, 8:52 AM
    • 628 Posts
    • 744 Thanks
    Daniel54
    • #9
    • 13th May 18, 8:52 AM
    • #9
    • 13th May 18, 8:52 AM
    I expect to receive full state pension when the time comes, I am married but wife has no pension other than state.
    Originally posted by famous5
    Have you both obtained a state pension forecast? In your case many years contracted out may mean you need more post 2016 contributions,but everyone's situation is different.I assume you have established your state pension ages?
    • famous5
    • By famous5 13th May 18, 9:06 AM
    • 4 Posts
    • 1 Thanks
    famous5
    Thanks for your reply - my wife would only get only 50% of pension salary if i die (and if she dies then nothing to pass on) - this is one of the reasons why I am considering the transfer.
    • famous5
    • By famous5 13th May 18, 9:07 AM
    • 4 Posts
    • 1 Thanks
    famous5
    Thank you for your reply. I have not obtained a SP forecast. Not sure what you mean by 'contracted out?" - I have paid NI for 38 years so Im assuming I would get full state pension. Have i misunderstood?
    • happyandcontented
    • By happyandcontented 13th May 18, 9:14 AM
    • 1,412 Posts
    • 2,683 Thanks
    happyandcontented
    Thanks for your reply - my wife would only get only 50% of pension salary if i die (and if she dies then nothing to pass on) - this is one of the reasons why I am considering the transfer.
    Originally posted by famous5
    You should check if that still happens if the pension is not yet in payment at the time of your death.

    Some, like my OH's FS scheme, only return the premiums you have paid under those circumstances. Death In Service packages would have some of the filled the gap for us, but he is now contracting so that doesn't apply.

    We only found this out by chance, after having an IFA look carefully at all our provision. We haven't yet decided what to do re-transfer but we are in the process of taking out an insurance policy to bridge that gap.
    • Daniel54
    • By Daniel54 13th May 18, 9:15 AM
    • 628 Posts
    • 744 Thanks
    Daniel54
    Thanks for your reply - my wife would only get only 50% of pension salary if i die (and if she dies then nothing to pass on) - this is one of the reasons why I am considering the transfer.
    Originally posted by famous5
    I think one of the risks that gets overlooked in transfer out discussions is political risk.

    There is no reason to think successive governments will not continue to change the rules and laws covering occupational pensions.

    The current inheritability rules were brought in at very short notice and with little/no consultation.They can be reversed just as easily.

    My own view is that the current very generous inheritance provisions would be very unlikely to survive a change of Government in their current form.

    If the IFA's report makes financial sense to you and you are happy with the risks,then go ahead.

    But I think the starting point should be the retirement provision for yourself and your wife.
    • Daniel54
    • By Daniel54 13th May 18, 9:22 AM
    • 628 Posts
    • 744 Thanks
    Daniel54
    Thank you for your reply. I have not obtained a SP forecast. Not sure what you mean by 'contracted out?" - I have paid NI for 38 years so Im assuming I would get full state pension. Have i misunderstood?
    Originally posted by famous5
    You have been in a defined benefits scheme which almost certainly will have been contracted out of the state additional pension ( SERPS/S2P).As such,you will have paid a reduced rate of NI and this will reduce your entitlement to the full New State Pension.

    Your occupational pension contains an element that should provide at least the same benefit as if you had been contracted in,but you may need to earn or buy additional years post 2016.Your forecast will help clarify your position.
    • MK62
    • By MK62 13th May 18, 9:58 AM
    • 239 Posts
    • 169 Thanks
    MK62
    Thanks for your reply - my wife would only get only 50% of pension salary if i die (and if she dies then nothing to pass on) - this is one of the reasons why I am considering the transfer.
    Originally posted by famous5
    I suspected that this would be the case.
    While £16k plus state pension might be OK, it could be 10+ years until your wife gets that state pension, so in the event of your untimely demise, living on £16k pa, whilst possibly manageable, would likely mean a life of perpetual frugality for her if she has no other income (at least until SP kicks in)

    Obviously I don't know if you have any alternative life cover, but if not then that £1M CETV starts to look very attractive - no doubt one of the reasons your IFA recommended the transfer.

    Just double check with your IFA about Lifetime Allowance (LTA) etc, but again I suspect he/she will have that covered.
    • Thrugelmir
    • By Thrugelmir 13th May 18, 10:48 AM
    • 59,835 Posts
    • 53,191 Thanks
    Thrugelmir
    Thanks for your reply - my wife would only get only 50% of pension salary if i die (and if she dies then nothing to pass on) - this is one of the reasons why I am considering the transfer.
    Originally posted by famous5
    You investments will need to perform well to achieve both your goals. If you were to live for some years yourself.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • GSP
    • By GSP 13th May 18, 11:02 AM
    • 191 Posts
    • 47 Thanks
    GSP
    Not sure of all the "nitty gritty", but find out if you can part and part. Take a portion as final salary still but transfer out the other half or portion. That way you are guaranteed income which should grow by inflation. On the size of your numbers, that would leave a fair chunk to leave to other family members which won't cease when you both die (sorry if bit blunt).
    • kidmugsy
    • By kidmugsy 13th May 18, 11:03 AM
    • 11,599 Posts
    • 8,124 Thanks
    kidmugsy
    O I am looking for a comfortable retirement but nothing extravagant. I am healthy as is my wife.
    Originally posted by famous5
    After tax and while both live: £40k p.a.? £30k p.a.? £25k p.a.?

    After tax and for survivor: 90% of joint after tax income? 75%? 60%?
    Free the dunston one next time too.
    • xylophone
    • By xylophone 13th May 18, 1:19 PM
    • 26,496 Posts
    • 15,735 Thanks
    xylophone
    I have paid NI for 38 years so Im assuming I would get full state pension. Have i misunderstood?
    You should each obtain a new state pension forecast.

    https://www.gov.uk/check-state-pension

    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

    but in the above read £119.30 for BSP and £155.65 for NSP.
    • Silvertabby
    • By Silvertabby 13th May 18, 1:41 PM
    • 3,259 Posts
    • 4,718 Thanks
    Silvertabby
    Thank you for your reply. I have not obtained a SP forecast. Not sure what you mean by 'contracted out?" - I have paid NI for 38 years so Im assuming I would get full state pension. Have i misunderstood?
    Originally posted by famous5
    It depends - have you paid full, non-contracted out NI or reduced, contracted out NI ? As a member of a final salary scheme it's likely to be the latter, so you may find that your State pension foundation amount as at April 2016 was the old basic State pension of £113 per week rather than the new single tier pension of £150 per week.

    As xylophone says, you need to obtain a State pension forecast.
    Last edited by Silvertabby; 13-05-2018 at 1:46 PM.
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