Final salary transfer

2

Comments

  • happyandcontented
    happyandcontented Posts: 2,768 Forumite
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    famous5 wrote: »
    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.

    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
    Daniel54 Posts: 832 Forumite
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    famous5 wrote: »
    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.

    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
    Daniel54 Posts: 832 Forumite
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    famous5 wrote: »
    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?

    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
    MK62 Posts: 1,446 Forumite
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    famous5 wrote: »
    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.

    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
    Thrugelmir Posts: 89,546 Forumite
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    famous5 wrote: »
    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.

    You investments will need to perform well to achieve both your goals. If you were to live for some years yourself.
  • GSP
    GSP Posts: 887 Forumite
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    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
    kidmugsy Posts: 12,709 Forumite
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    famous5 wrote: »
    O I am looking for a comfortable retirement but nothing extravagant. I am healthy as is my wife.

    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
    xylophone Posts: 44,348 Forumite
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    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
    Silvertabby Posts: 9,014 Forumite
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    edited 13 May 2018 at 1:46PM
    famous5 wrote: »
    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?

    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.
  • Dox
    Dox Posts: 3,116 Forumite
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    GSP wrote: »
    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).

    If the financial adviser has done their job properly, they will have established whether or not the scheme will permit partial transfers. Most don't because the admin is such a pain.

    OP, not clear what you mean by your comment that you've 'talked to' a financial adviser. I presume you mean they have carried out a full transfer analysis, fact find etc and provided you with a written report? Unless they are appropriately qualified and have been through the correct procedure, you won't be able to transfer out because they won't be able to provide confirmation to the trustees that you've had the required advice from a regulated person with the right permissions.

    If all that hasn't yet been done, there is little chance of getting through the necessary hoops before the 3-month deadline for acceptance of the CETV expires.
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