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  1. #21

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    Quote Originally Posted by zoomfwd View Post
    I am just starting to look at this for my wife's defined benefit pension but am struggling to find an advisor who will just provide the advice without requiring you (if the outcome of the advice was to transfer) to use their platform to reinvest the money.
    This kind of thing is a growing problem in so many areas. I'm not an IFA, but I sympathise. To my mind it's the equivalent of someone saying they do their own accounts/whatever and they just have one query on corporation tax, or something like that. Problem is, to us, we'd really want to understand the full picture before commenting. The risk of liability from giving poor advice based on only seeing part of the picture is huge. Same as me saying to a plumber I've installed my own boiler, just want you to check this one teeny part of it.

    I know there's several theories about the death of the professions, and I believe it will happen. The issue is that there will be a nasty period before it fully happens, where people can DIY 95% of things, and don't want to pay the professional to do everything...but the professional doesn't want to just do the 5% as it's more trouble than it's worth.

    Sorry, the above isn't very helpful to your situation, just me waffling. My layman thoughts were that DB pensions were like golddust so you'd virtually never want to leave one...but that may be outdated.

  2. #22

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    Quote Originally Posted by Maslins View Post
    Snipped - Sorry, the above isn't very helpful to your situation, just me waffling. My layman thoughts were that DB pensions were like gold dust so you'd virtually never want to leave one...but that may be outdated.
    Exactly my feelings. But at 37x benefit with >25 years to invest and accrue reinvested dividends plus asset growth, the SIPP route is looking VERY attractive.

  3. #23

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    According to the article below, AJ bell will accept a transfer into a SIPP as long as you have taken advice from an IFA (i.e. regardless of what that advice was).

    Does anyone have any experience with them?

    I was forced to waste 1k on advice when all I wanted was to move my pension

    There charges aren't as good as interactive investor, but seem reasonable enough compared to tradition providers:

    https://www.youinvest.co.uk/sipp/charges-and-rates

  4. #24

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    One additional consideration about DB schemes is their relatively low evaluation for lifetime allowance purposes. With an overall cap of 1m before painful tax levels kick in, a FS is valued at only 20 times the annual pension provided. This is considerably less than both (a) the amount you'd get for transferring the benefit out to a SIPP, (b) the amount you'd need to purchase an equivalent annuity. Thus the benefit you get in transferring out may be (due to tax) less than it appears on face value.

    On top of this, a FS scheme will usually give you some flexibility as to when you take it, reducing at a rate of about 3.5% for each year early. This should mean you get (roughly) the same amount of money from the scheme over the remainder of your life, but reduces the amount of your lifetime allowance that it takes up (as it's 20 times the reduced annual pension that you take when crystallising the FS benefit).

    (Above thoughts largely based on my own personal circumstances and IANA Accountant/Lawyer/Financial Adviser etc...)

  5. #25

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    Quote Originally Posted by Maslins View Post
    This kind of thing is a growing problem in so many areas. I'm not an IFA, but I sympathise. To my mind it's the equivalent of someone saying they do their own accounts/whatever and they just have one query on corporation tax, or something like that. Problem is, to us, we'd really want to understand the full picture before commenting. The risk of liability from giving poor advice based on only seeing part of the picture is huge. Same as me saying to a plumber I've installed my own boiler, just want you to check this one teeny part of it.

    I know there's several theories about the death of the professions, and I believe it will happen. The issue is that there will be a nasty period before it fully happens, where people can DIY 95% of things, and don't want to pay the professional to do everything...but the professional doesn't want to just do the 5% as it's more trouble than it's worth.

    Sorry, the above isn't very helpful to your situation, just me waffling. My layman thoughts were that DB pensions were like golddust so you'd virtually never want to leave one...but that may be outdated.
    I think you've pretty much hit the nail on the head there, any decent IFA will be charging what seems to a lot of people like a lot of money just for a letter saying they should/shouldn't transfer the funds out of the DB scheme. However, for an advisor to give that advice they have to do a full fact find, consider all options etc. and spend a considerable amount of time and effort to be comfortable that it is the correct advice to protect themselves as far as possible against potential future miss-selling claims.

    I've seen a transfer value in excess of 40times the annual benefit from a DB scheme quite recently! As I understand it schemes are trying to get members out of their defined benefit obligations because the costs of providing them have soared lately, something to do with such low gilt yields pushing up the costs of providing defined benefits but I'm not an IFA so not best placed to discuss the matter.

    Martin
    Contratax Ltd

  6. #26

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    Quote Originally Posted by Fred Bloggs View Post
    Exactly my feelings. But at 37x benefit with >25 years to invest and accrue reinvested dividends plus asset growth, the SIPP route is looking VERY attractive.
    All the online calculators I've tried seem to agree with you. If I put just the figures in for 138k for my existing pot and no further contributions, I only get as low as 3,800 pa income at retirement by setting the average return as low as 2 or 3 %, something that I don't think has ever happened in the history of the stock market.

  7. #27

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    Quote Originally Posted by Lambert Simnel View Post
    One additional consideration about DB schemes is their relatively low evaluation for lifetime allowance purposes. With an overall cap of 1m before painful tax levels kick in, a FS is valued at only 20 times the annual pension provided. This is considerably less than both (a) the amount you'd get for transferring the benefit out to a SIPP, (b) the amount you'd need to purchase an equivalent annuity. Thus the benefit you get in transferring out may be (due to tax) less than it appears on face value.

    On top of this, a FS scheme will usually give you some flexibility as to when you take it, reducing at a rate of about 3.5% for each year early. This should mean you get (roughly) the same amount of money from the scheme over the remainder of your life, but reduces the amount of your lifetime allowance that it takes up (as it's 20 times the reduced annual pension that you take when crystallising the FS benefit).

    (Above thoughts largely based on my own personal circumstances and IANA Accountant/Lawyer/Financial Adviser etc...)
    OTOH -

    A SIPP -

    You can take at any time after 55
    You choose how much/how little to draw
    Can be left free of inheritance tax to heirs etc...

    It's not a one way street now by any means, not like it used to be.

  8. #28

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    Quote Originally Posted by Fred Bloggs View Post
    OTOH -

    A SIPP -

    You can take at any time after 55
    You choose how much/how little to draw
    Can be left free of inheritance tax to heirs etc...

    It's not a one way street now by any means, not like it used to be.
    Agreed. Those are fairly well known and understood, however, and I thought it was worth mentioning the (less frequently mentioned) point about FS getting a more favourable treatment against the LTA. Your mileage may vary.

  9. #29

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    Quote Originally Posted by Lambert Simnel View Post
    Agreed. Those are fairly well known and understood, however, and I thought it was worth mentioning the (less frequently mentioned) point about FS getting a more favourable treatment against the LTA. Your mileage may vary.
    Yes, agreed.

  10. #30

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    Quote Originally Posted by Lambert Simnel View Post
    One additional consideration about DB schemes is their relatively low evaluation for lifetime allowance purposes. With an overall cap of 1m before painful tax levels kick in, a FS is valued at only 20 times the annual pension provided. This is considerably less than both (a) the amount you'd get for transferring the benefit out to a SIPP, (b) the amount you'd need to purchase an equivalent annuity. Thus the benefit you get in transferring out may be (due to tax) less than it appears on face value.

    On top of this, a FS scheme will usually give you some flexibility as to when you take it, reducing at a rate of about 3.5% for each year early. This should mean you get (roughly) the same amount of money from the scheme over the remainder of your life, but reduces the amount of your lifetime allowance that it takes up (as it's 20 times the reduced annual pension that you take when crystallising the FS benefit).

    (Above thoughts largely based on my own personal circumstances and IANA Accountant/Lawyer/Financial Adviser etc...)
    Good points. I doubt I'll get to over a million though, I'd probably invest in something else for my retirement if/when I get to that amount in my pension.

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