Transferring final salary pension to private scheme

[Slick]

I've never liked any pension scheme and never trusted anyone in a suit that can earn a living on the backs of other people's real graft. I did buy a pension aged 19 before finally realising that unless it was a government backed final salary they would be next to useless. I have done my own thing all my life and pension provision is no different. I am at a bit of an impass now though and will need to revise this for the next stage of life. Well done on making it work for you though.

 

[Pro Tour Punditry]

Am I alone in the "have to pay so do so/expecting bugger all" camp?

 

[Pat "5mph"]

Am I alone in the "have to pay so do so/expecting bugger all" camp?

I know my future in old age is gonna be bleak
Tell me why you do have to pay into your private pension: is it compulsory then? Last time I hear it has to be made available by your employer, but you don't have to take the offer up if you don't want to.

 

[Pro Tour Punditry]

I know my future in old age is gonna be bleak
Tell me why you do have to pay into your private pension: is it compulsory then? Last time I hear it has to be made available by your employer, but you don't have to take the offer up if you don't want to.

I have no idea, I just pay it. I work for a local authority and it has always been "compulsory" so it gets taken off. I would much rather invest it in fine wine*

*If I cared enough I probably would opt out and go down that line...

 

[Slick]

Am I alone in the "have to pay so do so/expecting bugger all" camp?

No, your not alone.

 

[Flick of the Elbow]

What I've concluded so far about pensions is that every direction you look, it's a game of chance.
Stay in a so-called defined benefits scheme ? The employer can change the terms of the scheme any time they like. They can add years to the retirement age, they can increase the reductions for retiring before that age, they can underfund the scheme, they can without notice announce that the 'final salary' won't be your salary at retirement but some other (lesser) figure of their choosing. There's even talk now, in a Govt White Paper, of allowing employers to, even once you are retired and drawing on the scheme, to change the terms to your detriment. Given that you could well be drawing on the scheme for 30 years, who knows what changes they will get away with over such a span.
Rely on the so-called 'flat rate' state pension ? But it's not flat rate, many people will not get the headline advertised top rate of £155 pw no matter how many years of NI contributions they have. For many it will be only £119 pw. And again, there's no knowing how the terms are going to change over the years before you get to the ever-moving magic age when you can start getting it.
Take the transfer value and give it to an IFA to invest ? The costs are eye watering. £3-5k seems to be the going rate just for an assessment, perhaps £30k for them to actually carry out the work, ongoing 1% annual charges from the investment company plus another 1% annually from the IFA. So to achieve a growth for you of 3% the funds have actually got to perform at 5%. And all at the mercy of World events and their effects on the market.

 

[Jimidh]

Interestingly a good friend of mine is a very successful IFA was telling me that increasing numbers are doing as the OP so there must be merit in it.

He did try to explain to me last week why but we were at Murrayfield for the rugby and I can't remember much of the reasoning .

 

[Flick of the Elbow]

Interestingly a good friend of mine is a very successful IFA was telling me that increasing numbers are doing as the OP so there must be merit in it

Merit for the client or for the 'very successful' IFA ? That's the worry.

 

[simon.r]

What I've concluded so far about pensions is that every direction you look, it's a game of chance.
Stay in a so-called defined benefits scheme ? The employer can change the terms of the scheme any time they like. They can add years to the retirement age, they can increase the reductions for retiring before that age, they can underfund the scheme, they can without notice announce that the 'final salary' won't be your salary at retirement but some other (lesser) figure of their choosing. There's even talk now, in a Govt White Paper, of allowing employers to, even once you are retired and drawing on the scheme, to change the terms to your detriment. Given that you could well be drawing on the scheme for 30 years, who knows what changes they will get away with over such a span.
Rely on the so-called 'flat rate' state pension ? But it's not flat rate, many people will not get the headline advertised top rate of £155 pw no matter how many years of NI contributions they have. For many it will be only £119 pw. And again, there's no knowing how the terms are going to change over the years before you get to the ever-moving magic age when you can start getting it.
Take the transfer value and give it to an IFA to invest ? The costs are eye watering. £3-5k seems to be the going rate just for an assessment, perhaps £30k for them to actually carry out the work, ongoing 1% annual charges from the investment company plus another 1% annually from the IFA. So to achieve a growth for you of 3% the funds have actually got to perform at 5%. And all at the mercy of World events and their effects on the market.

All very valid points. The only comment I'd make is that my total up-front fees were £15k.

[QUOTE 4706876, member: 9609"]Of course if your final salary value is equity related then maybe you have little to worry as you will be both selling at a high and buying at a high.[/QUOTE]

That's the thinking. Apparently CETV's are high at present for the reasons you point out.

 

[Flick of the Elbow]

Apparently CETV's are high at present for the reasons you point out.

It's about gilt yields, ie the lack thereof. This article from the FT suggests I might have missed the boat, it seems they hit bottom back in Sept.
https://www.ft.com/content/c2ed71f4-c694-11e6-9043-7e34c07b46ef

 

[Pro Tour Punditry]

[QUOTE 4707209, member: 43827"]Despite the bravado now I guarantee you will change your mind about the worth of pensions when you reach retirement age, especially if you are healthy and look like living to a good age. I know many people who struggle to live on just the state pension. My father's life was made so much more comfortable by having just a small company pension to add to the state pension.[/QUOTE]
I don't change my mind. And I'm not healthy and likely to live to a good age. But if I do I shall turn to a life of crime, I'll become a gangsta.

 

[Slick]

Remember how massively popular endowment mortgages were at one time? Cherchez les commission rates.

That's why I don't trust any of those guys, I bought 2 of these endowments and had to work hard to pay everything off.

 

[Crackle]

One of my pensions used to deliver an annual statement. Now I just get some guff about how they are making up the shortfall and when they expect to have done it, hopefully before I draw mine.....Never work in the construction industry.

I expect to be a poor church mouse, hunched and hobbling on a stick, with cauliflower ears, a bulbous nose and quick grabby hands with which to grip your wrist whilst I beg you for a pound to feed the cat, assaulting you with my foul odorous breath. In fact much like Marmion is now.

 

[Pro Tour Punditry]

One of my pensions used to deliver an annual statement. Now I just get some guff about how they are making up the shortfall and when they expect to have done it, hopefully before I draw mine.....Never work in the construction industry.

I expect to be a poor church mouse, hunched and hobbling on a stick, with cauliflower ears, a bulbous nose and quick grabby hands with which to grip your wrist whilst I beg you for a pound to feed the cat, assaulting you with my foul odorous breath. In fact much like Marmion is now.

You have beautifully captured all my best bits

 

[SteCenturion]

There was a time when women could retire on state pension 5 years before a man ..... which was wrong !

Then there was an equalisation of retirement age entitlement being no longer based on gender which is right !!

There was a time when you could draw state pension at 65 which was wrong !!!

Imagine Francois etc telling the French they will work until 68 years ....
the population wouldn't work for a month or until Government backed down.

Then a came a time which is now where future retirees must wait until they are 67, 68, 69 years old which is a deplorable National scandal !!!!

My state retirement age is 67 & as I have said many, many times past, "I am not a pit pony", therefore I refuse to work past 60 regardless of economics.

I shall be relatively poor, at least for 7 years, I shall present myself to the Dr's & local authority as a hopeless lush, for which & as it stands currently, I will receive a handsome daily allowance for which to feed San Miguel almost intravenously to my ageing fur lined arteries. The Government of the day will help me to continue being "a hopeless lush" as a) it is much cheaper than rehab & b) they will be every bit as incompetent & .......... (I will fill the bank when the word comes to mind), as they are now.

Of course I shall not really be a hopeless lush, but for important events, Dr's/L.A evaluations & the such, a special effort will be made, think the Charlie Chaplins of modern Britain with a token stick swing around when they think no-one is looking.

Cynical ?

Hell yeah.