O/T Pension Valuations / Switching

[WATFORD zero]

In my attempts to forget last night, I've been spending this morning going through my pensions, with are extremely wide-ranging, varied and small as a result of a fairly nomadic 'career'.

Amongst them are some final salary schemes which I'm looking at reviewing. Does anyone have any experience of the kinds of fees charged for transfer reports on final salary schemes. I know they are probably tiered so does anyone have any idea what sort of percentages and cut offs would you expect by Transfer value ?

Thank you source of all wisdom and signifcant amounts of bellendary

 

[Fungus]

Why would you want to transfer a final salary scheme? Surely, the payouts are fixed, as a percentage of your salary, based on the number of years worked?

 

[Beach Hut]

Why would you want to transfer a final salary scheme? Surely, the payouts are fixed, as a percentage of your salary, based on the number of years worked?

Mine certainly is and as of last September any further salary increases are excluded from the calculation

 

[WATFORD zero]

Why would you want to transfer a final salary scheme? Surely, the payouts are fixed, as a percentage of your salary, based on the number of years worked?

I've got some old Final Salary Schemes from big financial organisations. Because of the way they are calculated the transfer value is out of proportion to the guaranteed pension. (Unless I live to 110+ in which case I may have different priorities )

 

[S'hampton Seagull]

Feel free to pm me as my job is centred around administering final salary pension schemes.

Sent from my SM-G935F using Tapatalk

 

[biddles911]

In my attempts to forget last night, I've been spending this morning going through my pensions, with are extremely wide-ranging, varied and small as a result of a fairly nomadic 'career'.

Amongst them are some final salary schemes which I'm looking at reviewing. Does anyone have any experience of the kinds of fees charged for transfer reports on final salary schemes. I know they are probably tiered so does anyone have any idea what sort of percentages and cut offs would you expect by Transfer value ?

Thank you source of all wisdom and signifcant amounts of bellendary

You shouldn't be charged anything for requesting a cash equivalent transfer value from your pension scheme (or at most a nominal amount).

Because interest rates are so low and schemes are keen to reduce their administration costs, many are offering very high multiples of the annual pension income e.g. 40 to 50 times, so a £10k annual pension income might have a transfer value of £500k!

Putting this figure in a SIPP would enable you to take out 25% tax free at 55 and invest the rest to generate a pension income.

It used to be a no brainer to keep a final salary scheme but, if you're comfortable with the risk of investing yourself, it can be a very good deal at present.

Only thought of this myself because FT columnists highlighted this recently as a good option these days.

You need to take advice on this but it's well worth thinking about right now....!




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[WATFORD zero]

Should have said costs associated with transfer analysis report (compulsory on any final salary transfer over 30K). As you rightly say, no charge for transfer valuation report.

 

[seagullwedgee]

I had 32 years service with a bank, all in their final salary scheme. I've just applied for a transfer value out of interest, and was staggered to be offered 29 times what the company scheme annual,pension would be. There is no cost to get a transfer value, but there is a cost to get a TVAS Report. This is an actuarially produced Transfer Value Assessment Report, and taken all sorts of factors into account it compares the proceeds from either route and makes a recommendation. This is a requirement. Final Salary scheme administrators will not pay out a transfer value unless. You can prove you have taken full advice of this nature. My TVAS report cost £550, there is a lot of work involved. But on a transfer value of close to £2m, it's a piss in a pot.

The major befits of transferring out of the final salary scheme (which most people would think is frowned upon, but is currently potentially very good value indeed) are firstly, the whole fund becomes an inheritable sum for your spouse or dependents, free of IHT when you peg it. The final salary scheme however may pay no death benefit, and just a 50% pension to the surviving spouse, and when he/she dies, it stops altogether. Contrast that with having a substantial sum to leave to the next generation. The second major benefit is that the lump sum is invested by you and will grow. Invested wisely over the long term you might see it grow by 8%!pa, contrast that against CPI and AEI growth of about 2.5% and you are gaining massively every year.

Don't be put off by thinking you didn't work there long, it won't be much, you may well be staggered. If for example you worked for an employer for 5 years, in a 60ths scheme, and your salary at the end was £40,000, this would provide a pension of £3,333pa. 28 times that as a transfer example, for example, would be £93,000, into your SIPP, right now, for you to manage, and draw on flexibly using drawdown rules as you choose. If you had several of these dotted about, you could easily be worth a third, or half a million, or potentially much more.

It costs nothing to get a transfer value, do ourself a favour, and have a look. I can tell you a fact, the companies that produce these TVAS reports are absolutely stacked out right now, as more customers realise there really is huge value in considering it. As an earlier poster said, the scheme investment managers have to hold huge sums in bonds, gilts and cash, which yield not a lot, and that is why they are now trying to derisk these schemes at quite a fast rate. Good luck. PM me if you wish.

Wedgee