Pensions Pensions Pensions......................

[Weststander]

There isn't really a 'default position' - it entirely depends on your individual circumstances/plans/objectives/other assets/tax position/retirement plans/age/size of fund/scheme rules/dependents/investment experience/risk tolerance/income requirements etc etc - hence the need to seek professional advice. Potential ill health, and leaving money to beneficiaries are not the only factors to take into account.

In April Ros Altman summarised the position:

"Understand the issues before making any decision about transferring out of a DB scheme. It may be right for you, especially if you’re in poor health, or you have other pensions, or are still working and want to benefit from future investment returns (accepting the risks and costs of course)."

Digressing, do you agree with the advice to opt for a fixed fee from the IFA or agreed hourly rate subject to a minimum, either to be quoted in advance. Rather than based on a percentage of the funds transferred?

 

[dazzer6666]

Currently 5/6 years away from pension mindset, it's just great getting an insight into what people are doing, given the new options.

Similar. Bit of a minefield now with so many options. I'm (hopefully) 5 years or so from packing work in and trying to line things up accordingly............although may be longer.

I've broadly decided to cash in an old final salary scheme (stopped contributing in 2000 when I changed employer) and convert to a SIPP (better flexibility, very high transfer values and to be invested for growth), leave my subsequent DC scheme as it is and hope the two funds, plus whatever I can save outside of them, are enough to keep me in beer and season tickets until I croak. I'll let you know in 10/20/30 years whether it's worked out ok !

 

[AmexRuislip]

Similar. Bit of a minefield now with so many options. I'm (hopefully) 5 years or so from packing work in and trying to line things up accordingly............although may be longer.

I've broadly decided to cash in an old final salary scheme (stopped contributing in 2000 when I changed employer) and convert to a SIPP (better flexibility, very high transfer values and to be invested for growth), leave my subsequent DC scheme as it is and hope the two funds, plus whatever I can save outside of them, are enough to keep me in beer and season tickets until I croak. I'll let you know in 10/20/30 years whether it's worked out ok !

My wife had FSP with BT, working as a chef for twenty years, which then transferred across to Compass catering, as they took over that side of BT.
About five years ago she took voluntary redundancy, in the run up to this she was involved in meetings alongside high ranking BT directors about the FSP, being phased out, replaced by the stakeholder pension.
Did make her smile a tad seeing their faces drop, when being told they'll have to live like normal people

 

[Beach Hut]

Currently 5/6 years away from pension mindset, it's just great getting an insight into what people are doing, given the new options.

Looking at January 2020 for D-Day on retirement

 

[LamieRobertson]

Currently 5/6 years away from pension mindset, it's just great getting an insight into what people are doing, given the new options.

I think the majority with final salary schemes stay with there pension ..if u rely on money purchase at retirement then with current annuity rates its worth investigating..but everyone's circumstances are different hence need for advice.
For me it was either keep my home (pay ex) or keep a pension that probably wouldn't even pay my council tax on retirement

 

[Beach Hut]

I think the majority with final salary schemes stay with there pension ..if u rely on money purchase at retirement then with current annuity rates its worth investigating..but everyone's circumstances are different hence need for advice.
For me it was either keep my home (pay ex) or keep a pension that probably wouldn't even pay my council tax on retirement

You are right they just capped our final scheme at the salary we were at last September, the pension will still mature through the golden years but we could have opted out but nothing came anywhere near what we get staying in.

 

[Arkwright]

Last week I received my Pension Statement from Surrey County Council, only eight years contribution's from the 80's which I was always under the impression I could claim at fifty five (next year). Probably worth about £150 per month and I've called it my "Football Pension" as it would cover my season ticket and a few pints of Harvey's.
The Government have only gone and moved the goal posts and now I have to wait until I'm sixty. I'll have to carry on funding football out of my own pocket for another six seasons.
Also got private pension , so annoys me as it is dependent on the stock market preforming well, fingers crossed on that.

 

[AmexRuislip]

Looking at January 2020 for D-Day on retirement

I think the majority with final salary schemes stay with there pension ..if u rely on money purchase at retirement then with current annuity rates its worth investigating..but everyone's circumstances are different hence need for advice.
For me it was either keep my home (pay ex) or keep a pension that probably wouldn't even pay my council tax on retirement

I'll always get advice when D-Day arrives.
I think it's the not knowing what you'll receive, pension wise, when the times comes to retire.
I guess most people are in the same room, just depends what door they exit from

 

[Biscuit]

I'm 30 and only started a pension two years ago. I put 6% of my salary into my pension every month, and my work match up to 5% so that's essentially 11% of my salary a month going into my pension. My pension is medium-risk, managed by Aviva. Am I putting enough aside to have any chance of retiring at 55?

 

[Beach Hut]

I'm 30 and only started a pension two years ago. I put 6% of my salary into my pension every month, and my work match up to 5% so that's essentially 11% of my salary a month going into my pension. My pension is medium-risk, managed by Aviva. Am I putting enough aside to have any chance of retiring at 55?

I doubt it I put 11 plus % and my company has to match it

 

[reigate]

I'm 30 and only started a pension two years ago. I put 6% of my salary into my pension every month, and my work match up to 5% so that's essentially 11% of my salary a month going into my pension. My pension is medium-risk, managed by Aviva. Am I putting enough aside to have any chance of retiring at 55?

Without knowing your income, property situation and lifestyle I would be amazed if you could retire in your 50s based on that

 

[Cheshire Cat]

If you retire early on a final salary scheme, there is usually a deduction to take account of the fact the pension will be paying out for more years than if you went at the "normal" retirement age whatever it is by the time you get there as the government have changed the rules - between 65 and 67 for men. So if I went at 55, there would be a 40% reduction, and a 25% reduction if I went at 60.

If you retire on ill health, the rules are different and there is no reduction, but you may loose out because you haven't contributed for long enough to get the full potential amount.

For defined benefits scheme, annuity rates are generally very poor.

 

[Cheshire Cat]

I'm 30 and only started a pension two years ago. I put 6% of my salary into my pension every month, and my work match up to 5% so that's essentially 11% of my salary a month going into my pension. My pension is medium-risk, managed by Aviva. Am I putting enough aside to have any chance of retiring at 55?

Only if you want to live in a tent and eat in a food bank.

 

[patchamalbion]

I'm 30 and only started a pension two years ago. I put 6% of my salary into my pension every month, and my work match up to 5% so that's essentially 11% of my salary a month going into my pension. My pension is medium-risk, managed by Aviva. Am I putting enough aside to have any chance of retiring at 55?

For 55 unfortunately not, although I don't know your salary.

I started at 26 and put 8% and my company contributes 12% and even that may come short of what I wish to achieve by 65!!

 

[dazzer6666]

In April Ros Altman summarised the position:

"Understand the issues before making any decision about transferring out of a DB scheme. It may be right for you, especially if you’re in poor health, or you have other pensions, or are still working and want to benefit from future investment returns (accepting the risks and costs of course)."

Digressing, do you agree with the advice to opt for a fixed fee from the IFA or agreed hourly rate subject to a minimum, either to be quoted in advance. Rather than based on a percentage of the funds transferred?

Exactly.......lots of things to consider. For me it wasn't about health (hopefully), more about investment returns (I'm happy to take some risk), flexibility, tax management and being able to leave an inheritance. The DB scheme was good but current very high TVs made the decision easier.

Re fees for the advice, I think a fixed fee is probably fairest - loads of work involved for the IFA, and the amount of the potential pot doesn't really change the volume of work (so a % charge doesn't make sense). Any IFA would have to provide fee details in advance. Most will offer a free initial consultation to explain the options.

 

[dazzer6666]

I'm 30 and only started a pension two years ago. I put 6% of my salary into my pension every month, and my work match up to 5% so that's essentially 11% of my salary a month going into my pension. My pension is medium-risk, managed by Aviva. Am I putting enough aside to have any chance of retiring at 55?

Very unlikely (that doesn't make it a bad investment). You can put your numbers into a modelling calculator if you want to see what things might look like.

https://www.moneyadviceservice.org.uk/en/tools/pension-calculator

 

[Beach Hut]

If you retire early on a final salary scheme, there is usually a deduction to take account of the fact the pension will be paying out for more years than if you went at the "normal" retirement age whatever it is by the time you get there as the government have changed the rules - between 65 and 67 for men. So if I went at 55, there would be a 40% reduction, and a 25% reduction if I went at 60.

That is steep ours are much better we also get a level option which is very attractive where you get a higher amount before 67 when state pension starts and then it reduces by the value of the state pension.

 

[dazzer6666]

That is steep ours are much better we also get a level option which is very attractive where you get a higher amount before 67 when state pension starts and then it reduces by the value of the state pension.

Quite normal for the actuarial reduction for taking the pension early to be 4% (or even more), so a 40% reduction for taking at 55 instead of 65 isn't unusual. Scary, but not unusual.

 

[Beach Hut]

Quite normal for the actuarial reduction for taking the pension early to be 4% (or even more), so a 40% reduction for taking at 55 instead of 65 isn't unusual. Scary, but not unusual.

I suppose so, ours is 40 years, after that it doesn't make much difference bar edging up the tax free lump sum, 37th year next year so getting close to the line

 

[dazzer6666]

I suppose so, ours is 40 years, after that it doesn't make much difference bar edging up the tax free lump sum, 37th year next year so getting close to the line

Many 40/60th schemes have either been capped (ie even if your pay increases your contributions don't and it's capped at a lower salary) or even closed completely, so you're in pretty good shape on that front........I've got a couple of pals who have gone past their 40th years in a single firm, drawn their tax free cash and pension but carried on working anyway.......

I'm going to have no pension income when I stop work, will be reliant on 2 DC funds and any savings to generate an income once I pack it in. Timing will be important.