"Gold-plated" DB pension - what a con

[YogaLite]

So not only transfer values have gone down, the companies now are allowed to stop them going through after shelling out for the unwanted advice!

Does anyone know how pension people calculate the annual pensions? Do they use gilt prices on a day they get around doing it? Or based on last month's gilt prices? Or some other tables?

I am still in a limbo, it took my old employer months to produce a statement, 3 months transfer quote expired whilst I was hunting for someone to do the "advice", now got rejected as TV dropped below £100k and they only accept over £100k so nothing will happen till next year or I waste hundreds on another quote.

What a con.

www.thisismoney.co.uk/money/pensions/article-11353005/How-savers-blocked-cashing-gold-plated-pensions.html

@YogaLite ues are you hundred percent sure that your dependant son won’t still get something if you were to die?

and what will you do if you do get to 70 and the pensions has been long spent?

Are you sure the scheme wouldn't pay a pension to your disabled adult DC as your dependent? Many schemes will.

How about taking out a life insurance policy that will pay out a lump sum if that's your goal?

No, my DC won't get anything and the scheme's increases are capped at 5% anyway.

I am more worried about not getting to 70 and there is always downsizing in addition to the state pension. At 70 I am hardly going to be conquering the world.

My goal is to get what's legally mine and I don't need life insurance.

What is legally yours is a guarantee of a monthly pension payment for the rest of your life. Your ability to trade that in for a cash equivalent is a highly regulated transaction that usually fails and is not an entitlement.

You are unlikely to win this battle so it really would be advisable to find other ways of mitigating your worries and achieve your financial goal of wanting to leave a lump sum for your child; a life insurance policy would achieve this very simply and quickly and you could move on and forget about this battle and worry.

Do remember you’ll probably need to pay tax if you withdraw all of the pension.

This is almost certainly a bad idea. You might be better off buying a life policy to pay out a lump sum on death. That would provide some of the protection for family you want.

I don't think so. That's because my D's couldn't manage finances himself and I need to put plans in place eg a trust with trustees. I can't do that if the money is inaccessible.

Also, if I can't get the higher lump sum that is allowed with a drawdown, no insurance will pay for his wheelchair now.

Oh, and all pensions are taxable (apart from tax free lump sum).

It’s not down to pension companies refusing, it’s the LAW that you have to pay for advice and 80% of the time the advice will be not to transfer, which kills it stone dead.
Up until around a year ago, some pension firms would take transfers from ‘insistent’ clients but that door is now locked.
People have spent £20-30k on advice and still can’t transfer.

Basically unless you are terminal/have reduced life expectancy or have other very good sources of guaranteed retirement income, the advice will be No.

You can also have life insurance written in trust, so with a will in place, your child would be taken care of .

advisingfamilies.org/uk/information-portal/caring-for-others/how-can-i-make-sure-my-disabled-child-is-provided-for-when-i-die/

Well, that's exactly why that LAW is a disgrace - it's set up to benefit the financial advisor, the pension fund and insurance company rather than the actual pensioner. How generous eh.

It doesn't benefit the pension fund. Generally they'd rather you transferred out.

Have you tried chatting all this through with Pensions Wise? I get the impression you're too angry to see the wood for the trees right now.

No, but have been at it for about 2 years, well, since covid.

I would need to live to about 100 to fully benefit from the fund as it stands. So if I die before, the balance stays in the fund, after me shelling out thousands for advice based on averages and/or the insurance.

I’ve been following transfer out values for the last few years and they are at the highest they have been for a long while. My DH transferred out of a 11k a year pension at 60 scheme to a 635k lump sum, he’s 55.

When did he do that and how did he get positive advice?

With respect @YogaLite i think you’re either misinformed about the type of pension you have or you’ve not explained it properly here.

As I understand your situation you have what’s called a defined benefit pension. That simply means it will pay you an agreed income (normally a % of your salary) from an agreed date (normally around your mid 60s).

There is no ‘balance’ as you put it. No account sat there with hundreds of thousands of pounds in your name.

It is as simple as me having a contract to pay you £10 a yr for life. I might then agree to instead buy myself out of that arrangement by giving you, say, £200 upfront. I win if you live for over 20 years. You win if you live for less than 20 years. But that isn’t the same as me having £200 sat in my account which belongs to you.

Also worth being aware the reason most transfers out of this kind of pension are now not possible is because most of them turned out to be a bad idea and people subsequently claimed compensation. Financial advisers and the regulators are just protecting against that happening again.

If you have a DB scheme I highly doubt you will need to live to over 100 to benefit. Most DB scheme recipients receive far more than they ever put in

Yes, I imagine the majority pay in less than £50k ( not to mention paying less tax) over a 30 year period to receive a guaranteed income amount that would cost perhaps £300k via an annuity.
A cetv of £100k means op probably contributed less than £30k. It would buy an annuity of around £5k a year.

Not the case any more, they were at their highest a year or so ago but have plummeted in the last few months.

Well, a guarantee is worthless if someone dies.

So much for "pension freedom" - being offered an option that I can't exercise.

There a numerous warranties that one can decline but no, not this "guarantee".

I could still sell the house, blow it on a Ferrari or two or take a mortgage I can't afford without the advice but I can't to k a pension option for a transfer.

I wonder what age I should be for the transfer to be seen in my favour (apart from being terminally ill)? Is it 60, 70, 80 or a death bed?

That’s like saying your home insurance is pointless unless you burn your house down.

I’m sure you won’t want to hear this, but you can’t take a transfer once you start to draw the pension.

A transfer is rarely in anyone’s best interests unless they have very poor health or significant debts which would be better off being paid off. I know this because I set the terms in my clients’ schemes.

There was a big buzz around ‘Pensions Freedoms’ when George Osborne launched them but the Government have been quietly trying to row them back since as it is generally such a poor deal for individuals, leaves more people falling back on state benefits and is such a target for scammers

I haven't been able to get to transfer so it's all still sitting there waiting for me to get terminally ill to do it I guess.