"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

I’ve posted myself on the ridiculous FCA rules which by design, take the default position is to not transfer.

I managed to achieve a transfer, but it cost me £16k to do what i wanted to do with my ‘asset’ and as a result i have been able to achieve a great many things in my life that would have been out of reach, and will continue to do so.

I got out because i was lucky in my timings in reference to height of transfer values, having multiple DB’s schemes and not all were fit for transfer, having no spouse or children, and so on. Even so, it was difficult and expensive. I actively invest with a 20+ year track record of investing so i knew the difference between ISa’s and how not to get ripped off by the high street banks. Oh and i intended to retire at 55, so 10 years actuarial reduction.should have been factored in to the value of any DB pot, but it wasn’t.

That being said, i had one scheme work £100k but is now worth only 60k transfer value, so it wasn’t worth transferrring initially, even less so now.

Great to see a few actuary’s on here, i had a number of dealings with them as a pensio. trustee and they were on of the few groups of financial experts i’ve met in my life who were (a) honest (b) reliable and (c) had genuine compassion for all parties involved in DB schemes. Their posts above are all valid.

The only thing i’d say, is that DB&DC schemes are great (not perfect - just ask those who have lost life savings) but transfers are sometimes a better option depending on the individual and their circumstances. Alas, too many financial sharks out there have undermined this route to the point where unless you know the system, know which buttons to push, have multiple sources of pension pots, lots of investment knowledge, and finally a friendly pension transfer company, then you are stuck. For most that is probably the best route, but given what we saw with LDI, a near collapse, then clearly no system is perfect.

Sorry OP, given your current TV, even i would suggest that it’s not in your interest to transfer at this time. However in the hope that in time you would regain the lost TV, have a look at the relatively new (at least to me) products called fixed term annuities, which might be an option for you to consider, which might balance risk, stable income and leaving a sizeable inheritance behind. I’ve only just discovered them myself and would only stick with the more reputable brands such as legal & general if i was to experiment with them, whilst they gain any form of reputation as a product. (No product is perfect!)

Best of luck.

Thank u @Bard6817 for the info and moral support. So the fixed term annuities is something I would need to set up myself from the scratch?

I came to the conclusion that pensions are really only a good deal when u are working and want to "save" on tax and offer the death-in-service potential benefit. However once u stop or want to stop working, the system is loaded against u.

For now I am just waiting until all those members of public services "gold-plated" pensions wake up to the fact that their families/beneficiaries will also lose out if they die before the average FCA death age expectations if they don't transfer.

Plus, at this rate, any tax saving on contributions might even disappear if taxes go up and stay up when they retire.

Oh i know many of those public servants are aware of their loss - it was a big thing back in 2015 when Osbourne cancelled their ability to transfer out - as he was introducing the pension freedoms. I think they knew it would break the system if we had mass transfers out.

Sadly there is no mechanism for ordinary people to have a voice with the fca, and even more sadly everyone who does have a voice is from the financial services industry or is a government servant - and at times have had feet in both camps. Shocking that no pension customer who doesn’t have a conflict of interest is actually represented on any of their boards.

Re: Fixed term annuities, they would work for someone with a cash pot considering their pension freedom mechanism. You might not have that option now, but it might be an option for the future and could inform your argument as you attempt to move forward with a transfer. As it’s not a stock market investment, you wouldn’t need stock market investment skills.

I am a huge fan of pensions, what i’m against is a loaded argument, the assumption that we should all be protected from ourselves when it comes to our assets, that we are all financially incompetent and NEED advice with pots of 30k. I’m also against the base assumption that DB schemes are better than DC schemes, again, just ask those who have lost their life savings from DB or DC schemes, or those who have successfully managed to transfer a 20k a year DB scheme income into a multi million pound asset for their family inside a SIPP wrapper. Finally, for every scam out there, there is probably a FA who signed on the dotted line, to enable that transfer. This is the industry we are dealing with. I do not rate FA’s and the number of times i’ve spoken with colleagues to advise against FA advice, is ridiculous. And from the reports from colleagues, the FA eyes always drop when they say, how do your costs stack up when compared with Vanguard…. IFA’s are only marginally better, as i’ve yet to find one that is willing to do cost per hour, fixed fee, rather than a percentage, when dealing with large sums, even if someone has a single tax free wrapper and is looking for a simple answer to a simple questions.

Pensions and Stocks and Shares ISA’s are valuable tools in growing wealth, and these days, with costs going up and taxes likely to, tax free wrappers are vital. So i understand your frustration, but learn all you can, there’s lots of great advice on youtube, Pensioncraft is one, and it’s never too late to really get financially educated. I wish i’d started younger, but didn’t really get it til i had some money, and i’d missed so many opportunities by that point, that i’d have been wealthier sooner.

@Bard6817 thank you for the shout out to actuaries. A career first for me and I felt strangely pleased by some praise for my profession from a random person on the internet!

For now I am just waiting until all those members of public services "gold-plated" pensions wake up to the fact that their families/beneficiaries will also lose out if they die before the average FCA death age expectations if they don't transfer

By the very definition of average, some scheme members will die earlier than the average death age and some later. The shorter lived fund the longer lived, some win, some lose. Like an insurance policy I guess. Not a reason to transfer out.