Author Topic: drawdpwn  (Read 2340 times)

oilworker

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drawdpwn
« on: Jun 20, 2018, 07:55:41 AM »
I am leaving my final salary pension scheme because it is under funded and under review with warning it could go to the government scheme if not fully funded in the next year or so. I want to put it into a drawdown scheme but its paying for advice that's worrying. PLUS who do you get.   

zoony

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Re: drawdpwn
« Reply #1 on: Jun 20, 2018, 11:36:37 AM »
Hello Oilworker. PF is a social site not an advice forum though there's a lot of folk with various fields of knowledge and experiences who're willing to share during a conversation. If you have a look at the various threads you'll get the idea. Oh, and it's usual to use some sort of greeting. :)
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Phil

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Re: Drawdown
« Reply #2 on: Jun 20, 2018, 11:47:42 AM »
I am leaving my final salary pension scheme because it is under funded and under review with warning it could go to the government scheme if not fully funded in the next year or so. I want to put it into a drawdown scheme but its paying for advice that's worrying. PLUS who do you get.

There are a few members who could probably give you good advice but the problem is that you'd have to give a lot of personal information on the forum.

I'd be inclined to advise you to contact the Pensions Advisory Service which is independent & free.

I can understand your concern because I took early retirement with my final salary pension some years ago when final salary pension schemes first came onto the radar of cost cutting measures.

I hope you get it sorted satisfactorily.

https://www.pensionsadvisoryservice.org.uk/about-pensions
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JCBDriver

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Re: drawdpwn
« Reply #3 on: Jun 20, 2018, 12:05:07 PM »
A lot of DB schemes are not fully funded, mine included, but it does not impede their ability to payout current pensions. The degree of underfunding is a matter of an actuarial valuation. A lot of companies put in place mitigation strategies to address the issue.

I would be looking into how the trustees are dealing with the issue before making any decision. You may be sacrificing benefits that you wont be able to recover with draw-down.

I would second Phils advice and seek some clarity from PAS.
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Phil

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Re: Drawdown.
« Reply #4 on: Jun 20, 2018, 12:31:39 PM »
A lot of DB schemes are not fully funded, mine included, but it does not impede their ability to payout current pensions. The degree of underfunding is a matter of an actuarial valuation. A lot of companies put in place mitigation strategies to address the issue.

I would be looking into how the trustees are dealing with the issue before making any decision. You may be sacrificing benefits that you wont be able to recover with draw-down.

I would second Phils advice and seek some clarity from PAS.

Thanks for your input JCBDriver, I was hoping that you'd reply.
"I've stopped arguing with idiots. They will only bring me down to their level and beat me with experience.”

Paraphrased from George Carlin

oilworker

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Re: drawdpwn
« Reply #5 on: Jun 20, 2018, 01:01:32 PM »
 Thanks for your comments i will try and get more information.

brian54

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Re: drawdpwn
« Reply #6 on: Jun 20, 2018, 01:26:20 PM »

My pension scheme is 102% funded.
I am not sure what will happen if we all lived to 107.

JCBDriver

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Re: drawdpwn
« Reply #7 on: Jun 20, 2018, 01:47:34 PM »
That would imply that the assets are yielding a very good return or alternatively there are not a lot of ex-employees drawing upon the scheme. I would assume that it is closed to new members.

My own employer decided to close the DB scheme  in order to mitigate any future liabilities. This is an approach a lot of companies are moving to as the contribution to a DC scheme places the responsibility for the investment behind the pension pot on the employee not the employer. Provided they match the appropriate level of contribution they know they are not building a forward commitment to the scheme. 
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JCBDriver

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Re: Drawdown.
« Reply #8 on: Jun 20, 2018, 01:50:43 PM »
Thanks for your input JCBDriver, I was hoping that you'd reply.


Thanks Phil, it was something I had to deal with, as OilW and others have had to with very little help. So I sympathise.
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brian54

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Re: drawdpwn
« Reply #9 on: Jun 20, 2018, 02:46:19 PM »
What annoys me is the company keeps on saying pensioners now living outside London should not expect pensions at the London rate.
They happily took our contributions at the London rate and the scheme is not short of money.

StevieG

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Re: drawdpwn
« Reply #10 on: Jun 21, 2018, 03:54:31 PM »
This may be an opportunity rather than a problem:

Key differences between DB and a personal pension are:

1. With a personal pension you need to estimate when you / wife will die.  This is so you can decide how much to pull out in drawdown each year.  If you pull out too much each year, the fund will run out after a [hopefully long] while, leaving you with no personal pension!  In a DB scheme, the payments just continue till you / wife die. But if the size of your personal pension pot is enough to see you through till 110, you can spend the lot! calculating the amount to take out each year to leave the drawdown pot empty when you would turn 110.  [i.e. not only spend the 4 or whatever percent per year, but also the capital].  Careful judgement needed here to make sure you don't run out!
2. If you have a good sized pot that will keep you well till you pass on to the great retirement home in the sky, you can leave it to your kids.  Not possible with DB.

This is what I would do.  I am not qualified in anything financial [am an engineer, so can do sums and have half a brain...], so this is just in my honest opinion. [do your own research etc..] but I have had to sort out my own messy pension situation, and seem to have done ok:

a. Get a quote from the DB scheme for the amount of the lump sum it would transfer to you. Unless it's ridiculously small and you might be better if the government took over [heaven knows how you make this judgement!] take it and put it into a Self Invested Personal Pension. [SIPP] You may well find that your DB scheme will insist you have professional advice from an advisor before you can get the money out. Consult friends / relations to see if they know a good one.  Otherwise google "good independent financial advisors" and read carefully!

I opened a SIPP with Hargreaves Lansdown {am not am employee and don't have shares!} I have not yet gone into drawdown, but have the funds in a few Investment Trusts.  These are funds that have shares in many companies.  The management spend their time buying and selling shares to maximise the value / income from the fund.  They are very keen to do well with it because they have bonuses based on how well the fund does.  And they want a big Merc next year!  So they have incentive to perform well.

To find a good Investment Trust google "Best Performing Investment Trust 2018".  Pick maybe 3 and invest a third of the money in each.  Every January 1st, do the same goggling and transfer your SIIP investments based upon the latest performance figures.

You can choose aggressive growth trusts [high risk] or safe and sound trusts [low risk] 

Happy to respond further.............have been studying pensions for 25 years after I discovered I had no pension entitlement at age 42! [changed jobs a lot and had the stupid belief I would die early like my dad....daft].  Now 67 and things are fine financially.




JCBDriver

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Re: drawdpwn
« Reply #11 on: Jun 21, 2018, 04:59:57 PM »
1. Some DB schemes come with additional benefits. Mine has a 50% pension to surviving spouse when I die. So cashing in should only be an option when everything has been considered, pros and cons.
 2. A SIPP is also sits outside IHT when passed on to beneficiary tax free upto age 75 for withdrawals or conversion to annuity. After 75 taxed at highest marginal rate. Provided lifetime allowance does not apply (£1M - I wish!)

Insurance companies are reluctant to part with pension monies for obvious reasons hence the insistence on financial advice. In my case a large well known company put up numerous obstacles to accessing my DC pot. I also went with H&L, after some research, who eventually prised it out of them.

I still think you need to understand how and what your SIPP is invested in and how much the management charges are. Frequent reviews are essential - fire and forget is not a strategy given changes to personal circumstances in retirement.
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prestbury

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Re: drawdpwn
« Reply #12 on: Jun 24, 2018, 08:58:24 PM »
What annoys me is the company keeps on saying pensioners now living outside London should not expect pensions at the London rate.
They happily took our contributions at the London rate and the scheme is not short of money.
For once Brian this is not all about you, the guy is asking for some genuine advice which you are not offering.