Author Topic: Any thoughts on this?.  (Read 201 times)

brian54

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Any thoughts on this?.
« on: Jul 11, 2018, 05:48:04 PM »

A man has asked me for advice. He will retire before the end of 2018 and the company pensions advisor said so he can give the best advice to bring in a list of his savings and any other pensions.
The advisor said it is entirely his choice but he as said why not live on his savings for the next 4 years and let his pension increase by 11% per annum for every year he delays drawing it.
My immediate thought is what would happen if he dies in the next 4 years .Will his family get any of the benefits. It is a medium size company but I am also wondering what will happen if his employers go bust?.
Any other thoughts?.
Personally I think he should see an advisor independent of his employers.

StephenM123

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Re: Any thoughts on this?.
« Reply #1 on: Jul 11, 2018, 06:13:21 PM »
I had a company go bust in my mid-forties and it ten years to sort out the mess with the scheme members losing out badly as solicitors, fund managers and administrators took their wedge.


I looked at delaying my state pension but the payback time was 17 years, i.e. more than the average lifespan!


My advice is take the state pension at 65 and look at the company pension options. Two companies I worked for had an IFA linked to the scheme and their advice was dubious, and one made you check for your ring and watch after shaking hands!

Phil

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Re: Any thoughts on this?.
« Reply #2 on: Jul 12, 2018, 08:16:38 AM »
A man has asked me for advice. He will retire before the end of 2018 and the company pensions advisor said so he can give the best advice to bring in a list of his savings and any other pensions.
The advisor said it is entirely his choice but he as said why not live on his savings for the next 4 years and let his pension increase by 11% per annum for every year he delays drawing it.
My immediate thought is what would happen if he dies in the next 4 years .Will his family get any of the benefits. It is a medium size company but I am also wondering what will happen if his employers go bust?.
Any other thoughts?.
Personally I think he should see an advisor independent of his employers.

A deferred State Pension only increases by 5.8% per year.

I've not done a precise calculation but if the man deferred his State Pension for 4 years & had to take the equivalent amount from his savings, it would take around 14 years before he broke even.
« Last Edit: Jul 12, 2018, 08:21:18 AM by Phil »
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fortyone

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Re: Any thoughts on this?.
« Reply #3 on: Jul 12, 2018, 09:27:16 AM »
I would have deferred my state pension by a year if it had taken me into the new arrangements which pay more but as they are based on birth date and not the date you draw the pension all that I'd have got was the increase from the deferral. Calculations I made at the time lead me to believe that to be a poor deal.

My firm belief is that every time a pension advisor gets involved their cut reduces your take and that is more than any additional benefit coming from their advice.

brian54

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Re: Any thoughts on this?.
« Reply #4 on: Jul 12, 2018, 11:54:52 AM »

Sorry I did not make it clear.
His ex employers have provided a financial advisor and are paying him.
My thought are is he mainly acting in the interests of the company.
When I retired we had a financial advisor paid for by the company but there was no option to defer the pension.
He did give advice on tax efficient ways to invest our money etc but the company did not get involved with the investments so had no interest.


Phil

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Re: Any thoughts on this?.
« Reply #5 on: Jul 12, 2018, 12:30:42 PM »
Sorry I did not make it clear.
His ex employers have provided a financial advisor and are paying him.
My thought are is he mainly acting in the interests of the company.
When I retired we had a financial advisor paid for by the company but there was no option to defer the pension.
He did give advice on tax efficient ways to invest our money etc but the company did not get involved with the investments so had no interest.

Well irrespective of who's paying the so-called financial adviser, the advice is wrong as he'll only get 5.8% increase, not 11%, on his deferred State Pension.

Whether waiting until he's virtually 80 (assuming he's retiring at 65) just to break even is debatable.
"I've stopped arguing with idiots. They will only bring me down to their level and beat me with experience.

Paraphrased from George Carlin

brian54

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Re: Any thoughts on this?.
« Reply #6 on: Jul 12, 2018, 01:06:38 PM »
Well irrespective of who's paying the so-called financial adviser, the advice is wrong as he'll only get 5.8% increase, not 11%, on his deferred State Pension.

Whether waiting until he's virtually 80 (assuming he's retiring at 65) just to break even is debatable.



We are talking about the company pension. He is not state pension age yet.

Phil

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Re: Any thoughts on this?.
« Reply #7 on: Jul 12, 2018, 02:43:38 PM »

We are talking about the company pension. He is not state pension age yet.

For god's sake Brian, read your goddamned original post!!!!!!!!!!!!!!!!!!

You asked about deferring his State Pension & the financial advisor saying it would increase by 11% each year if it was deferred!!!!!!!!!!!!
« Last Edit: Jul 12, 2018, 02:47:58 PM by Phil »
"I've stopped arguing with idiots. They will only bring me down to their level and beat me with experience.

Paraphrased from George Carlin

StephenM123

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Re: Any thoughts on this?.
« Reply #8 on: Jul 12, 2018, 02:56:37 PM »
It wasn't clear that it was early retirement which changes things somewhat.


He needs to go through the pension rulebook to examine the various scenarios. For instance there could be generous "death in service" benefits that cease on retirement, the widow's pension could be better if he takes the pension now (compared to dying before he takes it). Then there is what type of scheme is it. 11% growth seems exceptional these days - if money purchase it could actually go down depending on the financial markets and Brexit. So no easy answers


From experience IFAs linked directly to a company and/or scheme do not give the best advice. He should ask the company to pay one he chooses.

Phil

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Re: Any thoughts on this?.
« Reply #9 on: Jul 12, 2018, 03:01:41 PM »
It wasn't clear that it was early retirement which changes things somewhat.

He needs to go through the pension rulebook to examine the various scenarios. For instance there could be generous "death in service" benefits that cease on retirement, the widow's pension could be better if he takes the pension now (compared to dying before he takes it). Then there is what type of scheme is it. 11% growth seems exceptional these days - if money purchase it could actually go down depending on the financial markets and Brexit. So no easy answers

From experience IFAs linked directly to a company and/or scheme do not give the best advice. He should ask the company to pay one he chooses.

It won't be early retirement, Brian said the man's due to retire before the end of the year so if he did want to defer his State Pension now's the time he'd have to start thinking about it.
"I've stopped arguing with idiots. They will only bring me down to their level and beat me with experience.

Paraphrased from George Carlin

StephenM123

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Re: Any thoughts on this?.
« Reply #10 on: Jul 12, 2018, 03:11:21 PM »
Brian needs to make things clear!!!

Phil

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Re: Any thoughts on this?.
« Reply #11 on: Jul 12, 2018, 03:14:54 PM »
Brian needs to make things clear!!!

It happens quite often.

Brian suddenly changes the criteria that makes any helpful posts meaningless.
"I've stopped arguing with idiots. They will only bring me down to their level and beat me with experience.

Paraphrased from George Carlin

xetog

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Re: Any thoughts on this?.
« Reply #12 on: Jul 13, 2018, 10:49:17 AM »

Brian's original post:
 "A man has asked me for advice. He will retire before the end of 2018 and the company pensions advisor said so he can give the best advice to bring in a list of his savings and any other pensions.
The advisor said it is entirely his choice but he as said why not live on his savings for the next 4 years and let his pension increase by 11% per annum for every year he delays drawing it.My immediate thought is what would happen if he dies in the next 4 years .Will his family get any of the benefits. It is a medium size company but I am also wondering what will happen if his employers go bust?.Any other thoughts?.
Personally I think he should see an advisor independent of his employers."

Where did Brian say anything about state pension?  When I first read it, I did wonder whether he was referring to the state pension. but realised that he was talking about an offer from the company.  I think you have all been a bit hard.  yes, it could be a little clearer because there is a similar scheme for the state pension, but he does not refer to it.

I would say two things:
1. The pension should be separate to the companies finances and the funds be held in a safe account regulated by a separate board of administrators.  I would refer to them and ask if this is kosher.
2.  The final arbiter of whether it is worth is  surely the return one gets from the annuity at the end of the day.  If annuity rates are dropping faster than the rate of return on the money, his pension will be less despite the increase in his lump sum.[/font]

 It is not stated what sort of pension this is.  If it is a final salary pension and he has served the correct number of years it does not depend upon an annuity.  But to get a return on the lump sum it might have to be removed from the company scheme and reinvested.  A bit dodgy to mind and it is too complex for one of us to advise. I think an independent financial advisor is the way to go.

Mike.X
« Last Edit: Jul 13, 2018, 10:53:55 AM by xetog »
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Phil

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Re: Any thoughts on this?.
« Reply #13 on: Jul 13, 2018, 03:51:36 PM »
Brian's original post:
 "A man has asked me for advice. He will retire before the end of 2018 and the company pensions advisor said so he can give the best advice to bring in a list of his savings and any other pensions.
The advisor said it is entirely his choice but he as said why not live on his savings for the next 4 years and let his pension increase by 11% per annum for every year he delays drawing it.My immediate thought is what would happen if he dies in the next 4 years .Will his family get any of the benefits. It is a medium size company but I am also wondering what will happen if his employers go bust?.Any other thoughts?.
Personally I think he should see an advisor independent of his employers."

Where did Brian say anything about state pension?  When I first read it, I did wonder whether he was referring to the state pension. but realised that he was talking about an offer from the company.  I think you have all been a bit hard.  yes, it could be a little clearer because there is a similar scheme for the state pension, but he does not refer to it.

I would say two things:
1. The pension should be separate to the companies finances and the funds be held in a safe account regulated by a separate board of administrators.  I would refer to them and ask if this is kosher.
2.  The final arbiter of whether it is worth is  surely the return one gets from the annuity at the end of the day.  If annuity rates are dropping faster than the rate of return on the money, his pension will be less despite the increase in his lump sum.[/font]

 It is not stated what sort of pension this is.  If it is a final salary pension and he has served the correct number of years it does not depend upon an annuity.  But to get a return on the lump sum it might have to be removed from the company scheme and reinvested.  A bit dodgy to mind and it is too complex for one of us to advise. I think an independent financial advisor is the way to go.

Mike.X

So the man isn't retiring before the end of 2018, he's taking early retirement which is a totally different thing.
"I've stopped arguing with idiots. They will only bring me down to their level and beat me with experience.

Paraphrased from George Carlin