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UK Final salary pension transfer

UK Final salary pension transfer

Old Jul 23rd 2020, 1:04 am
  #16  
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Default Re: UK Final salary pension transfer

Originally Posted by paul45 View Post
There are a number of factors in the decision of whether to stick with a final salary pension -
1- Rate of return embedded in the lump sum versus final salary (time value of money calculation, looking at various time ranges from receipt of benefits to death)
2- Quality of the company backing the scheme (you are effectively an unsecured creditor)
3- Lifestyle, spending, other sources of income in retirement - the final salary is not adjusted for inflation every year but your expenses certainly will be

So it's not so simple to say "you should stick with a final salary pension" OR "value of 53x the annual amount does change that advice." In my view, neither is correct and it requires deeper analysis to make a recommendation.

Next, "your only realistic option is to transfer to a UK based SIPP" is also not correct. There are international SIPP providers which work with IFA/RIAs that can provide access to US-based (if that's your preference) investments.
Of course every situation has its own specific details but as rule of thumb you should stick with a final salary scheme unless you are offered a very high multiple of your annual earnings and are comfortable making major financial decisions independently. Anyone in the latter category will be well aware of that and will be more than capable of figuring out their own specific circumstances. Anyone in the former category is almost certainly going to be advised not to transfer. Nearly 80% of all analysis performed under the new regulations result in a No Transfer recommendation. Take into account that many people undergoing the required analysis fit into the latter category and that tells you that most people in the former category will get the No Transfer recommendation. Although there will be a few exceptions to the rule, this can help folks think twice before undertaking a very expensive analysis.

The UK based SIPPS provide access to funds in almost every major exchange and currency. In fact as an expat you are limited to specific international funds but retain the UK regulator protection which is priceless. Of course you could transfer to a non UK regulated SIPP but I would think more than twice about that one.
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Old Jul 23rd 2020, 12:24 pm
  #17  
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Default Re: UK Final salary pension transfer

Originally Posted by SquirrelRat View Post
I thought company pensions were adjusted for inflation. Mine, from a university, certainly goes up every April.
Originally Posted by ProfYaffel View Post
Mine is too, with an oil company
I have 2 UK private pensions and one US private pension. One of my UK private pensions is adjusted for inflation the other 2 pensions are fixed. The US pension is over 4 times larger than the other 2 combined and it is fixed, and has been since I retired over 10 years ago. Fortunately inflation has been low this last 10 years and we are now both coming up to OAP and SS age.
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Old Jul 23rd 2020, 11:24 pm
  #18  
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Default

Originally Posted by ProfYaffel View Post
Mine is too, with an oil company
I should rephrase "the final salary is not always adjusted for inflation". That said, what matters is your lifestyle and spending. If inflation is 2% per year but your spending is increasing by a greater amount (think healthcare costs in the US), even if just a portion, this could present a challenge.

Originally Posted by Glasgow Girl View Post
Of course every situation has its own specific details but as rule of thumb you should stick with a final salary scheme unless you are offered a very high multiple of your annual earnings and are comfortable making major financial decisions independently. Anyone in the latter category will be well aware of that and will be more than capable of figuring out their own specific circumstances. Anyone in the former category is almost certainly going to be advised not to transfer. Nearly 80% of all analysis performed under the new regulations result in a No Transfer recommendation. Take into account that many people undergoing the required analysis fit into the latter category and that tells you that most people in the former category will get the No Transfer recommendation. Although there will be a few exceptions to the rule, this can help folks think twice before undertaking a very expensive analysis.

The UK based SIPPS provide access to funds in almost every major exchange and currency. In fact as an expat you are limited to specific international funds but retain the UK regulator protection which is priceless. Of course you could transfer to a non UK regulated SIPP but I would think more than twice about that one.
All the factors I described are calculable, not subjective - it's a time value of money calculation incorporating income (whether from final salary or investing a lump sum with investment return assumption), expenditure and inflation expectations on various components of expenditure. You could also discount the final salary to some extent to account for credit quality of the pension provider. You compare the two cashflow streams and whichever comes out higher should be the direction you go.

Last edited by christmasoompa; Jul 24th 2020 at 4:59 pm.
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Old Jul 24th 2020, 5:41 pm
  #19  
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Default Re: UK Final salary pension transfer

Hi
I need to take documented financial advice from a certified UK IFA before I can think about transferring my DB pension into a SIPP. Anyone have recommendations ?
P.S I dont have enought posts to be able to read PMs

Thank you
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Old Jul 24th 2020, 9:23 pm
  #20  
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Default Re: UK Final salary pension transfer

Originally Posted by durham_lad View Post
I have 2 UK private pensions and one US private pension. One of my UK private pensions is adjusted for inflation the other 2 pensions are fixed. The US pension is over 4 times larger than the other 2 combined and it is fixed, and has been since I retired over 10 years ago. Fortunately inflation has been low this last 10 years and we are now both coming up to OAP and SS age.
I think the inflationary increases are more likely with UK public sector pensions than private company pensions.
Lack of these pay rises can be problematic. Just ask any Brit living in Canada for the last 10 years watching their old age pension from the UK government dwindle. Fortunately I don't think it applies for US-based pensioners. There was a campaign to get the anomaly corrected. Although I think it is based on bilateral agreements between the UK and the other countries.
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Old Yesterday, 8:39 pm
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Default Re: UK Final salary pension transfer

Originally Posted by ProfYaffel View Post
Hi
I need to take documented financial advice from a certified UK IFA before I can think about transferring my DB pension into a SIPP. Anyone have recommendations ?
P.S I dont have enought posts to be able to read PMs

Thank you
ProfYaffel The Money Advice Service has a directory that allows you to create a shortlist. As I have less than 5 posts, I cant add the link. However, you can google the following: "Retirement Adviser Directory - Money Advice Service"

As you are resident in the US, you'll likely need to also have a US based advisor. The trustees for the International SIPP will not allow a UK-based advisor to manage your SIPP given that they are not registered with the SEC.

Hope that helps.

- Daniel
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