The Money Thread...

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Grumpy David
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PostRe: The Money Thread...
by Grumpy David » Wed Sep 02, 2020 11:28 am

Tomous wrote:Ah, so 2 of my jobs were with defined benefit schemes, in that case will likely not be worth changing them?

I am going to contact the schemes now, update my details and get the information I need before deciding what to do.

Thank you for your replies :wub:


It would be utter madness to transfer a defined benefit scheme to defined contribution. Most schemes actually require you to get an IFA to sign off on switching them because it's such a bad idea as DC is the Gold Standard of pensions.

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Tomous
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PostRe: The Money Thread...
by Tomous » Wed Sep 02, 2020 11:29 am

Grumpy David wrote:
Tomous wrote:Ah, so 2 of my jobs were with defined benefit schemes, in that case will likely not be worth changing them?

I am going to contact the schemes now, update my details and get the information I need before deciding what to do.

Thank you for your replies :wub:


It would be utter madness to transfer a defined benefit scheme to defined contribution. Most schemes actually require you to get an IFA to sign off on switching them because it's such a bad idea as DC is the Gold Standard of pensions.



Even if I was only there for a couple of years?

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Grumpy David
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PostRe: The Money Thread...
by Grumpy David » Wed Sep 02, 2020 11:38 am

Tomous wrote:
Grumpy David wrote:
Tomous wrote:Ah, so 2 of my jobs were with defined benefit schemes, in that case will likely not be worth changing them?

I am going to contact the schemes now, update my details and get the information I need before deciding what to do.

Thank you for your replies :wub:


It would be utter madness to transfer a defined benefit scheme to defined contribution. Most schemes actually require you to get an IFA to sign off on switching them because it's such a bad idea as DC is the Gold Standard of pensions.



Even if I was only there for a couple of years?


Most of the DC schemes require professionals to sign off that they've recommended you swap from DB to DC. It's a seriously high risk / compliance issue.

https://www.moneyadviceservice.org.uk/en/articles/transferring-out-of-a-defined-benefit-pension-scheme

At a glance
In most cases you’re likely to be worse off if you transfer out of a defined benefit scheme, even if your employer gives you an incentive to leave.

Before you go ahead, you should seek advice from a regulated financial adviser.

In some cases you might have to.


With only 2 years in a DB scheme its very unlikely to be worth 30k which is generally where the IFA sign off is required but DB schemes are guaranteed inflation linked returns where as DC assumes certain levels of stock market returns.

You might be surprised at how much 2 years of DB pension might equate to on a monthly basis. They're very generous schemes that 2 years of DC wouldn't remotely compare to unless you assume something insanely high like 4 decades of 10% after inflation returns.

Sort the DC out and leave DB the hell alone (but do update your current address and contact details with them).

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Tomous
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PostRe: The Money Thread...
by Tomous » Wed Sep 02, 2020 11:48 am

Thank you, makes sense :cool:

I've contacted each to update my details and will look at merging the DC from my last job into my current scheme.

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Jenuall
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PostRe: The Money Thread...
by Jenuall » Wed Sep 02, 2020 11:53 am

I go through phases of getting really hands on with my pension - tracking funds, moving things around, comparing charges etc. but then I fall back in to just leaving it alone for ages. It seems to be doing okay at the moment but pensions in general always seems like such a huge area that despite how important it all is I almost just want to ignore it and not have to worry about it all!

Looking at it today it's nice to see that it seems to have recovered well from the Covid wobble earlier in the year, that's enough reassurance to keep me happy enough for now!

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