What Is A Defined Benefit Pension Plan? What Advice Do You Need? DB Transfer Specialist Explained!

hi subscribers and welcome back to the channel my name is Dominic James Murray CEO IFA and founder here at Cameron James okay so today we're going to be discussing Define benefit pension plans what is a defined benefit pension plan what transfer advice do you need and who exactly is a pension transfer specialist if you're already in the process of looking or considering to transfer your pension you can book in via the description below for a free initial consultation via the calendar link you can select the day and the time that is most suitable for you then it will go directly into my agenda you can also reach out via the website or via the WhatsApp button below for a more informal opening if you have to wish to have a quick chat send me a voice note exchange some messages before we potentially look to book you in um for a full initial appointment okay so if you found this video is more than likely you have a defined benefit scheme however for those of you who might not understand a Divine benefit pension plan is an older type of UK scheme which was typically provided back in the day as more of a benefit for employees if you're staying with the same employer over a prolonged period of time obviously the world has kind of moved on a little bit but by then and also Divine benefit schemes are far too expensive for employers to maintain so a defined benefit Pension Plan effectively what it means is at the end of your employment with that company your final salary or final salary DB defined benefit are all interchangeable here your final salary will be based on your final salary when you left the scheme how many years you were in that position or worked at the company plus the accrual rate which would typically be 160th or 180th there's a number of additional Black Box calculations including guilt rates interest rates and many other factors alongside the scheme which will decide what level of retirement income they will give you per annum or what you could exchange that retirement income for as a cash equivalent transfer value or a cetv which will allow you to transfer away from your defined benefit plan in to a sip or a defined contribution plan or possibly even a qrops if that's a requirement for you okay so that gives you a little bit of a background as to what a defined benefit plan is it's very important to realize and caveat a defined benefit pension plan is very different to Define contribution scheme you may well have an older defined benefit pension plan from one of your previous employers 5 10 15 20 years ago it's more than likely that any new employers or maybe your same employer has finished that pension and now you're inside a defying contribution scheme inside a defined contribution scheme the only value that you have is a contributions you and your employer make plus growth minus charges equals the value of that pension of what you will get at retirement it will fluctuate over the course of time up and down with market returns a Divine benefit pension plan is extremely different it is a guaranteed income for life which would typically be revalued and indexed and increased over the course of your retirement to depending upon the factors inside your defined benefit plan so what this means is Define benefit plans are far more valuable to individuals than Define contribution plans it doesn't mean the money in the Divine contribution plan is not valuable of course it is but it's only based on market returns inside the defined benefit plan no matter what happens in the markets no matter if you have crashes financial crisis Etc your plan will continue to increase in value and because that's effectively the commitment which your employer made to you right at the beginning so a lot of people would ask well hang on Dominic Define contribution sounds rubbish compared to the Fine benefit why would I even consider transferring a defined benefit pension plan we have many videos on the channel in relation to this but just as a quick summary some of the reason people might want to take the fine benefit pension transfer advice maybe they think they can outperform their DB scheme if their DB scheme is offering them say base rate plus three or four percent growth per annum some people might say well the S P 500 has done 10 annualized return over the past 30 years I think I could use easily outperform my fund other people might say Dominic I want to maximize my 25 pcls from the age of 55 inside a sip as opposed to inside my defined benefit plan where you never quite get the full 25 I've actually spoken about this on other PSL PCS pcls video at which the team can run for you other areas might be that people are looking to pass on to the assets to their name beneficiaries obviously inside a defined benefit plan 50 will pass on to your spouse at the point arm of your death obviously if you have children there's certain instances where the assets can also pass on to Children typically if they're below 18 or 21 or still in full-time education compared to a sip where obviously 100 of the asset or any other defined contribution scheme can be passed on to your name beneficiaries who does not need to be your spouse and does not need to be your partner it can be anyone um that you define those are just three very basic reasons so what does this mean in terms of the pension landscape now so pension transfer advice for defined benefit pension schemes has become mandatory from the UK government since 2015. I remember when the legislation came out and we were all like what is happening now so effectively your right to transfer your defined benefit pension scheme is somewhat removed from you or is it an arm's distance you now have to go through an authorized and regulated defined benefit pension transfer advice process in order to attain a suitability report as to whether you should transfer your pension or not now whether you think that is ridiculous and the government made a good decision a bad decision or an okay decision on that it's kind of irrelevant that's where we are now and we have to work with inside that framework so you must take Divine benefit pension transfer advice on any DB scheme which is over the value of 30 000 pounds any scheme below the value of 30 000 pounds you can transfer it as per a defined contribution scheme normally it's always best to do it with financial advice but technically you could transfer that scheme yourself so that brings us neatly onto the topic of defined benefit pension transfer Specialists what exactly is a specialist um and why do you need one so a pension transfer specialist is someone who has sat the relevant qualifications in exam to be a pts as we called in the industry before that pts exam you actually need to have sat three previous exams a minimum in order to have the relevant qualifications I actually got one of the books here from the recent pts exam which I sat which is the workbook as you can see here it's a pretty dense topic and there's lots of stuff to be covered now I personally quite enjoyed studying for the examination because a lot of the content for me I already knew it because I'd already been focused on the interesting working on it for some time however there's only two pts exams happen per year with the CSI which the body it's the isi the body that I studied with and in my last examination only 10 people sat that examination so obviously what that means is there's not that many people out there her willing and dedicated enough to sacrifice their time money and energy to getting the relevant qualifications however it's not just the qualification you need with this qualification alone I'm not allowed to give final salary pension transfer advice any pts must also have the correct authorization from the FCA and be authorized to provide a DB final salary advice this is something which is really important when you're focusing on a final salary pension transfer if you're speaking with an advisor ask them directly either a are you a pts yourself and B do you have the relevant authorization from the FCA to provide DB advice some people may say yes and no I am not a pts but I do understand the system I'll be introducing you to a pts who has qualified other people like here at Cameron James I am a qualified pts but we do not provide the authorized DB report ourselves we believe you should always have a Chinese Wars Operation system whereby I'm not the one recommending you to transfer your pension and I'm also the one who's potential really going to benefit from having a long-term relationship with you and having assets under management at Cameron James all of our DB reports are written independently but inside the company from a different member of the team to ensure that we have a little bit of a less conflict of interest in terms of advisors overstating the suitability of the client's report because possibly they might want to have the ongoing management fees so guys I hope this has been a valuable video for you it's a big Topic at the moment if you open up the Ft advisor and the financial times you cannot get away from final salary or defined benefit pension transfer topics if you have any questions at all you want to reach out to us if you're right at the start of your journey you haven't even got your cetvs yet and you want us to attain everything for you if you've already started getting your cetvs you need to be aware that you only have a 12-week period or three months to attain those cash equivalent transfer values we need at least four weeks to submit everything to us and submit for your report but obviously there's normally a week or two words of work before that four week period for your report to start or if you can completely new and you haven't done anything yet get in touch below and we can find out the best option for you for your DB pension transfer options guys I hope this has been a valuable video for you please let me know your feedback um like and favorite the channel below and also subscribe to help grow the channel and let us know that our content to you is most valuable and that you would like to see more of it thank you very much guys and speak to you soon [Music]

Channel: Cameron James Pension Transfer

Views: 4,093

Keywords: Expat, expat financial adviser, pensions, pension fund, financial adviser, financial planning for expats, expats, expat financial planning, financial planning, financial advice, finances, personal finance, expat finances, uk expats, salary, savings, expat savings, financial advice for expats, pension savings, money, wealth management, expat financial plan, retirement, retirement planning, uk expats financial advice, Cameron James

Id: 4m9oE_8Wfs4

Length: 9min 27sec (567 seconds)

Published: Fri Jan 20 2023