Cashing in a final salary pension to use in P2P

It's all don to RISK.


With a FS pension the employer has to deal with all the RISK, if you transfer it out then you face all the RISK.


There seems to be some confusion possibly in a number of the previous posts between retiring taking your maximum 25% Tax Free Lump Sum / Pension Commencement Lump Sum and putting that into P2P as opposed to taking the Cash Equivalent Transfer Value out of the FS scheme and going it alone entirely.

I think you are considering the latter by the sounds of it.


Personally I wouldn't put ALL of ANYTHING into one investment vehicle whether it be a CETV cash pot, a 25% TFLS amount, or just regular investments / savings. Much prefer to have a range of options in play at any one time.

Your estimated pension v your CETV doesn't sounds like a very advantageous CETV though. A £ scheme I am a deferred member of offered a £6k pension relative to a CETV of £120k so broadly similar to yours.

I discussed it informally with a couple of IFAs and they made it clear that they thought I would be crazy to move it out.

There will be a number of factors - some of which have already been mentioned including differences:

- in demand;
- ease of planning;
- preference to rent in Germany vs. buy in the UK (+ Government policy to encourage this)
- the growth the letting/BTL  sector in the UK

There are also issues to do with the average age of the housing stock, differences in the availability of transport infrastructure and the fact that East Germany is still coming up the standard of West Germany.

But I disagree with your statement that the "Amount of land and population and population distribution are somewhat comparable. Demographical development is comparable." between the UK and Germany.

If you look at Wikipedia, the population density of the UK is already higher than Germany (and if you look at England alone the gap is even larger) but what is really telling are the future demographic/economic trends (excluding the recent refugee crisis)

Germany, like Japan (where I used to live) is a rapidly ageing society - and its population  is already falling - while the UK is expected to have the largest population by 2050 (and be the largest European economy as well)

The EU has previously estimated that Germany's population will fall from 81.3 million in 2013 to 70.8 million in 2060, whereas the UK's will rise from 64.1 million to 80.1 million (and not just due to net migration) over the same period. In 2080, the population would be 85m in the UK vs. 65.4m in Germany

Given that the % of elderly people is also increasing faster than in the UK, it also means a higher % of the smaller population are going to be as economically active.

Some links/stats chosen at random:

www.cityam.com/221125/population-growth-uk-become-biggest-country-european-union-2050
www.bbc.co.uk/news/business-34172729
www.migrationwatchuk.org/briefing-paper/356

I suspect all these trends have underpinned the UK housing market and will continue to do so.

While I understand your reasoning about demographics, I think it is unlikely to be the biggest driver

UK
Density 255.6/km2

Germany
Density 227/km2

UK age structure
15-64 age: 66.0%
65+ age: 16.4%
Source: en.wikipedia.org/wiki/Demography_of_the_United_Kingdom#Age_structure

Germany age structure
15–64 years: 66.1%
65+ years: 20.3%
Source (different year): en.wikipedia.org/wiki/Demographics_of_Germany

The differences seem rather minor to me.

It seems good to exclude recent refugee influx (>1M), since that would not have affected house/land prices in the past. However in a case of a Brexit there is some probability of a reverse effect. In the past UK experienced a huge influx of Eastern European workers. One argument of Mr. Cameroon seems to be that he wants to curb/control that, therefore that could slow down.

P.S.:

Actually when it comes to public infrastructure (roads, universities, hospital, administration), the standard in the East is much better than in the West as everything is new. Some eastern towns specialise on attracting retiree with offering a very good cultural programm, good services, all at much lower living costs then in the former west.

I agree, the main difference is future expectations. Personally I think the much more established institutional residential letting market is a big difference as well, providing stability for renters.

Re current demographics, there is a 23% greater 65+ already and the other difference is the number not quoted: 17.6% UK : 13.6% Germany for <15, i.e. 23% less children. This underpins the future expectations, not just immigrants. Of course the big unknown is the impact of the current migranst who are a much higher proportion of the young adults in Germany than UK now.

That sounds like a money purchase scheme, not a final salary scheme. 

Unless you are saying that you were offered a transfer value of £100k for each £5,000 of pension, which sounds too high unless you were very close to retirement.

I am one of the "braver" I transferred as a deferred member (age 53).  The amount was approximately 20 x the current stated full annual pension. I am now running a SIPP and I am on track to retire fully at 55 - 10 years earlier than the company scheme would have started to pay. I do also have other assets as though so have a risk spread.

Not necessarily comparing like with like.  Different schemes have different rights to increases, which will change the numbers significantly.  My guess is your quote was based on projected pension assuming annual increases.  (The clue is the word "estimated".) The other quote probably was not, but still seems high.