Only worth it if you are contemplating transferring anyway. For many the tv is irrelevant as their top priority is a guaranteed escalating income so leaving it where it is will be best. For our clients this is the default stance until we evidence otherwise. In other words we assume before we talk to someone that staying in the DB scheme is best rather than searching for ways to make transferring look better.
Im taking my pension out (when I retire! ) in July next year. (Im 60 in January)
It is a final salary pension ....My pension will be very modest compared to some figures Ive seen on here! Though it will give me a good enough lifestyle, and will be in S.E. Asia for our cold winter months!
Everybody is different, in how much money they want to retire on..for me..I will be fine....more importantly though, the remainder of my life, I wont be governed by work or the alarm clock! Will be able to eat healthily and at a regular time (I work for the railway..so work at stupid times!).
I cant wait...Ive had lots of people ask me...what will you do etc..my reply is..whatever the hell I want to do!
I , as I have said, work stupid shifts, only guaranteed days off are christmas day and boxing day..so i cant wait... BRING IT ON!
Excuse the question but are you transferring out of FS/DB scheme with a calculated lump to manage for the rest of your life?
The figures x24, x36 are these yearly pension not including state pension at 65+?
I have 35 years in University scheme & just looking at options, cheers.
I definitely won't miss working shifts.
Apart from a brief period in the 90's when I worked a double day shift I'd escaped shifts till the last 4 1/2 years.
I'm convinced shifts are unhealthy and nights are the worst.
My final salaries are fairly modest too but they'll be enough
Good luck
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Thanks for that!
Nights are a killer! I have for the past few years, swapped my night shifts....(get extra money for doing them..so easy to swap them).
I am taking up a pension level option type thing...which basically will give me an extra yearly pension (until I get my state pension.....if Im still around!) at 66...then it will drop a little at 66...........had a look at it..IF i live to about 74...thats when Id start to lose out (by taking the level pension option thingy) a little financially that is,...but...will I still be alive then? if I am? will I still be healthy enough to go to Thailand twice a year and do what Im doing now?!
Will I need more money then...if I end up in a care home...the council get my house money pensions anyway!
We only live once...this isnt a rehearsal...live life I say!
This was certainly the approach adopted by our IFA and the independent pension advisor. Both our pensions will have transferred out by the end of the year. In no particular order, our drivers, which satisfied the increasingly strict scrutiny of FCA requirements included:
- Release of tax free cash without the need to drawdown any income until a much later date (not possible with the two DB schemes)
- Control over investment strategy for the two pots
- Pots of sufficient size that income, when needed, can be taken from the dividend without the need to touch the capital sums
- IHT efficient, the pots can pass to our children tax free on death prior to age 75
- income tax efficient, taking into account 2 x individual personal allowances and lower tax rate
- DB schemes reduce by 50% on your death, and expire on death of spouse
For information, we are both 55.
My 52x figure related to the annual pension I would have received under my ex-employer’s FS/DB scheme had I retired at 55. Given our ages, the state pension is irrelevant for quite some time to come.
Last edited by Skyman; 8th September 2019 at 10:34.
I'm not sure what I'm doing yet Steve as regards final salary or drawdown, I'll have to see an adviser
The figures of 24 and 36 are multiples of your final salary after that's been worked out
ie £20,000 x 36 or 50 if you're lucky.
I think the multiple the actuaries used for my last calculation was 32.
I would have retired earlier but the reduction factor used for going at 60 was 36.9 % which means I'd have lost over a third.
I think the average reduction factor is about 4 or 5%/annum which isn't bad.
Even drawing my final salary at 63 I'll lose 16.7%
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Hoorah to that.
It's ok having a fat bank balance at 80 odd but what quality of life have you got??
Everyone knows somebody who've not had the chance to enjoy their pensions, if any.
My mate retired in April 2015 with a good pension scheme, 11 months later out on his mountain bike, heart attack, and that was that.
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The state flat rate pension at roughly £169/week isn't much and some people who've worked all their lived will unfortunately fall short of that.
What will people who haven't even worked the minimum of (I think) 10 years get ??
Do they get credits or benefits ?
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Those posting that they are going to transfer out of their DB pension schemes might find it's not as simple as they think. Due to increasing concerns over the suitability of doing this many advisors are refusing to take on the appraisal work (or can't get insurance cover) & those that do are charging very high fees. You are legally required to take advice before moving so don't just think you can ignore this.
In addition to this some pension providers are now refusing to take in transfers from DB schemes as they do not want to be put in the position of being in any way liable should transfering prove to have been a poor decision.
It's not just about the guaranteed annual pension, you need to consider the benefits as well. Is there a widow/spouse's pension? What level is it? What happens to the pension pot when she/he dies (assuming you go first)? Is there any guaranteed annual rise?
Of course there are advantages to controlling the pot yourself: you may feel you can invest it to produce a higher annual pension, if you die your spouse still has access to the same level of annual pension & when she dies your children get the residue without any IHT issues. For some people moving the funds out is a good idea.
In general the reason CETV multipliers are going up is because the fund managers are struggling to fund the pensions they are paying out so they want as many future pensioners off the books as possible. They aren't offering high transfer values out of the goodness of their hearts: they want you to take the risk.
We all have differing views of risk. My personal view is that if you do not transfer then in reality the £1.5m in this example is irrelevant. You may never receive anything approaching that amount via you and your spouse’s pension. Equally, you may eventually exceed it. That is all the risk/reward of the Pension Fund. Me, I prefer to control my own financial destiny and, just as importantly, my two children for whom housebuying, pension planning etc will be far from easy. I would say, however, that I would not consider a transfer if the CETV was less than £500,000 minimum regardless of circumstances.
You last comment may be true in a very few schemes but it’s not the norm. The main reason CETVs have been rising is gilt yields and long term annuity rates falling. This means the trustees must use higher multiplier to “capitalise” the benefits when working out the CETV.
I retired at 48 with a great pension and for 5 years lived in Spain or Oz for the winters...bought the fast cars and nice watches and travelled the world but by 53 it became boring not having something to get up for.
Don't need the money but went back to part time work and probably will do until i drop dead.
The bonus is i choose what i do and what hours...around 4 hours per day and 12 weeks holiday per year.
If i don't like the job i am doing i move on.
Don't wait for retirement and think it's the golden bullet...it can be disappointing after a while.
Mark
Eastbourne’s a great place to live; there’s always stuff going on and it’s not just for pensioners. I live about ten miles drive from the town itself in a quiet country village.
There are lots of pensioners though and driving around can be a tad frustrating at times, especially if you’re in a hurry.
Whilst I’m no expert, I’ve a reasonable idea of the good and less good places to live in the area, feel free to PM me if you want any local knowledge!
https://assets.publishing.service.go...16_-_FINAL.pdf
Interesting data from a couple of years ago shows the mean and median UK pension incomes (among taxpayers) are £17,100 and £14,300 respectively. Regional variations are quite striking.
https://www.theguardian.com/money/20...test-hmrc-data
Clearly we are all different. I stopped work five years ago, never ever missed it since that time - my career was just that, lucrative but not a heartfelt vocation. Plenty to keep me occupied. Up at 7.45 every day, ready go, but my boy Max (middle aged collie cross) sees to that. Age 55 saw me take pension draw down, but only to use the CFS to buy daughter a house. No intention of touching the pot for several years to come. Bring on the next few years. Cross fingers, they should be awesome.
An interesting article covering this was posted elsewhere:
https://henrytapper.com/2016/12/04/w...culously-high/
Pension annuities near rock bottom.
https://www.which.co.uk/news/2019/09...till-worth-it/
And with annuities being based on long term gilt yields - if you assume they will not change then you have to factor in increased longevity too. Life expectancy increasing year on year is also driving annuity rates down lower
If you wanted a joint escalating annuity with 500k you wouldn't get much.
What does this mean for final salary transfer values?
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Probably 40x.
The ‘my benefits’ page on my employers intranet tells me that my employer is contributing an additional 60% of my annual salary into my DB pension scheme, just to meet its 60ths non-contributory obligation for a retirement age of 60. And that’s before the recent further fall in gilt yields.
Think I’ll be in the firing line once the next round comes up, as it’s only us time served oldies who still get the DB pension.
Anyone who joined in the last 10 years gets a standard 15% DC.
Last edited by noTAGlove; 19th September 2019 at 14:31.