Another CETV Q; Help Me Thrash It Through...
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No.
Current pension at NRA is £33k. 27K is the pension accrued at the DoL (which is approx £400 more than the statement from last year so this makes sense(increase in accrual).
[As an aside, £27k is the revalued pension, not the pension at DoL (which never changes in value).]
This shows the danger in using multiples. One person's multiple can simply not be read across to another person.
I found a thread where someone had a multiple of 32 that you might have used as the basis for your first post. That person had 7 years to go until normal retirement age. However, you have 13 years until yours would come into payment and that will always reduce the multiple (even if everything else about the schemes are the same). I'd hazard a guess that going from 7 years out to 13 years out would get close to halving a multiple.
However, in practice, multiples are affected by every single aspect of the scheme and the member's individual entitlements.
The current focus on multiples is far too simplistic.0 -
In this instance/estimate, isn't the revalued pension and the pension at DoL the same thing, i.e. based on the fators known on the date the estimate was produced my pension number was £27k.As an aside, £27k is the revalued pension, not the pension at DoL (which never changes in value).
I can only speak from my own perspective, and the danger as you put it or only very loose relevance to my own personal circumstances is well understood and accepted. It was a starting point for a discussion. I have modelled this using many different ratio using my own spreadsheets and cFiresim.[This shows the danger in using multiples. One person's multiple can simply not be read across to another person.
This thread has helped me immensely to understand what is important going forward, and as usual I have received excellent posts, confirmations of benefits and potential drawbacks, together with some ideas/options which I had not considered. If all that comes out of this thread is a clear and concise understanding of what is important to our retirement and how to focus the goals to achieve this then this thread achieved more than I hoped.
If the actual CETV is No.1 then yes I would feel a degree of.....'oh dear, poor me' but, at the same time I know where I stand and what i need to focus on.
If the CETV is the sum on 1 through 3 then that makes for some interesting decisions. Even if I should I go forward with a transfer, that would not stop me from continuing to contribute to my company's DC scheme, 8% from myself and the same from my company. Additionally the AVCs I currently make would also continue in to the DC scheme.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Pension at DoL is exactly what it says it is - it!!!8217;s fixed forever at the point a member leaves. Revalued or preserved pension is the pension after post-leaving increases have been applied to it. However, I think you are still an active member (which I was forgetting in my last post) so we may be talking at cross purposes Re. the usual terminology.
And having said what I said about multiples, your CETV does still look a bit on the low side if figure 1 is indeed the full figure.0 -
I don't disagree.Pension at DoL is exactly what it says it is - it!!!8217;s fixed forever at the point a member leaves. Revalued or preserved pension is the pension after post-leaving increases have been applied to it. However, I think you are still an active member (which I was forgetting in my last post) so we may be talking at cross purposes Re. the usual terminology.
And having said what I said about multiples, your CETV does still look a bit on the low side if figure 1 is indeed the full figure.
If the overall value is No.1 then (as mentioned previously) the risks/rewards are insufficient to warrant transferring out and I will need to implement a revised strategy to provide the flexibility this thread has helped clarify and actually cement as our primary goals.
If the overall value is the sum of the three then there are some difficult decisions to be made. It was fine previously talking in terms of the hypothetical but, if we just assume the sum of the three is the CETV estimate it brings the weight of the decisions we may make more in to focus. The thing I will need to balance is whilst my risk tolerance would be comfortable with going down this path I also need to consider what is put in place should I pass earlier than my wife, as finances simply are 'not her thing'. But I think Jamesd may have provided some options around this regarding an annuity so, (again) if we go down this transfer path there other elements I need to be comfortable with which are outside of the 'I have a pot of money and how do I manage it appropriately', which will need to be understood/balanced.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Spoke with Capita and.... The prize goes to Silvertabby. The CETV is No1.
I am somewhat surprised that the ratio is so low (in my opinion, without having any knowledge or skills in the actuarial world).Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
So.... life goes on and now I need to come up with a credible plan going forward.
(As per a previous post): Assuming Capita confirm in writing that I would be able to transfer the AVCs and leave the DB component intact should I leave the company's employment, I am torn between:- Making use of my HRT and SS contribution benefits
- Building up my wife's SIPP (for the longer-term gain)
Basically we have £400pm disposable income which can be 'allocated' to pension contributions. We currently contribute £100pm (net) in to my wife's SIPP and my plan previously was simply to increase this to £400pm (£6k gross per year), she earns approx £7.5k.
If I take the net £400pm and add it to my current £250pm (gross) AVC contribution the £400pm net will equate to a gross payment of approx £600pm / £650pm; so a total of £850 / £900 going in to the AVC.
I've always been keen to ensure we build as big a pension as possible for my wife in her own rights but the taxation benefits of doing it via my workplace scheme (assuming the above assumption is confirmed) is really making it a 'no brainer' to go down that path.
If the AVC assumption (above) turns out not to be correct then I'd still need to decide if doing it via my own SIPP rather than my wife's SIPP is financially a better option. Ordinarily, if we assumed I retired at 65 (and would be drawing my DB pension) the tax benefits would have been fairly muted, i.e. for me 40% going in but taxed at 20% coming out, for my wife 20% going in but tax-free coming out (up to the individual allowance). But this whole discussion is about flexibility in when to retire so if we assume a retirement age of 60 and therefore no taxable income for the 5 years to 65, the withdrawal from my AVCs (or SIPP) would be tax free up to the allowance with a small percentage being taxed at 20% (assuming I take all the pot in the intervening 5 years).
I think making additional contributions in my name (either via the AVC or a SIPP route) is the way to go.
What am I missing?Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Just a bit of an update, in case someone finds this thread and the process proves useful.
So, on a previous thread I had encountered the possibility that my AVCs might require IFA approval. I asked the question of Capita and received the below response:
The comments regarding my last question from more knowledgeable posters than myself offered that as there were no safeguarding benefits (can't remember if that was the correct term) then it was reasonable to expect no pension specialist IFA review to be required.Ok, so...Capita have come back and stated:
We can confirm that, as the Scheme’s AVCs are Defined Contribution (DC) benefits, they would not be subject to the requirement to receive financial advice.
So that is positive, for me. Is it likely that receiving schemes may err on the side of caution and require a IFA review before accepting the transfer?
In addition to the above confirmation regarding transferring out my AVC (were I to leave employment before NRA), I have also queried with Capita / scheme trustees if they would allow a partial transfer of the AVCs from the scheme whilst continuing with AVC contributions. Note, I offered to cease AVC contributions for a period to allow the transfer and then re-start if there was the potential for an administrative reason for not allowing partial transfer out of the AVC account.
Partial transfers - By this I mean periodically transferring out the monies in the AVC account to another provider (probably a SIPP). I would continue making contributions in to my AVC.
My reasoning for this is that mine is an old DB scheme with the AVC being provided by Prudential, and the fund choices are somewhat limited and also the charges (whilst not extortionate) are possibly higher than you could achieve in a modern platform/investment combination. As an example, one of two available international funds (Prudential International Index S3) has a total charge of 0.75%. This is an all in charge so I need to weigh that up against the total charges I might face in a new platform.
The other reason is due to the very limited fund choice. The fund I referred to is my primary allocation of contributions and whilst I am in favour of its more appropriate UK weighting, i.e. it is not 25% etc, it is hugely weighted in favour of mega and large cap stocks.
Anyway....
The scheme Trustees and Prudential have now come back to say that periodic transfers (possibly biennially) is allowed and that they would not apply any charge to do so. Interestingly I came across a post or article recently whereby Prudential had removed charges for transferring AVCs after March 2017 (I believe).Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Just an update...
So, the AVC pot has over £16k in it now (not sure that is hugely relevant), but I am keen to prove my investigations and the corresponding confirmations are correct and I can undertake a partial transfer out without the DB transfer advice requirements coming in to play.
I have therefore initiated a partial transfer from my AVC pot in to my SIPP. Let the chips fall where they will.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Just an update...
So, the AVC pot has over £16k in it now (not sure that is hugely relevant), but I am keen to prove my investigations and the corresponding confirmations are correct and I can undertake a partial transfer out without the DB transfer advice requirements coming in to play.
I have therefore initiated a partial transfer from my AVC pot in to my SIPP. Let the chips fall where they will.
If your AVC is linked to your DB, you may well be able to withdraw it tax free when you start to take your DB pension. By moving it to a SIPP now, you will lose that ability. I nearly made that mistake with my AVCs.0 -
Yes, I appreciate that but, what I have worked out going on this journey is that I lack some flexibility we have with regard to earlier retirement, i.e. DB scheme (and AVC) is only accessible at NRA (65).If your AVC is linked to your DB, you may well be able to withdraw it tax free when you start to take your DB pension. By moving it to a SIPP now, you will lose that ability. I nearly made that mistake with my AVCs.
I could have made additional contributions to a PP/SIPP but as my my company operate salary sacrifice this was the most efficient way to build an accessible pot to provide the flexibility.
I'm looking to achieve a pot of approx £120k by age 60 / 61. The plan will be then to either withdraw the maximum tax free using UFPLS (personal allowance + 25% tax free) each year, or to withdraw the whole 25% and then the personal allowance each year. I've not decided on the method yet.
My wife will also have a pot to draw on from around age 60 and the plan will (probably) be to do exactly the same, so as to maximise withdrawals free of tax. We are unlikely to need to use the majority of my wife's draw down amounts and so these amounts will be re-invested back in to the same funds within an ISA.
The exact method is all subject to re-assessment as we approach the date.
As mentioned, what became very clear to me during this journey was the need for more flexibility and that is our prime focus, and one I'm willing focus on and accept other constraints which may come in to play.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0
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