Db transfer to Dc

Harry81 · 14 June 2017 at 6:40PM

Hi, i get a yearly transfer value for a job i had around 10 years ago. Im 36 and the current transfer is 64k, last year it was 43k ( 3200 per year growing by 5% or cpi which ever is lowest) My current pension is a dc scheme with around 36k in. Last year it grew by around 9% with my company paying management fees. With this type of growth surely it would be a good idea to move it into the same pot. im aware that it can go up aswell as down but with 20-30 years to grow it looks like a no brainer. As its over 30k I'd have to speak to an ifa...can this fee come out of the pot or due to my age will i have to find the cash?

Thanks with any pointers

AnotherJoe · 14 June 2017 at 6:55PM

I'd stick with the DB. You'd break even after 20 years, you have extremely valuable inflation protection, you have certainty, and a DB pension would help give an underpinning to future DC pensions.

squeeks · 14 June 2017 at 7:22PM

Interest rates are low right now which makes the transfer value high (and dc pensions less valuable than db) if you think interest rates are going to rise significantly over the next 30 years, it could be a good move. As always do you own research and speak to a couple of financial advisors as I could be completely wrong.

Harry81 · 14 June 2017 at 7:57PM

Thanks for taking the time to reply. I suppose it would be good to have the diversity of 2 separate pensions. I like the idea of having a larger pot so possibly something to leave behind also my dad hasn't got the best health and it makes you think how a db pot could be wasted ( i know everyones different in later life health )

LHW99 · 14 June 2017 at 8:14PM

Having even a small DB gives you choices IMO. It means you have a basic income in retirement, to add to the state pension, and as you can always run a DC scheme voluntarily alongside, you can invest 100% in equities while you are young, with a good chance it will do well over the 30 odd years its likely to be before you need it / pass it on in the end.
If you ever marry, a DB scheme usually gives at least a 50% pension to your spouse if the worst happens.

OldMusicGuy · 14 June 2017 at 10:56PM

I am just about to retire with no DB pension and a large DC pot. I would much rather have a smaller DC pot and a core DB pension because I am a risk averse person and would love to have the certainty of some inflation-linked income to rely on. OK I will get the state pension but I am not confident that will be around in its current form for the next 30 years.

The one thing that I can guarantee is that a lot of what the experts are telling you now about what may happen in 20 to 30 years will not come to pass. No one predicted near zero interest rates and the death of annuities 20 to 30 years ago when I started saving for retirement. So if you are risk averse like me, hold on tight to that DB pension and save hard into your pot as much as possible now to give you a nice mix of retirement options. If you like taking a big punt, transfer it all into a DC pot and enjoy the ride over the next 20 to 30 years!

Kynthia · 15 June 2017 at 1:36AM

Does your DB pot pay a percentage to a spouse from the date of your death until they due? Does it pay a smaller percentage to any children until they reach adulthood? Neither of those are "nothing" although they obviously will be better for some and worse for others unlike a DC pot which will have the same amount for beneficiaries no matter what your marital sutuation.

Harry81 · 16 June 2017 at 8:29PM

It does offer a spouse pension for about half the amount. I've read a few threads on people asking about transferring out of a db scheme and most of them say stick with it. My is for a pot of x20 with 29 years to grow. If it stays in the db scheme it grows by between 2.5% and 5%. Whereas a dc scheme seems to grow between 5% and 10%... this is my main thinking about taking the cash now with the added benefit of retiring earlier. Me and my employwr are currently putting in around £500 per month via salary sacrifice, current pot of 37k. Maybe this would be enough to give me a half decent pot at 55-60 to retire and leave the db pension for a small back up... too many scenarios running through my head to make the right decision :rotfl:

Thrugelmir · 16 June 2017 at 9:41PM

Harry81 wrote: »

Whereas a dc scheme seems to grow between 5% and 10%...

What's your reference source?

Harry81 · 16 June 2017 at 10:36PM

From the last 3 years of my pot growth and what I've been reading up on. From what ive read 4-5% cautious 6-7% balanced 8-9% adventurous. Over 20 - 30 years i guess it is more of a gamble than a guaranteed 2.5% but surely worth the risk.:beer: or not :eek:

bigadaj · 17 June 2017 at 12:15AM

Harry81 wrote: »

From the last 3 years of my pot growth and what I've been reading up on. From what ive read 4-5% cautious 6-7% balanced 8-9% adventurous. Over 20 - 30 years i guess it is more of a gamble than a guaranteed 2.5% but surely worth the risk.:beer: or not :eek:

The problem is that those figures look like moderately optimistic projections based on historic data, no guarantees.

We've had a year which has returned 25-30% on many equity heavy portfolios, and also inflation is heading upwards. Some indication interest rates may rise later this year, this may or may not be good for equities but low risk assets are expensive and difficult to find currently, wouldn't rule out the db offering value in the future.

Db transfer to Dc

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