Pricate pension projection seems way too high

desparateforadvice

Im in desparate state. I have a private pension estimated to yield approx £5500 on a fund of £47000. This seems way way too generous and I cant beleive this kind of return is possible. The provider says its only an estimate, but even so seems way over the industry nomr. Im in process transfering into my rail pension, but I now in order to opt for security. After last week seems a bad idea, so I may cancel the transfer.
The question is if I leave pension where it is, can I have any confidence in a projected yield of £5500 on just £47000???

molerat

Is it the yield on £47K or the yield on the projected value of the fund in X years at Y% pa increase ?

dunstonh

https://forums.moneysavingexpert.com/discussion/2786052

dup thread.

desparateforadvice

Reply
This is the current yild on the fund value. It seems unrealistic and im worried that its no more than an way optimistic quote designed to keep me in the scheme. Im in such a state, Im actually having panic attacks at night because I have to decide right now whether to stop the transfer into my current employers railway pension scheme, which is potentially going to be affected by the devasting anouncements last week

desparateforadvice

I put a dup thread in because I mispelt the word private and thought noone would bother even reading my post. As it happens you are the only one thats responded, thanks

Loughton_Monkey

desparateforadvice wrote: »

I put a dup thread in because I mispelt the word private and thought noone would bother even reading my post. As it happens you are the only one thats responded, thanks

Not if you look at the duplicate thread.

Data_Monkey_2

If you go to the Hargreaves Lansdown website they have a fairly simple pension calculator that you can use to work out what you might expect in x number of years.

There are plenty of others available as well, but this is the one that I normally use.

desparateforadvice

molerat wrote: »

Is it the yield on £47K or the yield on the projected value of the fund in X years at Y% pa increase ?

The £47 k is the current transfer value
They have quoted (it is not a guarantee) at my request in 8 years time a figure of approx £2500 age 60 and a balance of £3000 additional sum aged 65. These are annual figures, not a one off payment. They valued my fund at £51000 now in the original quote. When it came to arranging the transfer to the railway pension the valuation was quoted at £47000 now presumabley they take a cut for themselves? Today I was sorry worried I asked for the transfer to be suspended pending my decision on whether to go ahead and transfer or whether to stay in the original scheme. The original scheme was stated as final salary. Back in 1996 it was projected to yeild £1600 pa. Since then CPI has been applied and the projected future rate of 3% has been applied to generate the above two figures age 60 and the addition at 65. I dont know why they have split into 2 figures like that and not just quote one figure age 60 as I asked them. When I try and discuss this they say they cant offer advice (???? I not asking them I just want an explanation from them??!!!, cant they understand that) Why are they quoting two separate timescale for a split figure I wonder. Im totally confused. My existing railway pension is final salary but given the bombshell last week from the government its very unclear a) whether this will be allowed to continue or whether switched to DC and b) whether I will be allowed to retire age 60 under the railway scheme. Im so confused!!

desparateforadvice

Data_Monkey wrote: »

If you go to the Hargreaves Lansdown website they have a fairly simple pension calculator that you can use to work out what you might expect in x number of years.

There are plenty of others available as well, but this is the one that I normally use.

Thanks I will have a close look. May query really it why my curent provider quotes a split firgure - £2500 age 60 and a further £3000 age 65. These are estimates based on a current transfer value of £47000. So I can see that £2500 is perfectly reasonable, but the additional £3000 seems very odd - can it be possible I wonder. That would produce an estimated pension age 65 of £5500 based on a current value of £47000 which is estimated to increase by 3% pa. Im gaed 52, so that 13 years away. I am so confused!

vectistim

desparateforadvice wrote: »

Thanks I will have a close look. May query really it why my curent provider quotes a split firgure - £2500 age 60 and a further £3000 age 65. These are estimates based on a current transfer value of £47000. So I can see that £2500 is perfectly reasonable, but the additional £3000 seems very odd - can it be possible I wonder. That would produce an estimated pension age 65 of £5500 based on a current value of £47000 which is estimated to increase by 3% pa. Im gaed 52, so that 13 years away. I am so confused!

Is it a further £3,000?
Might it be: if you retire at 60 £2,500 per year, or if you leave it until 65 £3,000 per year.

Or might there be some SERPS opt out in there - maybe with the main pension starting at age 60 and then not being entitled to your SERPS related pension until 65.

desparateforadvice

vectistim wrote: »

Is it a further £3,000?
Might it be: if you retire at 60 £2,500 per year, or if you leave it until 65 £3,000 per year.

Or might there be some SERPS opt out in there - maybe with the main pension starting at age 60 and then not being entitled to your SERPS related pension until 65.

So you think the additional £3000 aged 65 might be an adjusted SERPS? ie they might have taken the estimated £2500 pension aged 60 off the estimated state pension of £5500, so giving the estimated projection of an additional pension age 65 of £3000? I f so thats really misleading because in their quote Ive assumed all along that the 2 phases of pension have been from my own pension pot and not inclusive of the state pension. They wont explain to me what the £3000 is. Thats another reason why Im so confused. Any thoughts??