Deferred Pension (Hypothetical) Question

colinjd

Harking back to a few questions I made a couple of weeks ago regarding a number of deferred pensions I have, today I received details concerning the largest single one.

Let me preface the following questions by saying that I am not intending to leave the scheme, as i don't believe it's worth taking the chance, BUT...

I'm 52, single, no dependants and the values have been based on a Normal Retirement Date of 65
No GMP
Guaranteed Transfer Value as of today of £86K
Pension payable from 65 of £9600pa

I spoke with them this morning and that pension figure has been calculated to include inflation and is the actual amount I will receive from the scheme, no further increases will occur.

So, my hypothetical question is...IF I transferred to a SIPP (where it would join a couple of smaller pots) how likely is it that I could build a pot big enough to match or better the £9600 already available? How big a pot do I need to receive that as a pension?

Only hypotheticals, but I'm interested in getting some expert opinion from the experienced amongst you here.

Thanks

srcandas

I went through this process a year ago. I had 4 pension pots. Two had guaranteed annuity rates over 9% so I took them as fixed amounts each year. As I still work I aim to put the proceeds into a SIPP.

The other 2 I transferred into a SIPP. Based on all my research and help here I felt I should look at extracting 4% a year drawdown when the time comes. At that rate of extraction I'd have a good chance of the pot growing year on year and some protection from market crashes.

Having the SIPP under my control has been a great feeling. I can see progress day by day if I wish and can make my own decisions.

Creating a well balanced portfolio was not difficult and great fun.

HTH

atush

Is that a DB pension?

nearly 10K, means you would need 180-200K in a pot to buy it (level no dependents) at 65.

sandsy

The pot needed to buy £9,600 now would be about £172,800, based on various annuity online quotes. However, as you have 13 years to get that much, you would need about £91,640 now, assuming 5% growth after charges year on year.

The figure of £86k equates to about a 7.2% growth rate each year after charges.

So it really comes down to how comfortable you are taking a risk on investment returns.