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Enhanced Transfer Value Offer

wroughtironron
Posts: 85 Forumite
I'm 58, and have several pensions lined up for when I eventually retire, including 10 years local govt.
From 2005-2011 I worked for a government organisation which had a defined benefits scheme, however the govt sold it in 2011 to a private company and I was made redundant.
My pension pot accumulated during these seven years came to £88k in 2011, and the buy-out company offered me a transfer value of £95k to move it out, which I refused.
Now they want to buy me out again with another enhanced value offer (not yet received).
Should I see an independent FA or should I trust my instincts and refuse?
From 2005-2011 I worked for a government organisation which had a defined benefits scheme, however the govt sold it in 2011 to a private company and I was made redundant.
My pension pot accumulated during these seven years came to £88k in 2011, and the buy-out company offered me a transfer value of £95k to move it out, which I refused.
Now they want to buy me out again with another enhanced value offer (not yet received).
Should I see an independent FA or should I trust my instincts and refuse?
0
Comments
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If it is a DB scheme then you should have figures showing an annual pension amount that would be due to you, not a pension pot "value".0
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Financial_Saddler wrote: »If it is a DB scheme then you should have figures showing an annual pension amount that would be due to you, not a pension pot "value".
They haven't given me the figures yet, just that they will give me access to a financial adviser (their choice - JLT Wealth Management), and that by taking the "Cash Equivalent Transfer Value", I will be able to take retirement benefits yet continue to work.0 -
I dont think the value of the pension pot for a defined benefits pension is a very useful figure for your purposes. The figure to compare it with is what it would cost you to get equivalent income appropriate for your needs commercially.
So in your position I think I would refuse unless the cash offer was at least say 20 times the expected pension at current prices. Then it would be a matter of looking at the details as to whether the increase in flexibility is worth sacrificing some of the income for. For example if your other pensions already provided you most of what you will need then the benefits of flexible drawdown, if you qualified, could be more useful than extra income.
At that point you may need professional help to consider all the ramifications.0 -
I dont think the value of the pension pot for a defined benefits pension is a very useful figure for your purposes. The figure to compare it with is what it would cost you to get equivalent income appropriate for your needs commercially.
Well the cash value is needed to calculate what the performance would need to be in an alternative plan, to improve the benefits the current one offers (critical yield analysis).
There are numerous other reasons not to transfer, and only a few reasons it could be seen as acceptable.
So yes, professional advice is highly recommended. Look out for a 'pension transfer specialist' (i think they'd be called) on https://www.unbiased.co.uk0 -
Well the cash value is needed to calculate what the performance would need to be in an alternative plan, to improve the benefits the current one offers (critical yield analysis).
There are numerous other reasons not to transfer, and only a few reasons it could be seen as acceptable.
So yes, professional advice is highly recommended. Look out for a 'pension transfer specialist' (i think they'd be called) on www.unbiased.co.uk
I was referring to the stated pension pot value in 2011. That isnt important. The two important figures are the guaranteed income and the lump sum that the pension company are willing to pay to relieve themselves of the responsibility of paying it.0 -
wroughtironron wrote: »I'm 58 ...
From 2005-2011 I worked for a government organisation which had a defined benefits scheme, however the govt sold it in 2011 to a private company and I was made redundant.
... in 2011, and the buy-out company offered me a transfer value of £95k to move it out, which I refused.
Is there any prospect that this pension plus the LGPS pension plus your State Retirement Pension will eventually add up to enough to let you apply "Flexible Withdrawal" to any private pensions or defined contribution pensions you may have? (The current requirement is £20k p.a.)
Is there any compelling reason why you would want the possibility of early access to this pension money?Free the dunston one next time too.0 -
Is there any prospect that this pension plus the LGPS pension plus your State Retirement Pension will eventually add up to enough to let you apply "Flexible Withdrawal" to any private pensions or defined contribution pensions you may have? (The current requirement is £20k p.a.)
Is there any compelling reason why you would want the possibility of early access to this pension money?
Until I get the figures during the next couple of weeks, I won't know what the estimated payments will be, but I'm in a senior full time role at the moment and don't need to draw on any pensions until my eventual retirement, probably at age 65.0 -
wroughtironron wrote: »Until I get the figures during the next couple of weeks, I won't know what the estimated payments will be, but I'm in a senior full time role at the moment and don't need to draw on any pensions until my eventual retirement, probably at age 65.
Unless there's something unusual about your position, or about the position of the pension scheme, it's unlikely that their offer would fully compensate you for the pension you'd be forgoing. That, after all, is why they are making the offer.Free the dunston one next time too.0 -
The company have now sent their various buy-out offers
Options
1 - An immediate pension of £3980 pa (I'm 58 and in full time employment)
2 - A residual pension of £2821 plus cash lump sum of £18806
3 - Enhanced transfer value to another pension arrangement of £93440 + £16036 enhancement = £109477
4 - Enhanced transfer value to an IVPP of £109477
5 - Do nothing0
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