Deferred Pension advice

--Tony--

I really could do with some pointers, I will try to give all the information I can.


I had a final salary pension since leaving school and was made redundant in 2007 (1985-2007).


My pension is now Deferred (on 30/09/2007) with a benefit of £14,829.50 a year, as at 30/09/2007.


I have just been given online access that have some tools that tell me:
I get my pension at normal retirement age of 31 October 2032 and the tools recalculate the pension at £18,389.14 as of today.


It also calculates the transfer value at £287,729.46 which sounds an awful lot.


So what I could do with knowing is if I might be better reinvesting that money in a private pension, is it likely I could get a better deal with that pot and would it be sensible to get out of the current scheme as most final scheme allegedly carry risks.

dunstonh

It also calculates the transfer value at £287,729.46 which sounds an awful lot.

In pension terms its not.

So what I could do with knowing is if I might be better reinvesting that money in a private pension

9 times out of 10, the answer to that would be no.

would it be sensible to get out of the current scheme as most final scheme allegedly carry risks.

What risks are these?
How do those risks compare to investment backed options?

--Tony--

Many thanks for that advice, I like leaving things be

What risks are these?
How do those risks compare to investment backed options?

I was only thinking about all the reports saying final salary schemes are or are likely to be in trouble or struggle in the future and wondered if it would be wise to slip away and reinvest.

kidmugsy

--Tony-- wrote: »

I was only thinking about all the reports saying final salary schemes are or are likely to be in trouble or struggle in the future and wondered if it would be wise to slip away and reinvest.

It's a fair question; final salary schemes are pretty wonderful as long as they outlast the member and his widow, much less wonderful if they don't. So the issue is your particular scheme. Is there any reason to think it is heading for trouble? Is it still open to new joiners? If not, are there still current active members (i.e. people still contributing to it)? If not, what has replaced it? If you'd like to, tell us which scheme it is.

Without that knowledge, there's not much to say except a few generalisations. For example, because you are now presumably in a defined contribution scheme with the investment risks that brings, you might look on the final salary scheme as an attractive diversification.

bigadaj

There's also the pension protection fund which covers 90% of the value up to around £30000. So if the scheme became insolvent the vast majority of the payout would be preserved or continue.

--Tony--

It's the Centrica scheme, I started out on the engineers BG scheme which I stayed on as a manager but was crystallised when I changed roles and moved to the Centrica scheme.


There are lots of people paying in but I'm not sure if they still take new members, I know the engineers scheme is closed and has been for a number of years, I suspect the Centrica one is also closed to new members.

RichandJ

You should be getting a 'Summary Funding Statement'* from them every year which gives the funding position of whichever of the Centrica schemes you're in. Have they got your correct address ?

If you're not getting one just ring the administrators, Mercer I think.

* having just printed >1,000 for one of my schemes this week I'm a bit sick of them.

atush

A fund of 287776 would give a tax free LS of nearly 72K.

The remaining 215800 could be expected to give a flat 12,950 pre year or a possible 7550 per year indexed for life like your pension is 9with a 50% spouse pension).

Neither of those is anywhere near the 18K per annum this pension will pay you- so houw could a transfer be better?

--Tony--

Thank you, that clearly answers my question, I clearly could not expect to reinvest and get a better deal.


Thanks for all the advice.

kidmugsy

bigadaj wrote: »

There's also the pension protection fund which covers 90% of the value up to around £30000.

People keep saying that but it's simply untrue. In my case I'd lose a substantial proportion of the value of my pension because I'd lose most of my index-linking. To talk of the "value" of the pension when you mean just the current annual payment is most misleading.

bigadaj

kidmugsy wrote: »

People keep saying that but it's simply untrue. In my case I'd lose a substantial proportion of the value of my pension because I'd lose most of my index-linking. To talk of the "value" of the pension when you mean just the current annual payment is most misleading.

Well it's more of a guarantee than you get on any defined contribution scheme, why not voluntarily opt out of this protection?

Then again people like a good moan about anything and nothing will stop them.