transfer or take pension

Daniel54

Another solution would be simply to take the 25% PCLS

Brings the index linked income down to £37,500, just above the PPF cap,plus a lump sum of £337,500 ,assuming the same commutation ratio of 27:1

Also avoids the costs and hassle of finding and paying an IFA prepared to sign off the transfer of the full pension value out of the DB scheme

Your_Hero

I just re-read the OP and as OP is looking to retire early, so the PPF will appear to have cap.

3pens, what's the maximum PCLS allowed and can you confirm the commutation rate?

Daniel54

Your_Hero wrote: »

PPF cap is only for deferred pensions. So if he was to take the PCLS, then the rest of the pension will begin payment (can't normally take PCLS and defer the pension). All DB pensions in payment are protected 100% by the PPF with no upper limit.

Thank you for that -I have been looking at the PPF site with regard to my own pension ( have reached my NRD) and am glad to learn that I misread it

Your_Hero

Daniel54 wrote: »

Thank you for that -I have been looking at the PPF site with regard to my own pension ( have reached my NRD) and am glad to learn that I misread it

Must admit that I don't get involved in the PPF a lot, just generic knowledge. As far I understood, I had thought that generally pensions in payment were covered by the PPF. But just going onto the website too, it seems there's a cap (same as deferred members) for those "retired early" before NRA of scheme. But it's not entirely clear. http://www.pensionprotectionfund.org.uk/Pages/Compensation.aspx

Found another document (page 9) that explains it better Daniel54, so you are right: http://www.pensionprotectionfund.org.uk/DocumentLibrary/Documents/What_is_the_ppf.pdf

Also the earlier you retire, the lower this PPF cap is to compensate for the longer time you have been receiving the payments. http://www.pensionprotectionfund.org.uk/DocumentLibrary/Documents/Compensation_cap_factors_Apr_2014.pdf

So if OP takes pension at 55, the PPF cap is reduced to £29,524.85. So 90% of this is £26,572.37

3pens

Your hero Don't have that information to hand but will post tomorrow afternoon thanks for help so far

3pens

Your Hero. I have checked my Options ,at 55 I have three options - Taking transfer £1.35m. Taking Pension 50k (RPI linked) or taking 222k cash and 33.2k pa (RPI linked) - this excludes the 2 smaller DB pensions previously referred to.

sandsy

To purchase a guaranteed income of £50k for life, increasing at RPI, from age 55 would cost in excess of £2m (eg. via an annuity). A transfer value of £1.35m seems poor value if you throw it into a few annuity calculators.

Your_Hero

3pens wrote: »

Your Hero. I have checked my Options ,at 55 I have three options - Taking transfer £1.35m. Taking Pension 50k (RPI linked) or taking 222k cash and 33.2k pa (RPI linked) - this excludes the 2 smaller DB pensions previously referred to.

So the commutation rate is actually only about 13 to 1, which is very poor value for money. Probably better to just take the pension (rather than commuting for a LS) or take a small LS if you really require it. Ideally you should take it nearer NRA instead to reduce the actuarial reductions.

As for taking the cash £1.35m, only a full analysis from an IFA could confirm this, but it is extremely unlikely to be a good choice.

Daniel54

3pens wrote: »

Taking Pension 50k (RPI linked) or taking 222k cash and 33.2k pa (RPI linked) .

These numbers don't seem correct,as you can only ever take 25% of a pension as a lump sum.

So if the £50k is correct,the maximum available for commutation should be £12.5k,not £16.8k

There may be a historical quirk in your pension set-up that says otherwise,but this is unlikely and I would check these figures

As Your Hero says,at the offered commutation rate,take the income.

want_to_save

I am all for asking the boards for help however this is a huge decision on a huge sum I would recommend you seek independent advice on this.