!! p!!!!!! v. !!PP

itch_for_a_glitch

I have a deferred FS pension, it offers, next year, a pension equivalent to a 4.2% yield on its transfer value.
The scheme is currently 90+% funded, and the company continues to pump in funds.
If I take the pension it rises with inflation(min 3% max 5%) and there is a 50% spousal pension.
If I transfer to a SIPP I would leave a 100% spousal pension, and on my partners death there would be money left for the kiddies.
If the SIPP was managed by a good IFA, could I reasonably expect the yield to be around 4% and the capital to grow with inflation?
Fluctuating income wouldnt be a problem.

drumtochty

Over the long term let's say inflation will be between 2.5% and 3%.

You are also expecting to take 4% of the value of the fund per year and at the end of the year the value of the depleted fund to increase by 7% in order for the fund to have a value of 3% more than it was at the beginning of the year.

It seems unlikely that you can get this increase on a year by year basis.

xylophone

Why would you wish to give up a final salary pension?

If you want to give something to your children, you could make them a lump sum gift from the tax free lump sum in the hope of a PET?

Does your wife have no pension of her own?

Have you looked into your (and her) state pension situation?

http://www.thisismoney.co.uk/money/pensions/article-2699832/Pensions-freedom-open-ALL-savers-comes-price-five-million.html

itch_for_a_glitch

xylophone wrote: »

Why would you wish to give up a final salary pension?

If you want to give something to your children, you could make them a lump sum gift from the tax free lump sum in the hope of a PET?

Does your wife have no pension of her own?

Have you looked into your (and her) state pension situation?

http://www.thisismoney.co.uk/money/pensions/article-2699832/Pensions-freedom-open-ALL-savers-comes-price-five-million.html

My fall back is to take the FS pension, I just want to explore the options.
The kids can have a deposit from other savings, sorry, dont know what a PET is ?
She will have a small pension ( a couple of grand a year ).
We will both get the basic SRP (£113) in due course.

xylophone

PET - Potentially Exempt Transfer http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

We will both get the basic SRP (£113) in due course.

You have obtained state pensions forecasts?

Will either of you become eligible for state pension on or after 6 4 2016?

itch_for_a_glitch

xylophone wrote: »

PET - Potentially Exempt Transfer http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm



You have obtained state pensions forecasts?

Will either of you become eligible for state pension on or after 6 4 2016?

We have both had forecasts, and both "retire" after 2016.


Thanks.

atush

then your forecasts are useless. New pension coming in april 2016. They can't give you a forecast for that just yet. If instead of a forecast, you get a SP statement, then you will know better where you stand.

then, pension. If you are in normal good health for your age, dont smoke or have a big genetic risk for things like Cancer, then you will get more fromn your indexed pension or yours and your wife
s lifetime than any transfer into a sipp.

Want to leave money to the kiddos? Save into a DC pension, take that LS from that and give it to them, gift them out of income if your pension is larger than you need. Let them inherit your house and savings.

kidmugsy

1) If there's a risk of your wife having unexploited Personal Allowance in retirement, start contributing more to a pension for her right away.

2) If you want to leave money to the children, and potentially to her, get/keep a job after you start your FS pension, and contribute all or much of your earnings to a personal pension.


P.S. The max inflation-linking must be a frustrating feature, but the min is wonderful. If we really are sailing into a huge, deflationary world depression, guaranteed 3% growth in income is spectacularly good. Probably you should put all your other savings into investments designed to protect you from inflation, then you will have your bets hedged.

dunstonh

If I transfer to a SIPP I would leave a 100% spousal pension, and on my partners death there would be money left for the kiddies.
If the SIPP was managed by a good IFA, could I reasonably expect the yield to be around 4% and the capital to grow with inflation?

Although the critical yield required by the SIPP to beat the FS scheme is likely to be in double digits and not 4%.

have you calculated the critical yield yet?

xylophone

then your forecasts are useless. New pension coming in april 2016. They can't give you a forecast for that just yet. If instead of a forecast, you get a SP statement, then you will know better where you stand.

It would seem that some people can get the new pension forecast.

https://forums.moneysavingexpert.com/discussion/5075832 post 13

sandsy

You're getting a 4.2% real yield. After inflation increases of, say, 3%pa, this becomes a 7.2% yield in monetary terms and could be as high as 9.2% if inflation hit the cap used by your scheme. So around 7% should be the minimum basis for your comparison, not 4%.