Public Sector Scheme Not Such A Good Deal?

Legacy_user

I have a deferred public-sector (defined-benefits) scheme pot worth a bit over £500k.

I'm 55 in a couple of weeks and find myself unexpectedly wanting/needing (for health reasons) to take the reduced pension now, as opposed to waiting till 60 as I'd planned.

The discount for taking it 5 years early means I'll get £15,000 p.a. Is this a good deal? Or could/should I do better in the outside investment world?

All/any comments most gratefully received.

Many thanks in advance.

xylophone

Which public sector scheme? If it is unfunded, you can forget about a transfer to the outside world?

If funded and you propose a transfer out, remember that you will need an IFA qualified and authorised in defined benefit transfers and you may well find that the advice is to stay put unless your condition is life limiting.

Are you able to take the pension early and unreduced on grounds of ill heath?

System

Thanks xylophone.

It's the BBC pension scheme.

My condition is genetic and rare (most doctors have never heard of it!) but is definitely life limiting, although probably not life-ending. I've been told I will most likely die with it not of it.

Upon diagnosis I applied to take the full pension early on ill-health grounds. But the BBC has farmed out the assessment to the lovely Capita, who told me to f-off. Apparently chronic crippling neuropathy-pain, massive doses of debilitating neuropathic pain-killers daily, progressive and irreversible demyelination (similar to MS) with resulting increasing muscle weakening and nerve damage, plus significant deafness (I was a sound engineer) should not prevent me from "working normally" Ho hum!

Anyways, despite appearances to the contrary I'm not here to complain or illicit sympathy. But given that I'm unlikely to live to 100, I've started to think that tying myself in to £15k from half a million pound pot for a relatively short time, with no other options and nothing to bequeath to the kids, may not be in line with living-for-the-moment.

And BTW, I am pretty cheerful about things generally and consider myself fortunate in the GSOT.

xylophone

Have you appealed the decision?

Taking your pension early reduces it by 24%?

http://www.bbc.co.uk/mypension/currentmembers/oldbenefits/second

Does the £15000 represent the pension without commutation?

You are not "confined to £15,000" - your pension increases in payment

http://www.bbc.co.uk/mypension/pensioners/increases

Your widow is protected

http://www.bbc.co.uk/mypension/pensioners/whenyoudie

If you wish to transfer out (and remember if you succeed in so doing the investment risk becomes all yours) you will need to consult an IFA with the relevant qualifications and permissions - this will not be cheap and you might find difficulty in getting an IFA to take you on.

Have you obtained a new state pension statement?

https://www.gov.uk/state-pension-statement

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

https://www.unbiased.co.uk/

atush

I would appeal the decision. Get your union to help.

As a sound engineer, everything else aside you would not be able to continue if your hearing is impaired?

kidmugsy

EarlyDoors55 wrote: »

I have a deferred public-sector (defined-benefits) scheme pot worth a bit over £500k.

You don't have a "pot" you have a promised stream of benefits. What you need to know is your CETV. Is that what you meant?

hyubh

EarlyDoors55 wrote: »

I have a deferred public-sector (defined-benefits)

No big deal, but while the BBC itself is obviously 'public sector', it's old DB scheme isn't considered a 'public sector' scheme in pensions-land. If you were to seriously consider transferring out (not that I'm suggesting you do), just speak of a 'DB pension' to avoid confusion.

System

Thanks all.

I have considered an appeal, but the whole process is so unbelievably, painfully slow (at least six months in total) that it adds significantly to the attraction of taking the "full value" of my pension (i.e. not reduced by 24%) outside straight away.

I have been told that the CETV that the BBC has given me might be "undervalued". Is that possible?

xylophone

http://www.telegraph.co.uk/finance/personalfinance/pensions/11230612/Calculator-final-salary-pension-valuation.html

might be of interest.

System

Thanks for that.

I still don't understand how the size of a CETV can be in dispute or negotiable? Why isn't it just what the pension scheme says it is, no more, no less?

Is it really possible for an actuary or IFA working for me' to tell the BBC how much money I should be permitted to take out of the scheme?

xylophone

The decision is ultimately that of the Trustees who will take advice from an actuary.

http://www.sackers.com/pension/transfers-how-to-calculate-a-cetv/

Are you still an active member of the scheme or are you now deferred?