CETV How much would temp you?.

Dird

mania112 wrote: »

i 'think' there's something about what happens if you die

OP has already covered this

ajbell wrote: »

I don't have any dependants and I am not going to die.

ajbell

Just got the paperwork through and i have been offered £361810

jamesd

Since the £10,600 at age 60 is just 2.93% of that, increasing with RPI up to 5% a year. The long term UK stock market return has been around 5% plus inflation. It seems like a reasonable offer to take if you're comfortable with investment risk and won't use it for something like repaying a cheap mortgage.

I'm not comfortable with the current value offered by many of the world's stock market so I wouldn't be wanting to invest it all immediately in equities or equities and bonds.

mark55man

the key advantage of taking the CETV would be you could use the money to retire earlier, which you would never do with the DB because of acturial reductions

that is way too much money to be taking internet advice on, but a balanced portfolio if fixed income, and high yield (dividend paying) stocks are used by some in lieu of annuities where Inflation + 4% is seen as reasonable conservative expectation.

The above are just words, what you have in you rDB is a cast iron guarantee of that performance so IMHO you would have to be quite brave and possibly overconfident to take the CETV - UNLESS you will drive yourself to misery by working for the extra years to realise your DB

ajbell

For those wondering if it is worth paying into a pension scheme,
My paperwork confirms a value of £361810 with contributions of just £4609

bigadaj

ajbell wrote: »

For those wondering if it is worth paying into a pension scheme,
My paperwork confirms a value of £361810 with contributions of just £4609

Not really a very sensible comparison though, with those returns most would contribute but you have been fortunate with the combination of employer, timing and bond yields/ annuity rates.

Nothing similar is on offer to younger generations and that is a problem in itself.

ajbell

bigadaj wrote: »

Not really a very sensible comparison though, with those returns most would contribute but you have been fortunate with the combination of employer, timing and bond yields/ annuity rates.

Nothing similar is on offer to younger generations and that is a problem in itself.

Agreed. What do you think of the offer?. What would people do?.

ajbell

Should I take it and invest it or should I leave it.
Is £361k good value at 50 years old and what are my options.

jamesd

The value is well above the level it would take to produce that income from income drawdown using "safe" withdrawing rates and the rules to optimise that.

Today I can invest just £89,000 and generate £10,600 a year of interest on it using secured peer to peer investing at 12% interest rate. More needed than that to over inflation but it helps to illustrate just how big the opportunity to better your position is.

In general you could, today, retire on the income that your defined benefit pension won't give you for years.

Provided you're willing to take the investment ups and downs that are inevitable without losing sleep over them. If you'd accept that £10,600 income level then today it is possible to not only take it but have the pot grow by something around £32,000 a year. However, that would not give you sufficient diversification and a reduction in expectation to more like £20,000 is more prudent.

However, those P2P rates are well above the 5% plus inflation expected from the UK stock market and there is no guarantee that they will persist for more than a few years. You should assume that they won't persist and if using them, exploit them while you can without spending the whole potential income level.

Longer term assuming the current P2P opportunities are no longer available, a "safe" drawing rate of around 6% could produce around £21,660 a year, if following rules that limit how much it will increase each year if stock markets do badly. You have additional safety margin from your state pension when that starts because it will reduce your required drawing rate for that income level by your state pension amount.

"Safe" is in quotes because it's defined as not running out of money more than perhaps 5% of the time, that being when stock markets do unusually badly.

Only you can determine whether you are comfortable doing these things. If you can retire today on an income in the £10,600 to £22,600 range I think that this offer provides you with that potential. The lower the income you require, the safer it is.

ajbell

I do want to retire at 55 so it is tempting.
I have 4 and a bit years to build up other pensions and income.
Do I now have to see an IFA to do the transfer?.
What company would accept this transfer and do drawdown.
I am with HL but do not have a SIPP.
What would an IFA charge?.
The offer is valid for 3 months.