CETV How much would temp you?.

jamesd

You must use a regulated adviser to obtain advice on such transfers. The scheme you're transferring from is required by law to see confirmation from an adviser that you have been provided with advice on your plans.

You are not required to follow the advice provided. Some schemes will take transfers even against advice. Others won't take transfers even if the transfer is following the advice. I've posted about schemes allowing transfers before, ou can probably find the posts with an advanced forum search for transfer from poster jamesd.

IFA charges vary and there is some negotiable aspect also. Probably going to cost between £1,000 and £2,000 but it could well be more.

To get a more pessimistic view, have a play with Firecalc. It doesn't include the more effective and more recent drawdown rules so it'll present a more pessimistic picture of safe income levels. the key thing for you to learn from playing with Firecalc is the effect of the chance of timing on stock market risk (and part of why I currently prefer P2P) but also its long term importance.

When using Firecalc go to the Other income/spending tab and enter numbers for your anticipated state pension as a "social security" payment. You should ensure that you get the full flat rate by buying years after 2016 so enter 8,000 a year if you don't have a better idea of the value. You can ignore the use of Dollars, though it also uses US investments and that has some issues that it's not worth going into at this stage.

The most critical decisions for you are your lowest tolerable income level and your real willingness to adjust spending to below the desired level down towards the minimum level if you happen to be unlucky in your timing. If you refuse to do this you're likely to see this pension pot depleted before death, leaving you with the state pension. Which isn't a horrible level to live on, particularly for a couple who own their own home, but it's not actually desirable either.

If you have a spouse you can/should include their income and assets in the numbers to provide household income but you should also do solo planning in case of divorce or death. Divorce can be troublesome because pension pots are an asset to split in divorce. Though a person relying on a pension for income who is already retired is in a better position than some others could be in, it's still a risk to consider and manage. You don't need to make the divorce or death of spouse cases your central plan but you should check that you can deal with the financial consequences.

Now is also the time to be considering downsizing and/or relocating. You're relatively young so it's relatively easy to do and the potential gains in running costs from a smaller place are available for longer the earlier you do it, as are any financial assets free up by the change. Your still working is helpful when it comes to things like getting a mortgage. A mortgage can be handy to free up capital for investing and it can also be used to change lender if you still have an uncleared mortgage, perhaps extending the term until well after state pension age to reduce your outgoings before the sate pension starts as far as possible.

For more on Firecalc you can do an advanced forum search with Firecalc as what to search for. If you add user jamesd on the right you'll find a walkthrough or two where I illustrate how to use it.

As you experiment with Firecalc and other tools and learn your way around you'll hopefully end up forming your own opinion on when to retire and what your pre-requisite targets for it are.

ajbell

If I wait until nearer to 55 will the offer increase or decrease.

sandsy

ajbell wrote: »

If I wait until nearer to 55 will the offer increase or decrease.

If nothing else changed except you getting older, it would increase as the income is closer to being paid so is worth more.


The biggest risk to the CETV is interest rates increasing. If interest rates increase, it will cost the DB scheme less to provide you with the same income so the CETV will fall to reflect that.

mania112

mania112 wrote: »

well 10,600 plus 5% for 30 years is just over £700,000

ajbell wrote: »

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

So they're saving themselves some money by you transferring away now. Unless you can double your money whilst chipping away at it each year, I don't think you'll be better off financially by moving it away.

It therefore comes down to lifestyle choices - and this is a question only you will have the answer to.

jamesd wrote: »

£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.

You're not suggesting he uses the CETV to become a Lender?

ajbell

But i want to retire at 55 not 60.

jamesd

mania112 wrote: »

Unless you can double your money whilst chipping away at it each year, I don't think you'll be better off financially by moving it away.

On what basis do you make that claim? The income and more can be generated today, without any need to double the money.

mania112 wrote: »

You're not suggesting he uses the CETV to become a Lender?

I'm suggesting investing the money with that as one of the options for part of the money. P2P of the types I'm thinking of has a number of advantages over equity or bonds

1. Very low volatility, so no real prospect of an equity or bond type of drop in capital value, so no significant sequence of returns risk.

2. Capital protected by security in the form of buildings or other items and often a protection fund on top, so capital losses are unlikely.

Even so it's something that would best fit as part of a mixture of investments, with the 89k in the part you quoted being just 24.5% of the total and there probably being other assets around that we're not considering.

On the other investments side I'd add in some VCT that does mostly lending secured on property, that Albion VCT which expects to continue paying out 10% a year tax free. And a range of equities, of course.

Personally, I'm in the process of arranging to move around half of my own pension pot into P2P and expect that to continue to increase to nearly 90% over the next six months. I like the combination of secured lending often with protection fund, low volatility and higher than equity expected returns. By this time next year I expect that more than three quarters of my own investments of all types will be lent via a range of secured lending P2P platforms.

You might also find this poll over at the P2P Independent Forum of interest:

39%: work full time
35%: retired
8%: P2P is my living