Final salary vs. Drawdown

princeofpounds

It is a whole new mindset as 'mortgage free' was always the dream.

Totally get that, it may well be a sensible option, but sometimes the commutation factors for defined benefits pensions the rate at which you sacrifice income for a lump sum can be surprisingly (un)generous (depending on which way round you look at it)

dunstonh

The ongoing adviser charge is not expensive. That is the typical ongoing rate. The initial is on the high side. if it was £5k then I would say fair enough. £8k would suggest that its someone that doesnt really want to do it but if you are willing to pay for it they will.

Or it could be one that is damned expensive and knows he will lose business but will get enough to make it worthwhile. (less work, more income rather than the other way around).

snuff2pay

The figures are

Pension fund £761441 max tax free sum
Annual pension of £11421 index linked to RPI
Spouses pension of 83%

Drawdown
£112,547 max tax free

Fees £7500 fixed
0.5% management fee

The FA was obviously keen to emphasise the benefits of drawdown but my instinct is that the invested sum would have to work really hard to return the benefits over a long period which an index linked pension would offer. As its not a good idea to invest in high risk strategies at this stage, I am struggling to see how it would be better.

As he's getting ever closer to retirement my husbands health is getting better so I think for us staying with the company pansion is the way to go.

Am I on the right lines here ?

maximumgardener

In your shoes

I'd see 3 IFA's and seek proper guidance (free initially!)

you need to get the terms of your pension contract fully understood, it may have valuable guarantees

GunJack

Plus, if you stay in the company scheme, if the worst comes to the worst and hubby dies before he retires, there'll be death benefit of 3 or 4 times salary that will be payable. I mention this as no-one has so far, and is often overlooked., and is often worth more than the lump sup payable on retirement.....

my wife thinks it's mad that I'm worth more dead, but that's just the way it is...

greenglide

my wife thinks it's mad that I'm worth more dead, but that's just the way it is...

I think it is mad that I am worth worth more dead than alive with a death in service benefit of 7 or 8 times my gross salary and a widows pension of significantly more than my retirement pension.

As retirement approaches this becomes more and more stark - I must get a food taster!

xylophone

I must get a food taster!

And avoid

standing on the edge of the kerb/platform

persons standing near you with umbrellas with pointy ferrules

unexpected parcels in the post

opening the door to strangers......:eek:

AlanP_2

xylophone wrote: »

And avoid

your wife by the sounds of it :rotfl:

snuff2pay

There is death in service benefits but Mr. Snuff retires officially in a couple of weeks. Perhaps we need to play 'top of the stairs marbles'. (It is a good job he will never read this!) Thanks to all for your advice and we will see an other couple of fa s, and make a decision, confident that we havhave done our best to come to the right decision.

kidmugsy

If Mr Snuff has reached 65 before 6/4/16, then he could make an excellent investment by deferring his state retirement pension. He'd get an extra 10.4% for every year of deferral. This might be a useful low-risk complement to a drawdown pension. When he dies you'd "inherit" at least half of the extra pension. (I estimate my widow will receive about 90% of mine.)