pension - what to do..delay a few months?

Vonnie406

Hi

My partner has been made redundant. He is 55 and unlikely to get another job in his industry. We have already asked for an early retirement quote (2 weeks ago), nothing arrived as yet. Maybe this is a result of Brexit or maybe it takes this long anyway. His pension is with MNOPF. He has also received the medical certificate to say he unfit to return to sea. Which means he will be able to apply for ill-health retirement (yet to do this).

We are having kittens thinking that we have no choice but to go for the pension, BUT we have no idea how Brexit changes what we'll get, or if it will at all (but I think it must). I don't even really understand how it works, i think we have to buy an annuity? I know we can also take a lump sum.

HOWEVER how scared should we be about the markets/value of pound in terms of how much that would reduce the monthly pension? I am unsure how linked the markets are to the pension, I can only assume that they are heavily inter-twined. Should we wait for the markets to settle? Should we go at it as quickly as possible (including selling the house, which we will have to, and move elsewhere, cheaper)?

Maybe no-one has the answer but I would really appreciate some advice as we are in the position of having absolutely no idea what effect this might have or what to do in terms of urgency\waiting. We can probably hang on for 6-9 months, but we'd rather know now what our financial position is going to be obviously, because such uncertainty is stressful. We can't plan to move house if we don't know what our monthly income is likely to be.

If this post should be somewhere else, in a Brexit type forum, then apologies, please let me know and I'll move it.

Appreciate any advice.
Many thanks

bigadaj

It's not really Brexit related.

The mnopf website seems reasonably good and straightforward, looks as though older members may have had access to a final salary scheme which may well have now become a defined contribution scheme.

They offer a full range of options, from annuity to drawdown to lump sum, or combination, so get a quote from them for all of the options, then post back and people can comment on the relevant pros and cons to each option if you describe your situation and needs.

Edit - whatever you do don't panic, no one can predict what the markets will do and depending on how the pension pot is made up its likely that they will have been moved to lower volatility assets anyway.

If you haven't heard anything fm then then guve them a ring to check progress, nothing wrong with being a bit pushy and I'd continue to do this on a weekly or fortnightly basis until you get the info you need.

dunstonh

Maybe this is a result of Brexit

The outcome of the referendum happened yesterday. So, that would have absolutely no impact. at this time.

HOWEVER how scared should we be about the markets/value of pound in terms of how much that would reduce the monthly pension?

If it is investment backed, it will do whatever the investments do. If planning to retire in short term, you shouldnt be in markets. So, a move to cash should be selected.

Should we wait for the markets to settle?

You will be waiting forever. The markets are never settled. For example, yesterday saw markets drop by just over 3% because of Brexit. Last Autumn, the markets fell by over 20%. You are worried about Brexit but were you worried last Autumn over the market crash?

but we'd rather know now what our financial position is going to be obviously

in which case, move to cash. Most unit linked fund selections have a deposit/cash fund for exactly this reason.

If this post should be somewhere else, in a Brexit type forum, then apologies, please let me know and I'll move it.

Brexit has nothing to do with this.

xylophone

Your husband is a member of the Defined Benefits Scheme?

If so, see below

http://www.mnopf.co.uk/myMNOPFpension/How-the-MNOPF-works/New-Section-pensions

http://www.mnopf.co.uk/myMNOPFpension/Retirement

"Retirement due to Ill Health" in menu on the left.

Vonnie406

I think maybe i wasn't very clear on what i was asking. The question really was this. We can afford to delay for at least 6 months from taking the pension at all. Should we? I have no idea how the MNOPF invest the pension funds, so I don't know how much his pension will be affected. Yes he's DB. And we are likely to take a pension and a cash sum. I have read that it's not wise to come out of such a scheme unless you can afford to take risks, which we can't.

Surely the value of the monthly payment will be affected by the turmoil in the markets? So, should we delay as long as possible until things settle or just get on with it?

AnotherJoe

Vonnie406 wrote: »

Surely the value of the monthly payment will be affected by the turmoil in the markets? So, should we delay as long as possible until things settle or just get on with it?

No, it won't be. That's the difference with a DB scheme to a DC scheme and why they are so valuable.
The "benefit" is fixed. And unaffected by stock markets. You have no reason to delay on this reason.

The only reason to delay would be if the defined benefit was higher, perhaps due to age, if you delayed, but a few months wouldn't make any difference there

xylophone

I have read that it's not wise to come out of such a scheme unless you can afford to take risks, which we can't.

I don't quite understand what you mean by "coming out"?

Your husband has a DB pension currently deferred because he has been made redundant?

In view of the state of his health, he is going to apply to access his pension under "ill health" arrangements?

He is not "coming out" of the scheme but becoming a pensioner member of the scheme?

Vonnie406

that was just an aside sort of comment. i just meant i was reading up because i thought with a pension that people mostly went off and bought an annuity (and cash if they wanted it) because if you just take what you're given you can get ripped off. But i now realise that might be the case with a DC policy, and not so likely with a DB policy. DB policies i have realised are much better.. This has all only just happened. We are awaiting quote from pension scheme on early retirement. In the meantime he went and got his eng3 (I think it's called), as he is unfit to go back to sea. We have yet to apply for the ill-health, we will do this soon.

Vonnie406

part of my thinking was because we are smokers, and that annuities can give better rates due to this. But my understanding it is better to stay in DB scheme.

Vonnie406

AnotherJoe wrote: »

No, it won't be. That's the difference with a DB scheme to a DC scheme and why they are so valuable.
The "benefit" is fixed. And unaffected by stock markets. You have no reason to delay on this reason.

The only reason to delay would be if the defined benefit was higher, perhaps due to age, if you delayed, but a few months wouldn't make any difference there

Thank you so much, i don't quite understand WHY it's unaffected but that is so reassuring. This is the case even if he is not receiving it or been given a monthly payment quote yet (or whatever they call it). I assume so from what you say. Can't tell you what a relief this is, will just get on with it then

atush

It is easy to see why it is unaffected- the pension is not invested in t he stock market, in so far as it is not a fund in that way.

A DB pension is more like a 'promise'. They promise to pay you a certain amount of money a year for the rest of your life when you retire. Based on your salary and the number of years you were a member of the scheme.