Final salary scheme converted to a Bond

archie17

Dear All

In about 1999 the company I was working for had a final salary scheme.
The Trustees and owner informed us that it was untenable.
This final salary scheme was converted to a Bond with guaranteed benefits, I left the company shortly afterwards.
These are
Annual pension of £5879
This was made up of the following
£3983 with no rate of increase
£1895 with a 5% annual increase.
50% would go to my wife on my demise.

I asked for a transfer value and was told that this would be £120,000.
I like the idea of the security of a known income but I do not think it is good value.

I would be interested in your opinion of the annual pension amount offered.
I am currently 65 and need to decide what to do.

Best regards

buglawton

Depends on your age and the date you can claim that annuity from. You should be able to find an online actuary table and get an estimate of your longevity. Multiply number of years you could claim by £5800. Might also be worth noting who owns the fund and how secure they are.

HappyHarry

archie17 wrote: »

Dear All

In about 1999 the company I was working for had a final salary scheme.
The Trustees and owner informed us that it was untenable.
This final salary scheme was converted to a Bond with guaranteed benefits, I left the company shortly afterwards.
These are
Annual pension of £5879
This was made up of the following
£3983 with no rate of increase
£1895 with a 5% annual increase.
50% would go to my wife on my demise.

I asked for a transfer value and was told that this would be £120,000.
I like the idea of the security of a known income but I do not think it is good value.

I would be interested in your opinion of the annual pension amount offered.
I am currently 65 and need to decide what to do.

Best regards

Assuming you are in good health and your wife is a similar age, the offering is far better than any annuity on the market. Purchasing a level annuity for life using £120,000 would pay you around £5,400 per annum (with a 50% spouses annuity).

JoeCrystal

Well, here is back of the envelope calculation based on Best buy rates HL annuity table: Link to HL Annuity Table

£3983 level per year with 50% for spouse: £82,378
£1895 with 3% increase (Can't find rate for 5% increase) with 50% for spouse: £58,200 (Would be higher since 5% increase costs more). So it is worth at very least £140,578

Therefore it is pretty good value anyway. Especially that few providers are already cutting rates again due to the the subsequent drop in gilt yields after the referendum result.

xylophone

converted to a Bond with guaranteed benefits,

A S32 Pension Policy? Some other kind of deferred annuity?

Assuming that this is a pension with guaranteed/safeguarded benefits, you would require advice from an IFA with pension transfer permission before you could transfer out - this would come at a cost, and a transfer might not be recommended.

You might then find it difficult to find a provider to accept the transfer.

archie17

Thanks for the quick responses - what a great forum this is.

One point I have missed, I have hypertension and it is controlled by drugs.
So there is a good chance I could get an enhanced annuity.
The provider is a well known name.
I think it is a section 32 policy but it is not clear in the documents.