Final Salary scheme massive transfer value has turned my head!

coyrls

Featherweight wrote: »

Transferring into a SIPP does not, of itself, free up any tax free lump. It just brings the pot under my control. Flexible drawdown payments are 25% tax free. Buying an annuity allows a tax free lump I believe. I don't actually need a lump sum for anything.

Transferring to a SIPP would enable you, if you wanted, to take 25% tax free immediately. UFPLS or a phased drawdown would enable you to have 25% tax free from each drawdown if you don't take the immediate PCLS. Flexi-drawdown on its own (without a phased drawdown) would not let you take 25% tax free on each withdrawal.

Grumpygit

If I was in your position then I would transfer it out - the control over it and also the ability to leave it to someone appeals rather than the pot being lost if you should expire early (or earlier than expected) especially given that you don't have any dependents

Our DB scheme closed a few years ago and I did move my pot out (there was a 30% uplift plus extra company contributions if you moved). Some people I worked with were within 5-8 years of reaching the retirement age so have kept their deferred benefit. However, all of them are going to take the maximum lump sum available. After having spoken to them, they all said the same thing - it would be lost if they died and the married pension is so low it's almost not worth it - so we wouldn't want our company to benefit more than they should (by not funding as much deficit as needed for example)

kidmugsy

Apart from your disinclination to manage the money, the strongest reason I can see for not transferring is the RPI-linking: I don't know any other cost-effective way to buy RPI-linking. If your other wealth is already invested heavily in (let us say) index-linked savings certificates, then this argument looks weak.

Is the pension scheme financially sound? If it looks rocky, that's an additional reason to transfer out.

Thrugelmir

Featherweight wrote: »

An investment return of RPI+3% would mean the pension could be paid out of earnings with no loss of capital.

What's the investment that is guaranteed to perform like that?

Featherweight

Thrugelmir wrote: »

What's the investment that is guaranteed to perform like that?

All I'm saying is that it doesn't require wildly optimistic returns to keep pace. Even at RPI+0% it would run out in my 90th year, and there are very few 90 year old diabetics. No one in my family has ever reached 90.

jennyjj

chesky wrote: »

Stop worrying about your sister and concentrate on how you would prefer to live your own life.

Hear, hear!!!

BobQ

Sounds so easy to transfer out, but it is a lot of hassle to manage your investments.

Why not draw your DB pension with a lump sum and put the LS aside in case you need it but treat it as money for your sister.

If you die in your sixties you will have made the wrong decision to keep the DB pension. But thirty years is a long time and who is to say that diabetes will not be cured 20 years from now?

Featherweight

BobQ wrote: »

Sounds so easy to transfer out, but it is a lot of hassle to manage your investments.

Why not draw your DB pension with a lump sum and put the LS aside in case you need it but treat it as money for your sister.

If you die in your sixties you will have made the wrong decision to keep the DB pension. But thirty years is a long time and who is to say that diabetes will not be cured 20 years from now?

Thanks BobQ, I am inclined to do as you say. It will be the one and only time I'll ever say "no thanks" to £580K though -- a momentous decision.

BobQ

Featherweight wrote: »

Thanks BobQ, I am inclined to do as you say. It will be the one and only time I'll ever say "no thanks" to £580K though -- a momentous decision.

Keep telling yourself that its only £580K for a reason, work out how long you need to live to get your money's worth and then set your mind on living that long, positive thinking and all that.

Also if you have any access to no questions asked life insurance maybe give your sister a further windfall.:)

Gentoo365

get an IFA that is qualified to advise on this and ask about 'impaired life annuities'.

You *may* be able to take some tax free cash and still get a decent income from it.

'impaired life' basically means they assess your expected life span and if it is below average due to health they may increase the amount you get per year from your annuity.

Only possible issue is whether the transfer value can somehow be impacted by this in any way. Hence you need to speak to a qualified and experienced IFA that has advised people in similar situations.