Pension wind-up & safeguarded benefits

jsinc

Hi. Late 30s. Former company dc scheme being wound-up. Offered (A) Transfer out; (B) Leave and either scheme taken over by another firm in the group, or benefits secured via insurer deferred annuity (future trustee decision/revaluation risk).

Transfer value = £28k
Section 9 (2B) Rights Transfer value = £25.5k
Reference scheme test = £970 pa (GMP 4% pa revaluation rate, RPI after state retirement).

Company appointed adviser recommends taking the transfer value - flexibility and freedoms, relative death benefits, low yields/high values and likelihood transfer returns will surpass defined pension. Protected tax free value is 31% fund value which they would try to retain.

While that all makes some sense, a few things I don't understand before I ask them more Qs.

1) Was explained that Section 9 Rights value comes down to the company side, not info advisers have. But without knowing how derived (fixed sum, or sum derived from a particular %) how does one make any forward projections of possible changes?

2) Does a deferred annuity guarantee £X pa compounding @ 4% pa OR £X pot compounding @ 4% pa that will later be turned into an annuity? i.e. in keeping the underpin would I be locking in rate of return and/or locking in actual annuity rate?

3) Is there any better way to make an informed choice without knowing the terms/conditions/fees of potential deferred annuity?

Thanks for any clarification or opinion.

xylophone

Is there any better way to make an informed choice

Independent Financial Advice on your personal circumstances?

The adviser is advising the company rather than you?

https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

http://www.hoganlovellsukpensions360.com/_uploads/Briefing_Notes/DBcontractingoutbooklet.pdf

http://www.royallondon.com/Global/documents/GoodWithYourMoney/COMPANY-PENSIONS-FIVE-REASONS-TO-TRANSFER-OUT-AND-FIVE-REASONS-NOT-TO.pdf

https://www.gov.uk/new-state-pension/eligibility

jsinc

Will have a look through links thanks (a few are ones already found browsing previously).

No the adviser is a (free to me) ifa firm appointed by the company. Advice was personal, but not as detailed as I'd like. By detailed I mean something like a comparison spreadsheet with all inputs - actual or assumed - or all numbers so I can do this myself.

Basically I have a transfer value and guarantee value today. The transfer value is just that of invested fund units. I'd like to know how exactly the guarantee value is derived so I can revalue under another hypothetical yield situation (future bond yields if relevant and/or future deferred annuity rates).

Such info isn't apparently available, so wondering how others reach a decision beyond what someone else recommends.

sandsy

Re. (2): you're locking in an income which will increase by 4% for every year before you take it, and will increase at RPI after you take it.

jsinc

sandsy wrote: »

Re. (2): you're locking in an income which will increase by 4% for every year before you take it, and will increase at RPI after you take it.

Both then, thanks.

jsinc

xylophone wrote: »

Independent Financial Advice on your personal circumstances?

The adviser is advising the company rather than you?
http://www.hoganlovellsukpensions360.com/_uploads/Briefing_Notes/DBcontractingoutbooklet.pdf

Had a read through thanks. One part that stood out in the above:

"...DC benefits must be at least equal to benefits required by the RST. This provides a DB underpin in a scheme that is otherwise just DC ... the legislative requirements for the RST will continue to have effect after 6 April 2016, despite being repealed by the Pensions Act 2014. This is acknowledged to be only a temporary solution and the DWP commented that this complex issue will be revisited."

However it's a significant but not huge amount (~1200 pa today). Undecided but recognise perspective of not transferring & mentally filing as part of state pension (with inflation/revaluation risk).