Transfering my DB pension into SIPP

cambb

Cheers kidmugsy.

The main reasoning behind the transfer is passing this onto my wife/kids in later life. I currently have 200k equity in my house and approx 200k savings so a guaranteed income is not really that important.

The fund is well funded i believe and its my existing employer.

i have only been tracking the value for a couple of month's as per below and i seem to remember a couple of years ago it was around the 388k mark.

15/02/2017 £504,724.69
06-Mar £521,529.60
13-Mar £522,250.43

Just when do i go for it. My IFA said it can take up to 8 weeks to complete.

Thanks for all the advise.

xylophone

I currently have 200k equity in my house and approx 200k savings so a guaranteed income is not really that important.

I know retired people with at least that much in savings and far more in equity in their house but that does not make their index linked DB pensions "not really important"......

kidmugsy

cambb wrote: »

Just when do i go for it.

Oh, before the market crash in May.

But seriously, that really is for you to guess.

Linton

cambb wrote: »

Yes i have a wife, 2 children and no health issues. The main reason is my father is terminally ill @ 74 and I think if i was in his position my wife would only get half of the pension as it stands. I have worked out i need to live to 93 for the DB to "break even" and by that time what use would the money be? I would rather have the tax free amount in my 55 and enjoy it. Say the £521K + £200K by the time i retire invested would be able to support us through retirement. Forgot to mention that my wife also has a DB pension that would provide approx £400 a month when she retires.

How did you work out 93? You would need to assume an average investment return and an average inflation rate to do the calculations - what value did you use? Even if the figure is right, from the ONS life tables, assuming you live until 65 and are of average health, the chances of you living past 93 are about 40%. As to what use would the income be - decent care doesnt come cheap.

cambb

Linton wrote: »

How did you work out 93? You would need to assume an average investment return and an average inflation rate to do the calculations - what value did you use? Even if the figure is right, from the ONS life tables, assuming you live until 65 and are of average health, the chances of you living past 93 are about 40%. As to what use would the income be - decent care doesnt come cheap.

I used the £522k / £19000 pension. i know very finger in the air and i didn't factor in inflation. But what would the £19,000 be worth at 3% increase a year? I cant find a calc online to work this out without doing it myself year on year.

cambb

kidmugsy wrote: »

Oh, before the market crash in May.

But seriously, that really is for you to guess.

So what makes the figure go up and go down? So i can do some research on it before committing.

Thanks again

kidmugsy

cambb wrote: »

So what makes the figure go up and go down? So i can do some research on it before committing.

The policy of the pension trustees presumably is a major part of it; your age and salary, and interest rates.

Beyond those you'd need to ask an expert. Start a new thread to attract 'pensiontech', perhaps?

sandsy

cambb wrote: »

So what makes the figure go up and go down? So i can do some research on it before committing.

Thanks again

A key factor is expected yields on assets that the scheme holds and expects to hold going forward. The less trustees think they can earn on those assets, the more money that will be needed now to pay out the DB benefits. Conversely, the more trustees think they can earn on those assets, the less money they'll need now to pay out the benefits.

Yields are currently low and expected to remain that way so trustees think they need high amounts to pay out benefits - and you're entitled to a transfer value that represents their best estimate of that amount for you.

So if yields start rising substantially, TVs will come down. In particular, DB schemes invest a substantial proportion of the assets for paying benefits in gilts and other income producing stocks. So gilt yields are particularly the yields to watch.

cambb

sandsy wrote: »

A key factor is expected yields on assets that the scheme holds and expects to hold going forward. The less trustees think they can earn on those assets, the more money that will be needed now to pay out the DB benefits. Conversely, the more trustees think they can earn on those assets, the less money they'll need now to pay out the benefits.

Yields are currently low and expected to remain that way so trustees think they need high amounts to pay out benefits - and you're entitled to a transfer value that represents their best estimate of that amount for you.

So if yields start rising substantially, TVs will come down. In particular, DB schemes invest a substantial proportion of the assets for paying benefits in gilts and other income producing stocks. So gilt yields are particularly the yields to watch.

Thanks for the information