Excited but Nervous - Transferring Final Salary Pension

maximumgardener

rather essential also for OP and her husband to get up to date state pension forecasts

has that been done?

Cat_House

Hi, Thanks for your replies.

I hate my job and have handed in my notice twice in the last 2 years, but because hubby is 3 and a half years unemployed, I got scared, so carried on working. I asked my pension company for a CETV on my final salary after reading about it here on the forums. I was shocked when I saw the amount, but still intended to leave it where it was until yesterday. I have another 160K DC and hubby has 120K DC and we also have savings and a couple of ISAs.

Hubby's state pension kicks in December 2021 and is forecast at £222 per week.

IFA worked it out to be around x 35 as the 8.5K does not kick in until Nov 2019. But it looks like I can now take more than 10K annually and retire two years earlier by putting just the FS into a flexi access with smoothed returns yielding 5% a year which we are both happy with.

We can live on savings and maybe access Tax Free Lump Sums if we need to until State Pensions kick in. I don't feel so nervous today as yesterday, having had time to sit down and think about it. In fact, I really cannot wait until Monday...

I am going to write my book about growing up in the social care system in the 1960's and 1970's. I started this 20 years ago, then I got this job and I never touched it again since.

I have loads of other plans too, things I want to do and learn while I am still able to. Even if I am not rich, I will just be Happy...

Cat_House

Dasa - 3.5% for the transfer £9.3K

Cat_House

K6Chris

It was about 5K at age 55 so I guess between 6K & 7K

GunJack

Cat_House wrote: »

Hi, Thanks for your replies.

I hate my job and have handed in my notice twice in the last 2 years, but because hubby is 3 and a half years unemployed, I got scared, so carried on working. I asked my pension company for a CETV on my final salary after reading about it here on the forums. I was shocked when I saw the amount, but still intended to leave it where it was until yesterday. I have another 160K DC and hubby has 120K DC and we also have savings and a couple of ISAs.

Hubby's state pension kicks in December 2021 and is forecast at £222 per week.

IFA worked it out to be around x 35 as the 8.5K does not kick in until Nov 2019. But it looks like I can now take more than 10K annually and retire two years earlier by putting just the FS into a flexi access with smoothed returns yielding 5% a year which we are both happy with.

We can live on savings and maybe access Tax Free Lump Sums if we need to until State Pensions kick in. I don't feel so nervous today as yesterday, having had time to sit down and think about it. In fact, I really cannot wait until Monday...

I am going to write my book about growing up in the social care system in the 1960's and 1970's. I started this 20 years ago, then I got this job and I never touched it again since.

I have loads of other plans too, things I want to do and learn while I am still able to. Even if I am not rich, I will just be Happy...

wouldn't it not be better to fund the 2 yrs until your DB kicks in by using your DC pot?? and then topping up the DB to personal allowance??

Cat_House

I understand, not just from the IFA, but also reading up, that this is the best time to take the transfer. If the interest rate rises at all ,then the CETVs will drop.

The DB pension, I left that job in 1996 so there is not an option to put anything into it, if I have read you correctly.

bostonerimus

Am I right in saying that you are being charged 3.5% for the transfer?
What are your ongoing expenses going to be....fund fees and IFA fees (if any)?
Have you considered what you'll do if your pension pot has several years of poor returns?

Cat_House

Bostonerimus - Yes 3.5% - Is that too high?

I don't have to pay this upfront, it will come out of the pension.

Ongoing advisor fees 0.5%

Fund fees not known yet. Have only had initial meeting.

Understand the plan is very cautious and we also have 2 other pensions.

bostonerimus

Cat_House wrote: »

Bostonerimus - Yes 3.5% - Is that too high?

I don't have to pay this upfront, it will come out of the pension.

Ongoing advisor fees 0.5%

Fund fees not known yet. Have only had initial meeting.

Understand the plan is very cautious and we also have 2 other pensions.

That might be the going rate, I don't know I'm in the US. But if we take 3.5% off your pot it goes to 258k and you now have to withdraw 3.3% to equal the pension. However, you will have 0.5% IFA fees and they will have to be paid so you will need to actually withdraw 3.8% to equal the pension. That's a little high to have a good possibility of sustainability over 40 years and I think that tips the balance towards keeping the final salary pension.

It's nice to have a range of income sources in retirement.....some safe and guaranteed and some a bit more risky. If you can keep your final salary pension it would be a nice complement to any other defined contribution pension pots you have.

Early retirement is a good goal, but don't let you current work frustration push you into ill advised financial decisions that you might have to live with for 40 years.

atush

I think that as it is over 9K it is a little high.

But it is a high risk transaction for the IFA.