Final salary scheme

jrsga

[FONT=&quot]I have a DB final salary scheme and have noticed much of the regular mention of them in the media.

A very recent illustration quotes a GMP and non-GMP part totaling about £1800 a year. It also says [/FONT]
[FONT=&quot]“The GMP part of your pension will be increased at your GMP Payment Date (age 60 for women and[/FONT]
[FONT=&quot]age 65 for men)” It’s a Barclays UK retirement fund.[/FONT]
[FONT=&quot]
The CETV is around £110K.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]I would appreciate advice and comments as to what I should consider at this point.[/FONT]
[FONT=&quot]I’m aware of the compulsory advice required before transferring out.[/FONT]
[FONT=&quot]thanks[/FONT]

Finst

I'll leave others to comment on whether the CETV is good value (although I don't think there's enough information here to judge).


The beauty of a DB pension is that all of the risks and responsibilities are carried by the employer. Investment choices, topping up the fund if the pension is going to fall short of what is promised, etc etc. Its perfect for people who don't have the knowledge to manage their retirement savings themselves.


A DC scheme (which you'd be transferring to) puts all those responsibilities on the individual. Forgive me, but in your post you don't sound like someone who would be confident about managing their retirement savings in this way. I'd urge you to think about that, alongside whether the CETV is a good deal or not.

jrsga

Finst wrote: »

I'll leave others to comment on whether the CETV is good value (although I don't think there's enough information here to judge).


The beauty of a DB pension is that all of the risks and responsibilities are carried by the employer. Investment choices, topping up the fund if the pension is going to fall short of what is promised, etc etc. Its perfect for people who don't have the knowledge to manage their retirement savings themselves.


A DC scheme (which you'd be transferring to) puts all those responsibilities on the individual. Forgive me, but in your post you don't sound like someone who would be confident about managing their retirement savings in this way. I'd urge you to think about that, alongside whether the CETV is a good deal or not.

I may not be too confidant at this point but if I am armed and do my research it may be beneficial for me to go this route?

I have read that these are golddust schemes?

The yearly income, who knows what that may be at that later time?

What else can anyone add?

sandsy

A DB pension provides you with an income for life, usually with some increases for inflation each year. You don't have to think about it - it will keep arriving each month as long as you live.

Transferring out means you get a cash equivalent transfer value to give up your claim to a lifelong pension. Instead, you get the opportunity to manage your own money in a pension where you (or your adviser) can invest the money in different investments. you can choose to take the capital and income from the pot however you like - but once it's gone, it's gone. The value of the investments can go up and down and you will have to pay the costs of investing the money to a pension/fund manager and, if you don't fancy trying your own hand at investment, you'll have to pay the adviser too - although both sets of payment can come from the pot.

So essentially, you give up certainty for uncertainty but with that comes flexibility and the potential for better or worse income than the original pension.

The two options are also different if you should die as the DB pension normally pays a portion to your spouse, again for life whereas the DC pension pot can be inherited in its entirety by your spouse/dependants.

Which option is right for you will depend on your personal circumstances - what you want to achieve in retirement, your total retirement income and outgo, your attitude to risk on investments, your health, family circumstances etc. and an adviser will take you through all of that - for a fee.

Muscle750

Plus if you drop dead a week after you retire the money in a DB scheme is wiped out end of with mine my wife will get a small pension from it if i go earthbound a week after i retire however live to get the telegram at 100 and happy days .................its a chance u take