Quick calculation

murphydog999

Thanks all for trying to suss this out. Transferring is not on the cards, as far as I am aware forces pensions aren!!!8217;t transferable or is the ability to take 25% tax free. My initial question seemed so simple! Without saying, well it depends on..........there isn!!!8217;t a calculation that gives the answer to age 55, index linked sum of £16500 p.a. what sum of money do I need to achieve this?

redux

murphydog999 wrote: »

Thanks all for trying to suss this out. Transferring is not on the cards, as far as I am aware forces pensions aren!!!8217;t transferable or is the ability to take 25% tax free. My initial question seemed so simple! Without saying, well it depends on..........there isn!!!8217;t a calculation that gives the answer to age 55, index linked sum of £16500 p.a. what sum of money do I need to achieve this?

I've read through this thread a couple of times, and I don't think it is simple. It is like you are asking a question parallel or analogous to what you actually want to know, or from another direction.

If something is not transferable, then the notional transfer value, or the cost to buy an equivalent of it, without defining what it is, is a somewhat hazy concept. There are uncertainties and approximations, and results can vary by more than just a few per cent, as the range of answers illustrate.

Part of the dilemma I see illustrated in the answers is the way to be most certain of that result is to buy an annuity now, but this isn't actually the best solution from that age.

Alibert

If you ask How can I be certain of a particular income , the answer is to buy an annuity

If you ask How can I avoid the disadvantages of an annuity while being fairly confident of a particular income , the answer is more flexible

murphydog999

Alibert wrote: »

If you ask How can I be certain of a particular income , the answer is to buy an annuity

With what amount of money?

Johnnyboy11

murphydog999 wrote: »

What size would my pension pot need to be if I retired next year (age 55) with £16500 p.a.? Hopefully that’s a quick calculation? Thank you very much if you can answer.

Simple answer is £412,500 (£16,500/4%).


Invest £412,500 in a diversified portfolio of mainly shares and you can safely withdraw £16,500 p.a. in perpetuity. Something like 7% long-term average investment return, less investment fees and less inflation gives a safe withdrawal rate of 4%. Your £412,500 won't be depleted and will keep pace with inflation.

Alibert

But that's not guaranteed. If you want £16500 guaranteed, index linked , for life, you'd need an annuity , which would cost a lot more

coyrls

murphydog999 wrote: »

With what amount of money?

Your pension is a guaranteed £16,500 pa, index linked to inflation. To get an equivalent pension with a lump sum, you would need to purchase an index linked annuity.

Early in the thread, zagfiles provided the cost of such an annuity as £825,000, so that is the answer to your question.

Silvertabby

OP - I'm assuming that you are already in receipt of your Armed Forces pension and £16,500 is the amount it will increase to at age 55 (ie, restored to pre-commutation rate and index linked from date of leaving).

If I'm wrong, then I'm afraid that you will have to wait until you are at least 60 to be able to access your deferred benefits.

Either way, transferring out to a private/money purchase money scheme is NOT an option, so there's really no point in juggling 'what if' figures.

No further/25% tax free cash, either.

murphydog999

coyrls wrote: »

Your pension is a guaranteed £16,500 pa, index linked to inflation. To get an equivalent pension with a lump sum, you would need to purchase an index linked annuity.

Early in the thread, zagfiles provided the cost of such an annuity as £825,000, so that is the answer to your question.

Thank you, are are you saying this from a position of knowledge and experience? If so how do you reconcile it will the lower figures? Are they not realistic?

murphydog999

Silvertabby wrote: »

Either way, transferring out to a private/money purchase money scheme is NOT an option, so there's really no point in juggling 'what if' figures.

Thank you for pointing this out, I've never mentioned transferring as I know it's not an option, and isn't why I am asking.