DB Pensions for Muppets?

LHW99

Also, you do have the option (at least with the pre-2011 part) to give up some annual income for a larger lump sum - that said, the terms were not particularly generous when my OH looked at it.

sandsy

Although the benefits payable by your scheme are only dependent on future inflation, the transfer value varies for other reasons. In general, transfer values go up as you age as the benefit is closer to being paid AND it will go up for inflation of the benefits.

And in your thinking about what £200k could look like in 20 years time, you're forgetting about inflation. Yes, it could be worth £530k in 20 years time but that will only buy what £335k will buy today.

And (everything else remaining equal) the the transfer value itself will have increased from £200k by then too (as above).

Transferring out with 20 years to go is generally not considered a good idea as you as you're closing a door on one of the retirement options available to you and that door can never be re-opened. It's best to keep open as many doors as possible until you're closer to retirement and have a better idea what you want your retirement to look like.

Kynthia

rathernot wrote: »

Thank you Those are all good points.

In my situation there is no spouse or dependents so being purely selfish I guess those don't come into play unless my personal circumstances change.

Illness and (for example) early retirement are good points, hopefully considering the latter more than the former hence starting to look ahead a little more

To be clear I'm not saying I want to transfer, simply trying to understand pros and cons, like I said I've been very slack on this stuff other than ensuring I pay in.

Not having a spouse or children does reduce some of the advantages of s DB scheme. However unless all your other pensions are DB also, most people highly value havibg a percentage of their retirement income low risk, unaffected by stock market crashes and guaranteed to not run out if you live longer than average.

However for some people transferring out can be a good thing, if all their pensions are DB, they have no spouse, and they want some to be inheritable for their children, flexible to fund early retirement, or they have life-limiting medical conditions. It all depends on your complete and individual circumstances which is why an IFA would look into everything before coming up with a recommendation.

rathernot

sandsy wrote: »

Although the benefits payable by your scheme are only dependent on future inflation, the transfer value varies for other reasons. In general, transfer values go up as you age as the benefit is closer to being paid AND it will go up for inflation of the benefits.

And in your thinking about what £200k could look like in 20 years time, you're forgetting about inflation. Yes, it could be worth £530k in 20 years time but that will only buy what £335k will buy today.

And (everything else remaining equal) the the transfer value itself will have increased from £200k by then too (as above).

Transferring out with 20 years to go is generally not considered a good idea as you as you're closing a door on one of the retirement options available to you and that door can never be re-opened. It's best to keep open as many doors as possible until you're closer to retirement and have a better idea what you want your retirement to look like.

Thank you, that makes a heck of a lot of sense (I did say I needed a guide a pension muppet could understand ).

The comment on closing a door that cannot be re-opened makes sense, but the bit I hadn't appreciated was your comment that people typically transfer DB's (if it's sensible to do so) closer to their retirement data rather than such a long way out.

I think I'm entitled to one free valuation every 12 months so I may get one at some point, but it certainly doesn't sound like there's any rush to consider doing anything, almost sounds the opposite :beer: