BT Pension - Increased Transfer Values

mbee123

It looks the the transfer values are more tempting, I've just received an updated quote from the BT portal which is far more generous than previous figures

The figure is coming out almost 34 times my annual pension (£16,206) at £545,738.

Mick70

mbee123 wrote: »

It looks the the transfer values are more tempting, I've just received an updated quote from the BT portal which is far more generous than previous figures

The figure is coming out almost 34 times my annual pension (£16,206) at £545,738.

I'm sure that isnt how you work it out and the calculation is more complex than that ?

colint1960

Hi, I am a deferred Section B member and can take take my pension in Jan 2020 at 60 years old having worked for BT between 1977 and 2000. I have been using the BT Pension Portal and been obtaining monthly "illustrative" transfer values. This transfer amount seems to vary up and down over the last year, is this due to the way its invested?
So annual pension of £10,620 and lump sum of £31,861- transfer out value £326,294.I appreciate I need to speak to a financial advisor. But my question is this.
I can take a 25% tax free lump sum from Transfer value approx £80k leaving approx £247k to invest in a drawdown pension (less financial advisor fees, £5k?) lets assume £240k. So use the same lump sum I would have been offered from the BT Pension of £32k (from the tax free lump sum £80k) leaving £48k as a buffer. This would represent approx 4 years BT Pension at around the £11-12k before I would need to touch the £240k drawdown amount. Even if this drawdown amount doesn`t increase it still represents 20 years pension at around £12k per annum. (this would be after the £48k buffer) Yet gives me the opportunity to benefit from any gains in the investment over the coming years. My pension would be CPI linked which I have checked is averaging approx 2.2% over the last 20 years. I appreciate that the drawdown investment could actually decrease in terms of another crash but I`m fortunate to have a small house Im currently renting out only worth around £100k. But I feel, looking at the above figures its worth the risk? I also recognise my wife would benefit from a 50% pension if I died but also gain the remaining drawdown amount in similar circumstances. Im also aware of the potential tax implications either way.
I am tempted with the transfer value an d take the risk as outlined above. Does anyone have any thoughts on my reasoning?

robin61

colint1960 wrote: »

Hi, I am a deferred Section B member and can take take my pension in Jan 2020 at 60 years old having worked for BT between 1977 and 2000. I have been using the BT Pension Portal and been obtaining monthly "illustrative" transfer values. This transfer amount seems to vary up and down over the last year, is this due to the way its invested?
So annual pension of £10,620 and lump sum of £31,861- transfer out value £326,294.I appreciate I need to speak to a financial advisor. But my question is this.
I can take a 25% tax free lump sum from Transfer value approx £80k leaving approx £247k to invest in a drawdown pension (less financial advisor fees, £5k?) lets assume £240k. So use the same lump sum I would have been offered from the BT Pension of £32k (from the tax free lump sum £80k) leaving £48k as a buffer. This would represent approx 4 years BT Pension at around the £11-12k before I would need to touch the £240k drawdown amount. Even if this drawdown amount doesn`t increase it still represents 20 years pension at around £12k per annum. (this would be after the £48k buffer) Yet gives me the opportunity to benefit from any gains in the investment over the coming years. My pension would be CPI linked which I have checked is averaging approx 2.2% over the last 20 years. I appreciate that the drawdown investment could actually decrease in terms of another crash but I`m fortunate to have a small house Im currently renting out only worth around £100k. But I feel, looking at the above figures its worth the risk? I also recognise my wife would benefit from a 50% pension if I died but also gain the remaining drawdown amount in similar circumstances. Im also aware of the potential tax implications either way.
I am tempted with the transfer value an d take the risk as outlined above. Does anyone have any thoughts on my reasoning?

If it was me I would take the BT Pension.

Ok so if you take the 25% you get a lump sum approx £50k more but how much pension could you safely take from the remainder without depleting your fund ? Some say drawing 4% is fine. Others think that maybe a bit less to be safe. But working on 4% of the £244k that's only going to give you £9,760 per annum against an index linked, guaranteed pension of £10,620

So really you are taking a risk to get a bigger lump sum. What would you do with the lump sum ? Do you really need it ?

For me anyway there isn't a big enough gain to make the risk worthwhile.

I wonder what sort of quotation you would get if you bought an annuity with the £244k. I bet it won't be great but maybe worth finding out.

1968gmr

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They have a great real time update and when you switch to 12 mths or 3 yrs you can see what drives the CETV Value increases and monthly spikes.

This way encompasses all the positive CETV Value factors of lower interest rates , higher inflation and lower GBP to the USD ..

LOOK FOR :
GBP V USD under 1.30
INFLATION over 2% like RPI still is (but CPI low @1.3%)
INTEREST RATE CUT FROM 0.75%

These are all in the Gilt yield so that is the best tracker ..