Please persuade my wife not to cash in her pension.

alfmurph

She is 62 in april 2019 and wants to retire soon after . Her private company db has a forecast of either 15k per year with no lump sum or 12k plus 80k lump sum .She will receive her oap when 66 .
She is determined to take a cetv . I totally disagree with her .
I am 65 and still working full time .
My lgps will pay 15k plus 30k lump sum or 12k and 80k lump sum . I already receive £146 per week oap .
I would like to take the 15k plus 30k lump sum and would like her to take the 12k with the 80k lump sum.
This would give us 27k plus 110k lump sum between us plus my oap with hers to come in 4 years .
But she wants the big money just to leave to our son even though he insists our house is more than enough .
We have no debts and mortgage free .
Please persuade her I am right .
Investments with their risks is way to complicated .

molerat

You may or may not be right. What is the CETV for her pension ?

Thrugelmir

However determined she is to take the CETV. Doesn't mean that she actually can. How far into the process has she got?

Dazed_and_confused

I don't think she has to "invest" it. She could keep it in cash.

Although she will then be losing money to inflation.

Personally I think your plan (the £80k lump sum) is probably a pragmatic middle ground however without the actual CETV its impossible for anyone to give a subjective view.

sandsy

First off, there is no way to transfer without taking regulated advice - this is a legal requirement. The regulator considers that pension transfers are high risk advice and only suitable for a minority of people. So it can't just be any adviser who gives the advice - it has to be one with specific qualifications in this area. There is a high chance that the advice will be not to transfer. Transferring to leave a legacy isn't a good reason for a transfer. Pensions exist primarily to provide retirement income.

alfmurph

She is only at the talking to me stage .
No forecast has been asked for yet but some work mates have and they are turning her head with pound signs .

Dazed_and_confused

You could get her to listen to the Money Box podcast about British Steel pensioners. It's available on the BBC website (Radio 4) and might make her think twice.

Dox

alfmurph wrote: »

She is only at the talking to me stage .
No forecast has been asked for yet but some work mates have and they are turning her head with pound signs .

Of course the pound signs are turning her head; that's what usually persuades people that transferring out of a defined benefit scheme is a good idea.

Why on earth do you think she will pay any attention to strangers on an Internet forum? Tell her to get a transfer value and then get the advice (which will normally cost her upwards of a couple of grand) and let the IFA set out the issues. If she chooses to ignore professional advice, on her head be it.

BTW, is she within a year of her scheme's Normal Retirement Age? If so, she has no statutory right to a transfer out, so may not be able to, depending on the trustees' policy/rules of her scheme.

Aegis

Ask for a forecast first, then look at how many years it will last if kept in cash and used to replicate an income rising at about 3% a year. The likelihood is that it will run out on this basis. Then look at investing it, and ask what might happen if markets fall by 50% (impact on her pension might be assumed at, say, 20-25%), then look at how long it might last in cash, 1% over inflation or 2-4% over inflation depending on how optimistic you want to be.


Add to this a cost of between £4,000 and somewhere north of £10,000 for the transfer and she may decide it's just not worth it.


Then look at the cost of providing an inheritance using a whole of life insurance policy funded from her pension. She might prefer that.

alfmurph

Whole of life insurance sounds like a good suggestion .
Any idea how much that might cost approx. .Female - aged 62 .
Would it be cheaper for one person.
I would take my son's suggestion and just leave him the house .

kidmugsy

"Please persuade my wife not to cash in her pension"

I think Mr Corbyn used the perfect expression.