Pension drawdown

WERDN

I am 55 and have the option of taking VR (approx £60K) sitting on a transfer value of £850,000. Currently considering my options, have spoken to FAs. The £60K would pay off all of my debts, with a small surplus. If i choose VR i would need to start drawing down on my pension from about the age of 56. My wife has a smaller pension, value £85,000, she is 52.
Currently spend about £3500 per month (excluding debts). We are not adverse to part time jobs.
64 million dollar question - How long is it likely to last ? Thoughts / advice would be appreciated Regards

jaybeetoo

Try this calculator https://www.hl.co.uk/retirement/drawdown/calculator

dunstonh

sitting on a transfer value of £850,000.

Is that a fund value or the transfer value of a defined benefit scheme?

WERDN

Thank you for response - It is an estimated transfer value of a defined benefit scheme
Regards

dunstonh

Do you have experience of running an investment portfolio of around £850k?

For example, you would lose around £150k in a frequent relatively minor downturn. Can you handle that?

How much income is the scheme pension and when is that payable without penalty?

WERDN

No experience of running an investment portfolio
I would have no other means of income other than to drawdown on £850,000 and house which is worth about £350,000
So i guess £150K downturn would be difficult
Unreduced pension not available until 65, and is estimated at £42K, estimate at 60 is £32K, at 55 is £24K

AlanP_2

WERDN wrote: »

No experience of running an investment portfolio
I would have no other means of income other than to drawdown on £850,000 and house which is worth about £350,000
So i guess £150K downturn would be difficult
Unreduced pension not available until 65, and is estimated at £42K, estimate at 60 is £32K, at 55 is £24K

Are those estimates base on you continuing to work and accrue pension?

What is the annual pension now?

dunstonh

So i guess £150K downturn would be difficult
Unreduced pension not available until 65, and is estimated at £42K, estimate at 60 is £32K, at 55 is £24K

This is what you are going to have to get used to though if you move it from a DB scheme into an individual one.

The large value means that percentage drops are magnified in monetary terms. So, whilst 15% drop is quite normal and shrugged off by experienced investors, you haven't see that before and watching your pension fall by that amount every 3-5% years (sometimes multiple times in that period) is asking a lot. To help, you are really going to have to step up your knowledge on investing. It won't make the first time any easier but it may prevent you from making a catastrophic mistake.

Considering your early age and the odds you will be a cautious investor, a figure around 2.5-3% of value would be a sustainable income (but with no guarantees). You need to build in some inflation protection as you are going to be retired along time. £100k will be worth around £70k in 10 years. So, if you draw all the return as income, you leave nothing to allow for future increases in income.

To do this, you are going to need an IFA as you cannot transfer without one. They should cover the warnings etc

wjr4

That's not a very generous Cash Equivalent Transfer Value (CETV).

WERDN

Pension value estimate as of 01/04/2019 (age 55) £24610 per year or £17502 and £116k lump sum. Other values I quoted are if I stay in DB scheme and continue working
Regards

xylophone

If you wish to do this you will need the advice of a Pensions Transfer Specialist.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

Without a positive recommendation your choice of pension provider may be limited.

Have you and your wife obtained new state pension statements?

https://www.gov.uk/check-state-pension