DB pension transfer success?

garrob

Hello, I am considering transferring my DB pension and I got a cetv last year. The value is £265,000, I also will have around £100,000 in a DC scheme. I am looking to retire in 3 years time - age 62. I will probably get a small part time job ang my Gov pension will kick in at age 66. I would only be looking to take £1000 per month out of my pension, plus I would have the part time cash - £500 per month. Wife would still be working full time. I want to be able to leave the fund to my wife/kids when I die. Has anyone else transferred a DB pension who are happy they did? Be good to hear other experiences.

lexington013

Still debating to do it with mine. CETV of £435k plus DC pension of £155k.
I'm only 52 so will leave it a few years and have a look just before I'm 55.
I'm medium risk averse so quite like the idea of guaranteed income from the DB pension at 65..........however as no spouse the DB benefits are not great if I die.......I would like to pass on any surplus retirement money to my children.
The cost to move the DB can be in terms of an IFA charges can be high too.
Are you comfortable managing your pension through retirement or paying a company to do it?

Dox

garrob wrote: »

Hello, I am considering transferring my DB pension and I got a cetv last year. The value is £265,000, I also will have around £100,000 in a DC scheme. I am looking to retire in 3 years time - age 62. I will probably get a small part time job ang my Gov pension will kick in at age 66. I would only be looking to take £1000 per month out of my pension, plus I would have the part time cash - £500 per month. Wife would still be working full time. I want to be able to leave the fund to my wife/kids when I die. Has anyone else transferred a DB pension who are happy they did? Be good to hear other experiences.

The trouble with 'other experiences' is that the individuals concerned are, by definition, not in exactly the same position as you, especially in terms of their attitude to risk. It is also far too early after 'pension freedoms' were introduced to have any long-term war stories to relate.

Remember that your CETV will have changed since last year - it could have gone up or down, so don't count on it being £265K+. Remember too that you will incur substantial fees in obtaining advice if you want to investigate transferring - but that is the only sensible way to investigate the pros and cons for you personally.

dunstonh

Has anyone else transferred a DB pension who are happy they did?

Yes they have transferred DB pensions. And there are plenty who are happy and plenty who are not happy they did.

Be good to hear other experiences.

How does that help you?
The other person will be totally different to you. Money, objectives, family etc. You shouldnt care about what may have been right for others. You should care about what is right for you.

Historically, only 1 in 10 people were better off transferring out of a DB scheme. However, if around 4 in 10 transferred are you going to get the opinion of the 1 in 10 that was good or the 3 in 10 that were not? And the 3 in 10 that were not may not yet be in a position that they realise that it was the wrong thing to do.

The value is £265,000,

Have you any experience of having an investment portfolio of £265,000?

At the moment, there is no investment risk or volatility with what you have. However, if you transfer it then the investments WILL have periods they go down as well as up. How are you going to react when the value falls £40,000? (not an if but a when)

Albermarle

You do not mention what the DB scheme would pay per year if you kept it .
Normally you should find out what you would get at 65 , in today's money. Then you can at least know what the CETV multiple is. There is no set formula for calculating the CETV and each scheme is different and some more generous than others . The higher the multiple the more tempting it becomes to change but only as one factor amongst the more important points already mentioned.
Another thing you can do is see what the current CETV would buy as an annuity and compare this with the DB benefits .

Parking_Trouble

Listen to DunstonH and really challenge yourself.

CETV numbers understandably make people's eyes light up.

Swapping a guaranteed for life, index linked income for having to manage the risks, costs and volatility of investments is definitely not for the faint hearted or risk averse.

I have stuck with my DB pension instead of a very large CETV.
When I stop work later this year it will cover all the main living costs with no drop in lifestyle other than cutting out frivolous spending. I don't have to think about that index linked income, it just arrives in my bank account each month.

We have other savings and an option to downsize the family home if necessary.

My wife has transferred her old DB pension from 25 years ago to a SIPP - It was a generous amount and the IFA supported the transfer out. If it does OK we'll have some great holidays and a nice car. If not, it'll be cheap weekends away in the U.K. and an older car until the market picks up.

With living costs covered I'm happy with the risk of having a significant chunk of money in the wife's SIPP.

If I die the wife can downsize and use her pot to make up the 50% drop in my pension. She will also eventually have state pension and small NHS pension in four years time.

Net result is a very low/no risk approach to covering living costs and higher risk (still relatively cautious) for the more discretionary elements and a longer term backstop if I go first.

Everyone's circumstances are different but we've taken mixed risk approach that takes some of the worry out of it.

garrob

Many thanks for everyones input on this subject, I greatly appreciate it.
I have no experience of managing a fund of £265,000 and Parking trouble you are 100% correct saying my eyes would light up at that sum.
My initial thinking was to transfer and have that amount and also have £100,000 in my DC one to do something with. I was thinking of taking £1000 per month from my pension have a wee part time job and then my Gov pension will come in to play at age 66. That would give me roughly £2200 per month and I saw this fund lasting well into my late 80s.
I just looked at my DB pension and it stands of today.


Retirement benefit at age 65 would be - No lump sum = £11,623yr.
Cash lump sum of £55,187 and a pension of £8,278yr.
Spouses pension of £5,811yr.


Retirement benefit at age 62 which I would like to retire is as follows.


No lump sum = £10,228yr.
Cash lump sum of £49,979 and a pension of £7,497yr.
Spouses pension of £5,114yr.


I can't see a way of getting to the figure of £2200 per month with these pension figures.


As I have limited knowledge and I am still trying to learn all the different scenarios, I still can't work this one out.
I have no Mortgage and my house is worth £330,000 kids will be working and my wife will still be working full time after I retire. She has been a civil servant for 19yrs. No savings as such at the moment as we are putting £500 per month into child Isa's for our kids for another year and a half yet.
Sorry for all the info - maybe too much, but I want to make the right choices. Any help would be greatly appreciated as I have asked quite a few friends/work colleagues if they know of a good IFA but they all say no!!. Regards.

xylophone

Remember that you will need advice from a Pension Transfer Specialist which will not be cheap.

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

https://adviserbook.co.uk/ You would tick "confirmed independent" and Pension transfers" when the menu comes up.

Have both you and your wife obtained state pension forecasts?

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

It would seem that your wife has her own DB provision for retirement - does it provide a widower's pension and "pensions" for dependent children?

Does your DB pension provide benefits for your dependent children in the event of your death?

Your DB pension is currently deferred?

It is with a private company, not a public service scheme?

When were you employed by the company?

Do you have a statement showing pre 88 GMP/post 88 GMP/excess?

Lincoln_Imp

One thing you say is you will probably get a part time job
If i were you i would not work out any figures based on that

I retired nearly 2 years ago aged 57 and always said i would get a part time job after a few weeks rest but as yet i have not and to be honest i have no desire to whatsoever as enjoying retirement far too much

coyrls

garrob wrote: »

Many thanks for everyones input on this subject, I greatly appreciate it.
I have no experience of managing a fund of £265,000 and Parking trouble you are 100% correct saying my eyes would light up at that sum.
My initial thinking was to transfer and have that amount and also have £100,000 in my DC one to do something with. I was thinking of taking £1000 per month from my pension have a wee part time job and then my Gov pension will come in to play at age 66. That would give me roughly £2200 per month and I saw this fund lasting well into my late 80s.
I just looked at my DB pension and it stands of today.


Retirement benefit at age 65 would be - No lump sum = £11,623yr.
Cash lump sum of £55,187 and a pension of £8,278yr.
Spouses pension of £5,811yr.


Retirement benefit at age 62 which I would like to retire is as follows.


No lump sum = £10,228yr.
Cash lump sum of £49,979 and a pension of £7,497yr.
Spouses pension of £5,114yr.


I can't see a way of getting to the figure of £2200 per month with these pension figures.


As I have limited knowledge and I am still trying to learn all the different scenarios, I still can't work this one out.
I have no Mortgage and my house is worth £330,000 kids will be working and my wife will still be working full time after I retire. She has been a civil servant for 19yrs. No savings as such at the moment as we are putting £500 per month into child Isa's for our kids for another year and a half yet.
Sorry for all the info - maybe too much, but I want to make the right choices. Any help would be greatly appreciated as I have asked quite a few friends/work colleagues if they know of a good IFA but they all say no!!. Regards.

You want to withdraw £1,000 a month from a pension post of £365,000, a withdrawal rate of roughly 3%. Alternatively you can have a guaranteed £11,623 a year index linked from your DB pension together with a £100,000 DC pot. £11,623 a year gives you £969 an month and taking the remaining £31 a month from your £100,000 DC pot is a withdrawal rate of 0.4%. I can’t see any case for giving up your DB pension.

[FONT=&quot]If you want to retire before 65, use the £100,000 DC pot to bridge the gap until your DB pension kicks in at 65.[/FONT]

bluenose1

Think I would be very tempted to take the CETV in your position to have the money to enjoy whilst still young enough to enjoy it, though because of the sums involved I would get a recommended IFA to manage it. I always appreciate the consistently good advice Dunstonh gives so someone like that would be my choice.
My DB pensions are mostly civil service and NHS so a CETV is not an option. If it were I would be very interested.
Though I suppose you have to factor in IFA fees etc into the equation.