Cetv and age query

JoeCrystal

Surely, would it make sense not to transfer? I mean, you already got enough savings outside the pension scheme. Once you paid off the mortgage at £50k, that leaves you with £190k. Use the savings & DC pension to cover the gap between 55 and 65 which then £15,500 pension kicks in at 65 plus your state pension at your SPA.

Albermarle

You should keep in mind a worst case scenario.
That is take the CETV - 6 months, one year later stock markets crash and you overnight lose 25% of the value . Then it takes 10 years or more to recover back to where it was , in which time inflation has increased by 30%.
At that point you will wish you had not transferred.
Even if it is not that bad , market volatility could be bad for your nerves/insomnia !

Triumph13

JoeCrystal wrote: »

Surely, would it make sense not to transfer? I mean, you already got enough savings outside the pension scheme. Once you paid off the mortgage at £50k, that leaves you with £190k. Use the savings & DC pension to cover the gap between 55 and 65 which then £15,500 pension kicks in at 65 plus your state pension at your SPA.

This would definitely be my first choice, particularly as you don't have kids to be thinking about passing on an inheritance to.
Retire at 55. Live on your DC funds (which you should be able to get out largely tax free) and your savings until 65. DB at 65, SP at 67. Guaranteed, stress-free income.

Nuttyboy

I did raise concern that im entering the market high.. The ifa said the risks were spread globally and didnt seem concened. (altho i am).. Do the markets really take 10years to recover in a dip?.i guess the stress caused to me initiating the transfer may be an indicator this isnt for me after all.

Malthusian

Nuttyboy wrote: »

I did raise concern that im entering the market high..

The majority of investors enter the market high. Over the last 55 years, the FTSE has spent 55% of the time within 10% of its all-time high. The vast majority of them still make money in the long term, unless they sell at a low point, use gearing or fail to diversify.

That in itself doesn't mean that transferring out of the DB scheme is a good idea.

Note that people who cash in DB pensions and draw down the capital are running a higher risk of being in the minority of investors who lose money, because they might be forced to sell at a low point to meet their living expenses.

Do the markets really take 10years to recover in a dip?

Not in living memory. The credit crunch typically took up to 4 years to permanently recover, the dot-com crash 5-6 years.

Not sure how long the Great Depression took to recover from as it's very difficult to find data that goes back that far which includes dividends.

10 years is a very very worst case scenario. Just bad enough to be worth thinking about without falling into the category of "apocalypse scenarios", which are not worth thinking about as there's nothing useful that can be done to avoid them.

Thrugelmir

Nuttyboy wrote: »

in theory my cetv would increase year on year..correct?..if so by how much?..would the actuary give me this percentage if i asked for it?

If you can forecast what action the BOE will take , or not take as the case might be , in unwinding QE. Then somebody could take a stab.

At the current time with a forced buyer in the market for Gilts. The market isn't functioning in a normal manner.

Thrugelmir

Nuttyboy wrote: »

Do the markets really take 10years to recover in a dip?

There was a decade when the S&P 500 underperformed inflation. Likewise over a 25 year period only around 800 out of some 25,000 listed stocks have actually beaten the return on cash.

As for longer term underperformance. The collapse of the Nikkei index, is a timely reminder that on occasions speculation and over valuation does occur.

Financial disasters happen when the last person who can remember what went wrong last time has left the building.

JoeCrystal

Thrugelmir wrote: »

As for longer-term underperformance. The collapse of the Nikkei index is a timely reminder that on occasions speculation and over valuation does occur.

I was mostly thinking about Nikkei when someone mentioned that markets take a long time to recover. I read somewhere that Nikkei still haven't recovered, even three decades later.

Albermarle

Investors in the FTSE 100 between Feb 1999 and Feb 2009, lost 14.5%, including taking into account reinvested dividends. Over the same period inflation was approx. 25%.
So a 40% loss in value over 10 years.

Ok it is very much a worst case scenario but it did happen.

Seabee42

You say you are looking at transferring to True Potential and you have seen an IFA? Do you mean you have spoken to an FA effectively a salesperson for true potential or did an actual IFA actually recommend True Potential?