DB pension question

enthusiasticsaver

Some pensions pay out a lump sum if the pensioner dies within a certain period. My dad died a few months after retiring and my mum got 5 years pension as a lump sum on top of the lump sum he had already received and the monthly payments. My DH pension is the same should he go within the first 5 years of claiming. Both DB pensions.

jamesd

Albermarle wrote: »

If you transfer the £500K and then a week/month later the market crashes 25% , then you might find your self drinking and smoking more !

That would perhaps because the income can easily be twice what the DB pension would pay and a 25% drop a month after transferring makes no difference because safe withdrawal rates are based on far worse than that, so it's party time.

jamesd

debroxton wrote: »

I am single and my children are all over 21 - from what I understand, all the money in my pension pot will be lost - I'm seriously thinking about transferring out of my DB pension. The value of my pot is over £500,000, I smoke and I drink, so probably won't live long enough for it to be worthwhile staying in.

Have a read of the examples linked from here then move on to the rest of the thread to learn more about safe withdrawal rates. It wouldn't be even slightly surprising to find that you could retire early starting on twice the DB income.

Given the smoking and drinking you might be able to usefully buy an annuity to give you some useful guarantied income. "Enhanced annuities" take individual health and lifestyle factors into account, DB pensions don't.

AnotherJoe

debroxton wrote: »

I am single and my children are all over 21 - from what I understand, all the money in my pension pot will be lost - I'm seriously thinking about transferring out of my DB pension. The value of my pot is over £500,000, I smoke and I drink, so probably won't live long enough for it to be worthwhile staying in.

Have you got so little consideration for yourself, your wife and your children you arent looking at changing that ?

Albermarle

That would perhaps because the income can easily be twice what the DB pension would pay

Jamesd, I know you are an expert on these matters but still this seems a rather strong statement , when we have no idea what the CETV multiple is . Normally they can be anything from 20X to 40X so it can obviously make a big difference to any calculations .

Malthusian

AnotherJoe wrote: »

Have you got so little consideration for yourself, your wife and your children you arent looking at changing that ?

debroxton_in_the_very_first_sentence_of_the_bit_you_quoted wrote:

I am single and my children are all over 21

That said, Britain's oldest woman who just died at (IIRC) 112 put her longevity down to a dram of bad whisky every day. She didn't smoke but there is no shortage of "my Auntie Ethels" who lived into their 90s who did.

You should probably consider harder drugs if your plan is to spend £500,000 on being smelly and then die. Ecstacy, heroin, spice, cake, clerky cat, etc. Human bodies are resilient and you could find yourself in the nightmare scenario of being both broke and stone cold sober with plenty of years left to go.

Audaxer

tacpot12 wrote: »

If you die, the pot is halved. Half goes to your wife for as long as she lives and the other half goes to provide a pension for those in the scheme who outlive you. So you wife doesn't have to live any longer than you to "break even". She actually breaks even if she receives one payment from your pension, because she didn't pay for it. And don't forget that women tend to live longer than men...

You wife will be a big winner if you die early, she gets all her own pension and half of yours; index-linked, guaranteed for life, with no work or worry required.

His wife might not have a pension of her own, so I don't see how she would break even after one payment. That 50% of his pension might be her only income.

OP - if you were to take the lump sum, most DB pensions allow the spouse to get 50% of what the full pension would have been if you hadn't taken the lump sum.

PennyForThem_2

As a widow who receives half DB pension and annuity, both of which increase by an inflation %, can I say how important that is to me as a sound basis of receiving known, non reducing income with absolutely no risk?

(Yes, I have my own pension provision - I am a baby boomer. But the provision made by my husband's choices is a rock.)

ratechaser

Thrugelmir wrote: »

Be interesting to look back at this in another 10 years time........

Indeed it will, given that's about when I'll be able to access my pot. Hopefully by that point there won't be hordes of pensioners that have drawn down their entire pots, frittered it all away and be throwing themselves on the mercy of the state. Last thing I'd want is to be tied back in to buying an annuity because the nanny state feels like it has to step in and change the rules again...

relishy57

Another widow here who values the 50% of pension guaranteed payment from late husbands pension coming in each month. Of course I would rather have him here and we were looking forward to a comfortable retirement with our combined pensions etc. He barely drew his state pension for a year. I was 12 years younger than him so that redresses a little his overall losses. when planning for your retirement make sure you look at what the survivor will have but also go on holidays and make memories now rather than leaving it all to 65 onwards.