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NRD reduction to 55 in DB scheme and cash transfer impact

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NRD reduction to 55 in DB scheme and cash transfer impact

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ADA58ADA58 Forumite
5 posts
First Post
MoneySaving Newbie
I have recently been made redundant , and as a result my NRD in a DB scheme reduced by 10 years to 55. ie no impact on pension. I am currently 22 months off this date and was offered a 4.5% pa reduction of a pension for these 20 months , which meant i m coming in at around 38K pa .


Using the redundancy pay out I can reach 55 comfortably and negate the reduction I was also able to benefit from AVCs from the redundancy and carry forwards, so I feel in a fortunate position to have a solid pension.


I am of course interested in a DB transfer value and have asked the trustees for one, however on researching I cannot find a typical impact on a transfer value for an NRD at 55 vs 60 or 65.


I know it is pension scheme specific with gilts, inflation , and trustee pension investment strategies all coming into play.


I will wait eagerly for the formal letter, but I know this will take time, and I would like to research a little before hand.


Does anyone have any info around the impact of 10 year reduction , if I was to assume an industry standard of 23-26 times, what could it be bumped up to, and why (is there a calculation) ?


Supporting info , 50% spouse on death , majority linked to CPI max out at 2.5% pa , although some linked to RPI max at 5%

Replies

  • AlbermarleAlbermarle Forumite
    3.9K posts
    1,000 Posts Second Anniversary Name Dropper
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    my NRD n BD scheme reduced by 10 years to 55. ie no impact on pension
    Very good result I would say . To take a DB pension 10 years early would normally reduce it by up to 50%.
    I am currently 22 months off this date and was offered a 4.5% pa reduction of a pension for these 20
    Again a generous offer , which I would take .
    Taking into account the above and the size of the pension , I was a bit surprised to see this comment
    I am of course interested in a DB transfer value
    Apart from the usual pros and cons of giving up a guaranteed income , the £38K gives you an LTA contribution of £760K
    Any sensible CETV offered will take you well over the LTA limit of £1.05 million , so will be a lot of extra tax to pay.
  • ADA58ADA58 Forumite
    5 posts
    First Post
    MoneySaving Newbie
    thanks for reply, I also think the DB scheme looks good, no need for me to take the approx. 7 pc reduction , rather wait to 55, and potentially defer further , accrues by 5,5% plus RPI pa, although mindful of lifetime allowance
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