Transfer valuation from DB Pension - advice

Mick70

There is no option for partial transfer , it’s either all or nothing.
There is a 3month window to seek advice and IF go ahead have all forms etc filled in and accepted by the trustees . It does state the value is not 100% guaranteed but just an offer.
Thing is I set up a basic spreadsheet over 30-35 years , from age 50 , £26,200 per annum rising at say 2% rpi each year and the grand total of all that and the 80k lump sum I think came out nrly £1.4M which I was surprised at , and it’s guaranteed income .
Now with the £1.7M transfer a chunk of that is going to end up as LTA tax and so there may not be as big a difference between the two as most initially think .
I did post my dilemma a couple of month back but at the time did not have definite figures .
I know it’s a nice dilemma but as my wife has no pension it’s a decision I need to get right .
Thanks for replies and advice folks , it does help people like myself who struggle a bit regarding DC pensions and not as clued up ,it’s much appreciated .
Mick

Seabee42

The LTA tax if you took the excess over the LTA as a lump sum based on the value of 1.7m and an allowance £1055,000 would be excess of £645000 taxed at 55% so currently £354750. Note I understand its five years time if you do transfer and lots of things could change between times.

squirrelpie

If it was me, I would take the DB pension next year. That provides a base income for you and your wife and guarantees her a basic income, plus her SP, if you should die early. Then perhaps concentrate on saving into a pension for your wife and/or ISAs until you feel comfortable and decide you'd rather retire. You should also be able to enjoy yourselves somewhat meanwhile. It's probably worth keeping an eye on the LTA as you build up your current employment pension.

Albermarle

Now with the £1.7M transfer a chunk of that is going to end up as LTA tax and so there may not be as big a difference between the two as most initially think .

You are not taking account of the fact that over a 30 to 35 years period the £1.7M should grow as well by at least inflation and probably more ( depending on how it is invested )

£1055,000 would be excess of £645000 taxed at 55% so currently £354750.

Only if taken as a lump sum , if taken as income it would be 25% + 20% basic rate tax ( which the OP would be paying whichever route he chooses)

If it was me , I would pay an IFA pension transfer specialist to analyse everything and then decide .
Although it would probably cost the best part of £10K , you would at least have the full picture to make the decision .
Taking advice from a forum is all well and good but not the right basis for a big decision like this.

LHW99

I know it’s a nice dilemma but as my wife has no pension it’s a decision I need to get right .

So worth working out what she has as income if you do pass first, and also considering if she would be happy to be left with a very large DC pension to manage.

Thrugelmir

Mick70 wrote: »

Thing is I set up a basic spreadsheet over 30-35 years , from age 50 , £26,200 per annum rising at say 2% rpi each year and the grand total of all that and the 80k lump sum I think came out nrly £1.4M which I was surprised at , and it’s guaranteed income .

CPI is targetted to be 2%. RPI has consistently been higher. You are most likely underestimating the rate of growth. Over 35 years could be a material difference due to the effect of compounding.

Mick70

Yes I realise I will need to seek out an IFA advice (work did offer a pensions advisor they use but I noticed he’s not registered as an IFA ?) , but also wary of bad press recently of advisors just chasing commission and not necessarily giving unbiased advice regarding DB transfers . Just thought worth asking on here also as many posters more knowledgable than me on the subject .
Thanks again for the replies , it all helps

Aegis

Mick70 wrote: »

Yes I realise I will need to seek out an IFA advice (work did offer a pensions advisor they use but I noticed he’s not registered as an IFA ?) , but also wary of bad press recently of advisors just chasing commission and not necessarily giving unbiased advice regarding DB transfers . Just thought worth asking on here also as many posters more knowledgable than me on the subject .
Thanks again for the replies , it all helps

Find someone that will do it on a fixed fee basis. If you're really worried about potential bias, make it clear that you don't need them to manage the money after the transfer. That strips out any potential bias of outcome - the adviser will then be paid whether you transfer or not and will not receive any ongoing benefit either way.

GSP

Everyone has different circumstances.
If you take your db pension, do you intend to retire while your wife continues to work?
Have you got kids or relatives you can pass any money left in your dc pension to. Your db pension dies with you both.
With the dc pension unavailable to drawdown until you are 55, what might the CETV figure be then approx.
With a current CETV figure that size I would say take it now, retire when you are 55 and your wife could give up work at 57. Then I would say you could both seriously enjoy yourselves and in 12 years or so your SP's kick in.
What a lovely dilemma to be in either way.
Enjoy yourselves Mick.

Mick70

If it was transferred would rather it went to
Our current DC Scheme with Royal London