Pension pot

xylophone

https://www.royallondon.com/media/good-with-your-money-guides/five-good-reasons-to-transfer-out-of-your-company-pension-and-five-good-reasons-not-to/

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

Your wife would need a Pension Transfer Specialist.

https://adviserbook.co.uk/ She would tick "confirmed independent" and "pension transfer" when the menu comes up.

And see post 133 here https://forums.moneysavingexpert.com/discussion/6032686/dont-use-hargreaves-lansdown&page=7

Have you and your wife obtained State Pension Forecasts?

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

Silvertabby

So, that valuation does indeed knock a trivial commutation on the head.

As SonOf and xylophone say, the only way your wife may take this as a one-off lump sum would be to transfer it to a DC pension fund and all the problems that will entail.

The transfer value is 30 times the annual pension given up, but that isn't a particularly good deal if the annual pension would be index linked and your wife is in good health. These are just two of the factors that your IFA will consider before recommending that she transfer or not.

Fewer and fewer IFAs are now recommending transfers out of DB schemes because of the risk of it coming back to bite them on the bum, and the cost of their indemnity insurance. I also suspect that the relatively low value (in pensionspeak) of the fund will mean that you will have even more of a struggle to find an IFA.

Albermarle

As said above , trying to take the transfer value of £47 K is probably not a good idea , and in fact will be costly and potentially difficult. So to concentrate on the other two options:

Lump sum £6.5k and a yearly pension of £971 per year.
Full pension of £1521 per year.

From a financial point of view the second option looks much better . A female aged 60 has a 50% chance of living to around 88 and this £1521 per year ( probably + inflation ?)will be payable to when she dies.

xylophone

OP, you mention a "deferred pension" - has your wife reached normal pension age for the scheme?

The commutation rate is poor at under 12:1.

Does the pension arise from a company scheme?

Is there a GMP? If so, is it pre 1988/post 1988?

How does the pension increase in payment?

Is there a widower's pension?

[Deleted User]

SonOf wrote: »

To take that pension as a lump sum it would need to be transferred. It would need an IFA to sign off on it (costing around £5000). And an IFA is unlikely, based on very limited info you have given, to recommend such as course of action.

1) An IFA is unlikely to recommend such a course of action, not because it is a bad idea for the client but because it is safer for the IFA to recommend that the client do nothing.

2) It doesn't matter what the IFA recommends, it only matters that the IFA is willing to sign the transfer form of the receiving provider. A simple courtesy, the layman may think, but IFAs are quite shy of doing so, for the same reason as 1)

3) If you're sure of what you want to do, just find the cheapest IFA willing to comply with 2)
There's no justification in charging £5,000 on a £47,000 pension.

enthusiasticsaver

I think you will find the fee for transferring out of a DB deferred pension with a transfer value of the amount you quote will be expensive. I was told the expense is because any pension transfer specialist will have to take out some sort of insurance to cover themselves against being sued for poor advice as most PT specialists will advise against doing what you are suggesting. I considered it for an old pension I have which matures next February but decided against it firstly because of the cost of the IFA advice and secondly because financially it does not make sense to take the whole lot out.

What do you and your wife intend to live off if you have both cashed in your pensions? The state pension (assuming you get full pensions) is set at a fairly basic subsistence level.

[Deleted User]

Another example of the lamentable state of affairs in the pension markets.
Eye-watering fees are normalised because the client has to buy advice, it's the law.

MallyGirl

ZingPowZing wrote: »

Another example of the lamentable state of affairs in the pension markets.
Eye-watering fees are normalised because the client has to buy advice, it's the law.

I believe that in this scenario eye-watering fees are charged because eye-watering indemnity insurance premiums are being charged

SonOf

1) An IFA is unlikely to recommend such a course of action, not because it is a bad idea for the client but because it is safer for the IFA to recommend that the client do nothing.

2) It doesn't matter what the IFA recommends, it only matters that the IFA is willing to sign the transfer form of the receiving provider. A simple courtesy, the layman may think, but IFAs are quite shy of doing so, for the same reason as 1)

3) If you're sure of what you want to do, just find the cheapest IFA willing to comply with 2)
There's no justification in charging £5,000 on a £47,000 pension.

1 - Rubbish.
2 - Rubbish.
3 - Rubbish

You haven't used an IFA. Yet you spout this rubbish and pollute threads made by people that need genuine help. How exactly does it help the OP?

[Deleted User]

I have used an IFA and a pension transfer specialist. They supplied contradictory recommendations.

As far as helping the OP goes, it looks as if the couple have weighed the benefits of a £30 per week pension for life against the cost of servicing their mortgage and found the idea of paying off the mortgage more attractive.
I wish them long life and would urge them to price it in! Then:
If they decide the pension is the better option, don't buy an IFA, just leave the pension intact.
If they decide paying off their mortgage is still the better option, choose the cheapest IFA available after ensuring at the outset that the IFA is willing to sign a declaration (whatever his recommendation) to the fact that he has provided financial advice.
Don't go half in half; taking 6.5k and losing half the pension looks the worst option.