Could I cash in final my final salary pension

ypudding

Sorry,I've no intention of cashing in 100% of the pension in one go as in selling the whole transfer value. I do realise 25% is tax free and the rest would be subject to income tax. The terminology I used is obviously misleading. My proposed plan is to come out of the final salary scheme so that as a single guy with no dependants the pot does not die with me (should I die!). I would no doubt look at the figures then decide on taking 25% tax free or leaving it in the new pension scheme as a larger sum.

Predicted pension at 50 is about 23.5k per yr

My original question stemmed from the fact I can access my final salary pension at 50yr old (in 15 months time). So would I be able to request a CETV even though I'm not 55yr old therefore cannot access a DC for 5yrs. And if I can request a CETV I assume the CETV could possibly increase due to this 5yrs.

SonOf

so that as a single guy with no dependants the pot does not die with me (should I die!).

as a single guy with no dependents, why should you care what happens to the pension when you die?

jimi_man

ypudding wrote: »

Sorry,I've no intention of cashing in 100% of the pension in one go as in selling the whole transfer value. I do realise 25% is tax free and the rest would be subject to income tax. The terminology I used is obviously misleading. My proposed plan is to come out of the final salary scheme so that as a single guy with no dependants the pot does not die with me (should I die!). I would no doubt look at the figures then decide on taking 25% tax free or leaving it in the new pension scheme as a larger sum.

Predicted pension at 50 is about 23.5k per yr

My original question stemmed from the fact I can access my final salary pension at 50yr old (in 15 months time). So would I be able to request a CETV even though I'm not 55yr old therefore cannot access a DC for 5yrs. And if I can request a CETV I assume the CETV could possibly increase due to this 5yrs.

As I understand it, the CETV would incorporate the 'extra' five years as you put it, as part of the total valuation. So yes, it would likely be more than if your retirement age was 55. The retirement age is just one of a number of factors used to come up with the CETV.

And I believe that someone else has answered this, but you can request a CETV at any time up until the 12-month period before retirement.

ypudding

Terminology again!!! No dependants as in under 18yrs old or in university etc. I have children who I'd like to see some form of benefit should I die.

jimi_man

ypudding wrote: »

Should this be possible the pot is worth around 500k so I assume the transfer value to be easily 750k plus. I also assume there would also be the amount I should be paid from 50 to 55yrs old index linked. Another 120k added to the final amount. This could be a Del Boy selling the watch moment!!!

Just out of interest, where did you get the £500K figure from? £23.5K from the age of 50, index linked at 3%, gives about £1.4 million total in pension payments over 35 years. So if I was going to swap, that would be the minimum figure I'd want, before taking into account any other factors. I certainly wouldn't be considering £500K or £750K.

Just checking it's not a public sector pension, since apart from the LGPS, you can't transfer out. What sort of index linking does the pension provide?

Albermarle

My original question stemmed from the fact I can access my final salary pension at 50yr old (in 15 months time). So would I be able to request a CETV even though I'm not 55yr old therefore cannot access a DC for 5yrs. And if I can request a CETV I assume the CETV could possibly increase due to this 5yrs.

Firstly the size of the CETV is also dependent on various factors in the financial markets . There is not a direct/simple calculation that links the size of the CETV to the pension you are giving up and how old you are. For example some will be more generous than others as the scheme is more desperate to get you off their books as future liability .
Also it does not matter at what age you take a CETV transfer . The money has to be transferred to a DC pension , which can not be accessed until you are 55 . The second the transfer happens any rules about retirement age etc in the DB scheme are irrelevant as you are not a member anymore ( and there is no going back )

ypudding

The 500k figure was partly an older comparison case I read in a news article. His 500k pot transferred to around 750k. My reference to Delboy moment was because without yet asking for the CETV and the higher CETV'S currently on offer plus the 5yrs I mentioned. I could well imagine the figure being 1 million plus. But I really don't know an exact figure at this stage. But what I did know is the "pot" would currently die with me in my current situation if left in the final salary.

ypudding

The other thing I'm starting to wonder about is the tax implications. IF I do go ahead with the CETV, transfer into a DC scheme (or drawdown that's another thing) I obviously cannot touch the money until I'm 55. Therefore will still be working as a payee. Would the inland revenue allow me to have a big pot of money destined for a DC scheme i cannot touch for 5yrs without them wanting a slice of the action?

ffacoffipawb

ypudding wrote: »

The other thing I'm starting to wonder about is the tax implications. IF I do go ahead with the CETV, transfer into a DC scheme (or drawdown that's another thing) I obviously cannot touch the money until I'm 55. Therefore will still be working as a payee. Would the inland revenue allow me to have a big pot of money destined for a DC scheme i cannot touch for 5yrs without them wanting a slice of the action?

Absolutely, why wouldn't they?

AlanP_2

ypudding wrote: »

The other thing I'm starting to wonder about is the tax implications. IF I do go ahead with the CETV, transfer into a DC scheme (or drawdown that's another thing) I obviously cannot touch the money until I'm 55. Therefore will still be working as a payee. Would the inland revenue allow me to have a big pot of money destined for a DC scheme i cannot touch for 5yrs without them wanting a slice of the action?

Yes, but be aware of Lifetime Allowance implications as DB schemes are "valued" more generously than the pure £value in a DC scheme.