Barclays 1964 Pension - CETV Query

Bert19

Hi 

Any advice regarding the Barclays 1964 pension, I am over 55 and have been offered a transfer value of £365k or a pension of just under £10k or lump sum £52k and pension £8k. 

Am I right in saying that 25% is allowed as tax free lump sum so if you work this out from my lump sum my CETV value should be approx £200k. How comes I am being offered such a large CETV value to transfer and is it worth it? 

Any advice on best way to maximise income? Is it to keep it in Barclays or transfer out? 

Albermarle

Firstly you should go to the search box at the top of this board and type in 'CETV' or 'DB transfer' and read some of the many threads all on the same topic.
How comes I am being offered such a large CETV value to transfer and is it worth it? 
It is because the cost of providing £10 K a year for life, usually increasing with inflation , is more expensive than you imagine and they want the liability for this commitment off their books.
If it went ahead the £365K would be transferred to another pension of your choice . If you wanted you could then take £91K tax free .
It is a very big financial decision and you will have to take advice from an IFA pensions specialist by law ( if you follow the other threads you will see this is not a simple process). Have a look at this link as well. 
https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/five-good-reasons-good-with-your-money-guide-2018-edition.pdf

Thrugelmir

What's your projected pension from the scheme at your Normal Retirement Age?  Be somewhat higher than £10k. 

Silvertabby

How long do you intend to live?  Average is 85, so £10K per year over 30 years is £300,000.  Except it will be more than that due to the index linking.  I'm not going to work it out for you, but:  Year 1 = £10K.  Year 2 = £10K + (say) 2% = £10,200 .  Year 3 = £10,200 + 2% = £10,404 etc etc.  And this will carry on for the rest of your life, even if that is 90 for even 100+.

Or transfer £365,00 to a draw down private pension and draw £10K etc per year.  With conservative investments, that should last you at least 30 years - but what if the market tanks again?  People on these boards are reporting losses of 10% to 20% of their entire funds.  Could you live with that?  Get it wrong, and you'll run out of money before you run out of life.

There is no right or wrong answer to your question but, as a rule of thumb, a transfer from a DB scheme to a DC scheme is only really a 'no brainer' if you know that you have a very limited life expectancy and want to leave money to non financially dependent family members (usually adult children).

xylophone

The NRA for this scheme was 60.
Is this a deferred pension that you are proposing taking early? If so, there will be an actuarial reduction.
There is a discussion here https://forums.moneysavingexpert.com/discussion/5865725/gmp-and-deferred-pension/p1 between Mike Floutier and DT2001 that you may find of interest if relevant to your circumstances.

Am I right in saying that 25% is allowed as tax free lump sum

This is a Defined Benefit Pension  - the lump sum offered will depend on the Scheme Rules and the commutation rate calculated by the Scheme Actuary.
You are being offered 1:26 - quite reasonable and even generous when compare to 1:12 offered by LGPS or the dire 1: 10.5 I recall mentioned in another post.

Bert19

Yes this is a deferred pension and I have just under 5 years until I am 60.  I havent requested my figures at 60 yet, does anyone know how these are worked out? Are there any calculations etc? 
When you say 1:26, what do you mean by this? 

xylophone

When you say 1:26, what do you mean by this? 

It is the "commutation factor" used to calculate how much pension you give up for the lump sum.
 Giving up £2000 of annual pension "buys" you a lump sum of £52,000. Therefore £1 given up buys £26.
The figures you give above are for taking your pension around five years earlier than Scheme NRA - an "actuarial reduction" will have been imposed.

https://forums.moneysavingexpert.com/profile/MikeFloutier This poster now knows a lot about the Barclays pension - you could try a pm.

Thrugelmir

Bert19 said:

Yes this is a deferred pension and I have just under 5 years until I am 60.  I havent requested my figures at 60 yet, does anyone know how these are worked out? Are there any calculations etc? 

What did your last benefit statement show as an annual pension?  What's the scheme age to receive the pension? 

Bert19

Approx 10k and it stated 60 

Silvertabby

Bert19 said:

Approx 10k and it stated 60 

Then it will almost certainly be £10K plus cost of living increases (as per your scheme rules) between now and 60. 

If you are able to take this pension early (not all pension schemes are allowing access before NRA - the Government just said that pensions 'may' be paid from 55, not  'must' be - then it would be subject to a reduction for early payment.  Again, in accordance with the scheme rules. 

Brynsam

Probably an academic question at present, as it is highly unlikely you'd find an IFA willing to give you advice in the current market - and you can't transfer out from a DB scheme with a CETV of £30,000+ without advice.