Can i cash in a pension early?

ffacoffipawb

Bravepants said:

There is no way on God's good earth I would give up a guaranteed, index-linked, DB pension!

Of course your company is offering you a good multiple (39), they want shot of the liability for your DB pension!

Surely depends on the multiplier. If it were 100 I would consider it, but 39, no.

Bravepants

ffacoffipawb said:

Bravepants said:

There is no way on God's good earth I would give up a guaranteed, index-linked, DB pension!

Of course your company is offering you a good multiple (39), they want shot of the liability for your DB pension!

Surely depends on the multiplier. If it were 100 I would consider it, but 39, no.

Well, it's never going to be 100...it's going to be tempting enough based on "market conditions", i.e. other colleagues falling for the company BS, but never too high.

AnotherJoe

I was in your position maybe 15 years ago.

I kept the DB and started a new DC one (no alternative, same as you)

I now have a lump sum i got when the DB started, plus a monthly DB which together with SP next year totally covers all my basic outgoings, so my DC pension and other savings are "play money".

If i was totally reliant upon DC, well I'd still be OK,  but because of this "underpin" i can take more risk with it and not have to think about day to day living. And i wont find one idiotic investment decision or some massive market crash, nukes the advantage of turning the DB into DC.

ffacoffipawb

Bravepants said:

ffacoffipawb said:

Bravepants said:

There is no way on God's good earth I would give up a guaranteed, index-linked, DB pension!

Of course your company is offering you a good multiple (39), they want shot of the liability for your DB pension!

Surely depends on the multiplier. If it were 100 I would consider it, but 39, no.

Well, it's never going to be 100...it's going to be tempting enough based on "market conditions", i.e. other colleagues falling for the company BS, but never too high.

Just asking as you never qualified your "no".

NottinghamKnight

Bravepants said:

ffacoffipawb said:

Bravepants said:

There is no way on God's good earth I would give up a guaranteed, index-linked, DB pension!

Of course your company is offering you a good multiple (39), they want shot of the liability for your DB pension!

Surely depends on the multiplier. If it were 100 I would consider it, but 39, no.

Well, it's never going to be 100...it's going to be tempting enough based on "market conditions", i.e. other colleagues falling for the company BS, but never too high.

Are you sure, with negative interest rates?

Albermarle

AnotherJoe said:

I was in your position maybe 15 years ago.

I kept the DB and started a new DC one (no alternative, same as you)

I now have a lump sum i got when the DB started, plus a monthly DB which together with SP next year totally covers all my basic outgoings, so my DC pension and other savings are "play money".

If i was totally reliant upon DC, well I'd still be OK,  but because of this "underpin" i can take more risk with it and not have to think about day to day living. And i wont find one idiotic investment decision or some massive market crash, nukes the advantage of turning the DB into DC.

OP , the above makes a good point . If you contribute now to the new DC pension for the next 15/20 years you will end up with a DC pot and a DB pension . Basically the best of both worlds. Although you and the employer will need to contribute reasonable % for the DC pot to build up substantially . Tax efficient as well , especially if you pay higher rate tax. 

OldBeanz

At today's prices your state pension will be £9k and you will also have your £11k giving £20k pa. That to me is a good base to start from so build your DC on top where you can take as much risk as you want.

Thrugelmir

OldBeanz said:

At today's prices your state pension will be £9k and you will also have your £11k giving £20k pa. That to me is a good base to start from so build your DC on top where you can take as much risk as you want.

Many people may well end up annuitising part of their pot in later life anyway.  

Cus

If you cashed in your db pension now, and put it in a super low risk money market fund, what would the total amount be at aged 58, and would you be able to buy an annuity giving you the same benefits as the DB scheme with that lump sum?

garmeg

Thrugelmir said:

OldBeanz said:

At today's prices your state pension will be £9k and you will also have your £11k giving £20k pa. That to me is a good base to start from so build your DC on top where you can take as much risk as you want.

Many people may well end up annuitising part of their pot in later life anyway.  

Index linked annuity at 4.5% at age 75 compares well with a safe(ish) withdrawal rate, however you would have to live well into your 90's to get your money back. A level annuity at 7% would still mean getting to 90 to break even. Of course the peace of mind of not running out of money is worth something.