Pension... transfer to drawdown ?

Albermarle

Wconnah said:

p00hsticks said:

Wconnah said:

Albermarle said:

I have a BT pension pot (final salary) containing £185k

With a final salary scheme , you do not have a pot of money allocated to you . You have the promise of a guaranteed pension from when you start to take it to when you die , usually linked to inflation . As a secondary point most schemes offer you a sum to buy you out of the scheme and give up the promise of a guaranteed income . For most people this is not a good idea to do and it is expensive in time and money . Is this what you are thinking of doing ?

When I say pot, I mean CETV with the final salary scheme.  This would be the sum to buy out of the scheme, yes.  I am considering this yes.

So how much pension would you get at the normal retirement age for that CETV ?

Does it increase annually and by what criteria ?

Any associated lump sum ?

Normal retirement age 60, would give £5,500 p/a, lump sum of £16k
Various options to index  link yes.

£185K transfer value for giving this up , is not bad but its not that fantastic either . Most likely an IFA /pension transfer specialist will give a negative recommendation . You can still transfer ( known as an insistent client) but most pension providers will not accept the transfer , as they are scared of you suing them in 10 years if things do not go to plan .

xylophone

Hi yes I did get my state figures.  Age 67, for get the actual number, was around £160 pm

I'd suggest you get a fresh one and read what it says very carefully.

Does it say "if you continue to contribute"?

Is a COPE shown?

Wconnah

xylophone said:

Hi yes I did get my state figures.  Age 67, for get the actual number, was around £160 pm

I'd suggest you get a fresh one and read what it says very carefully.

Does it say "if you continue to contribute"?

Is a COPE shown?

Good point indeed.  I will check this...   though I do intend to continue with my NI payments while still "semi" working.

[Deleted User]

If I were you, I wouldn’t commute. You don’t have any margin for error. Investments can and do go down in value. 

Imagine you do manage to commute. Then you experience a 50% drop in the next year.    You start with 220k, then you have 110k and more than 10 years before state pension kicks in.  How would you feel?  

Also, your position would improve a lot if you delayed semi-retirement by a few years. 

Wconnah

Deleted_User said:

If I were you, I wouldn’t commute. You don’t have any margin for error. Investments can and do go down in value. 

Imagine you do manage to commute. Then you experience a 50% drop in the next year.    You start with 220k, then you have 110k and more than 10 years before state pension kicks in.  How would you feel?  

Also, your position would improve a lot if you delayed semi-retirement by a few years. 

Thanks for your comments.. appreciated.  I was considering putting half in a safe situation, and the other half more risky. But yes, the points you make are still valid.  As I stated on a previous post above, I am rethinking (again!) in the light of the consensus of opinion on here.

[Deleted User]

Wconnah said:

Deleted_User said:

If I were you, I wouldn’t commute. You don’t have any margin for error. Investments can and do go down in value. 

Imagine you do manage to commute. Then you experience a 50% drop in the next year.    You start with 220k, then you have 110k and more than 10 years before state pension kicks in.  How would you feel?  

Also, your position would improve a lot if you delayed semi-retirement by a few years. 

Thanks for your comments.. appreciated.  I was considering putting half in a safe situation, and the other half more risky. But yes, the points you make are still valid.  As I stated on a previous post above, I am rethinking (again!) in the light of the consensus of opinion on here.

Define “safe” and “from what?” Bonds can and do go down in value. Bond funds dropped quite dramatically around March 13th. In the long term, bonds can be devastated by unexpected inflation. Cash is guaranteed to go down in value over time, so very “unsafe” in my book. 

Don’t get me wrong. I expect diversified investments to grow long term. Its just that your investment success is very sensitive to drops.