Fidelity DC pension transfer to Alpha Civil Service

morrow56

Hi any response kindly received

I have received a transfer value from Fidelity to transfer to Alpha Civil Service
I am 63 come November and intend to retire at 66
Fidelity transfer figure is currently  £26,843 and Alpha transfer in for that would get me additional £1653 p.a. In Alpha at state pension age
TBH it is less than I expected, thought it would be nearer £2.5k p.a.
Given that my thoughts now are to leave the £26,843 with the Fidelity pension for next 3.5 years (I am not currently contributing to that figure, instead I am using a SIPP which currently has 34k in the pot
Any thoughts much appreciated

Thank you

Marcon

Certainty v uncertainty - it really is down to personal preference/attitude to risk.

Diplodicus

Ask Fidelity what your pension would convert to as an annuity: it may be less than £1000pa.

I think you have a good deal in front of you, and you should bank it’s guarantees (the pension will rise in time).

Additionally, I believe you have a closing window of opportunity to make this transfer, which is an indication in itself.

You could then admit a bit more risk to your SIPP investment; so potentially win/win

Albermarle

A cautious assumption would be that the SIPP does not grow or shrink during the next three years . A fund that size could probably support an index linked income of approx. £900 to £1000 a year in drawdown.

Diplodicus

Yes, I thought that was case, Albemarle. 

My advice would be to make the transfer. 

NedS

So that's a 6.15% return on your investment when you retire in 3 years time that is CPI inflation linked for life. If someone could guarantee me a 6% return inflation linked I think I would take it.

If you miss the window of opportunity, next year you can always purchase added pension in alpha at almost the same rate - it will cost you a little more as you will be one year older and one year closer to retirement. To purchase added pension you must have been a member of the scheme for 12 months. You will also need to have sufficient earnings to cover the contribution in addition to your regular contributions as it would no longer be a transfer as thus subject to annual allowances and limits.

jsinc

Rough guide for age 65 RPI-linked annuity rate is 2.6% - https://www.hl.co.uk/retirement/annuities/best-buy-rates

Sustainable drawdown withdrawal rate for 30 years might be around 3%-3.5% - https://monevator.com/what-is-a-sustainable-withdrawal-rate-for-a-world-portfolio

Don't know much about the Alpha pension but assuming it's a defined benefit inflation-linked scheme your quote looks very reasonable to me in assured-income terms. But depends on your goals, outlook, health etc.

morrow56

Thanks for replies made, finding them very informative