How much is my final salary pension worth?

rothers

Just out of interest, nothing more. 

I can retire in 13 months at the age of 50 with a pension of £21k or in 6 years with a pension of around £28k, what would I need in a pension pot to produce a pension giving a similar income?

Many Thanks

AlanP_2

Using a 3.5% withdrawal rate £600k to £800k but then you need to consider yours is guaranteed and probabaly index linked and the withdrawal from a pot isn't.

rothers

AlanP_2 said:

Using a 3.5% withdrawal rate £600k to £800k but then you need to consider yours is guaranteed and probabaly index linked and the withdrawal from a pot isn't.

It is index linked, thank you for that. 

Albermarle

It is possible to buy a guaranteed income in the form of an annuity and some people use their accumulated pension pot to do that ( as opposed to keeping it invested and drawing it down which Alan P was referring to ) 
As a very rough guess an index linked annuity with no provision for spouse on your death for the amounts you mentioned would be approx. £1 million . It is more than Alan P mentioned for drawdown because it is guaranteed . It seems a lot but the index linking is expensive and on average you will live until you are 85 .

Prism

Somewhere between 300k and 700k depending on the markets, investments and withdrawal strategy.

Albermarle

AlanP_2 said:

Using a 3.5% withdrawal rate £600k to £800k but then you need to consider yours is guaranteed and probabaly index linked and the withdrawal from a pot isn't.

The 3.5% 'safe withdrawal rate' takes into account inflation increases each year 

Thrugelmir

Albermarle said:

AlanP_2 said:

Using a 3.5% withdrawal rate £600k to £800k but then you need to consider yours is guaranteed and probabaly index linked and the withdrawal from a pot isn't.

The 3.5% 'safe withdrawal rate' takes into account inflation increases each year 

Safe withdrawl may involve reducing the income drawn in anyone year. There's no certainty of a linear increase. 

Blue_Sky

Albermarle said: 

As a very rough guess an index linked annuity with no provision for spouse on your death for the amounts you mentioned would be approx. £1 million .

I would have thought it would have been more than this.  The OP is going to get £21k a year index linked at the age of 50.  So the annuity will have to factor in paying this for probably the next 35 years or more.  I think I have seen a table somewhere that for certain occupations the earlier you retire before 60 the longer you live, so by retiring at 50 the OP might be expected to live into his 90s provided he is currently in good health.

Blue_Sky

Blue_Sky said:

Albermarle said: 

As a very rough guess an index linked annuity with no provision for spouse on your death for the amounts you mentioned would be approx. £1 million .

I would have thought it would have been more than this.  The OP is going to get £21k a year index linked at the age of 50.  So the annuity will have to factor in paying this for probably the next 35 years or more.  I think I have seen a table somewhere that for certain occupations the earlier you retire before 60 the longer you live, so by retiring at 50 the OP might be expected to live into his 90s provided he is currently in good health.

I just had a quick look on HLs web site.  For a single life annuity with a RPI 5 year guarantee a £21k pension would cost around £1.3 million, but that was for a 55 year old.  I am not sure if they even do annuities for a 50 year old, so if that's the case you could say your pension is almost priceless.

Blue_Sky

Forgot to add to get £28k per annum (5 year RPI guarantee) at 55 would cost £1.7 million.  Annuities are much more expensive than they once were.

Albermarle

Blue_Sky said:

Forgot to add to get £28k per annum (5 year RPI guarantee) at 55 would cost £1.7 million.  Annuities are much more expensive than they once were.

My Million was just a guess . Incredible how much it is really worth . No wonder these DB pension providers offer such high CETVS to get people off their books.