Pension Advice needed - National Grid Defined Benefit Scheme

dunstonh

If they perserve let's hope they use an IFA and not a FA otherwise things could turn unpheasant and they will end up being stork raven mad and be back here with tales of fowl play.

True.  They would turn into a right grouse.

garmeg

dunstonh said:

If they perserve let's hope they use an IFA and not a FA otherwise things could turn unpheasant and they will end up being stork raven mad and be back here with tales of fowl play.

True.  They would turn into a right grouse.

i think we should stop larking around now.

AlanP_2

euanlowe said:

I think what is going on on this thread is that most people would give their hind teeth for a DB pension. In addition to this you haven't given out much info. I worked for less than 2yrs for a university and am currently taking the cash equivalent transfer value over to Vanguard so maybe I can provide a little info. You said something about a 20/60 scheme, so say you're on £40k/yr, I'm guessing the pension is worth £8,000 a year? First things first, this will rise by a bit every year, scheme's vary but maybe CPI or 2-3%, so that's your minimum benchmark on trying to outdo it yourself. Then hopefully you will fully accrue a state pension of £175.20/wk or 9.1k a year. So already I'm guessing an income of 17k. The big problem many will face is if you don't own a house - in which case its not enough to pay rent. Only you know that. Now as others have mentioned, there's also the hope that you will now accrue some DC assets over the rest of your career.
In terms of my CETV, I had a tiny income built up in USS, and they have offered 20-23x that small amount. If they offer you 23 x £8k = £184k you should say no. That's not a good offer. I'm going to take it, but that's because people who work less than 2yrs at USS get stiffed, so separate matter. Every so often you read of people getting offered 40-50x and that is more interesting. In that circumstance you will be obliged to get an IFA anyways and I suggest you have a good read of the advice they provide. There's a real question mark over whether they will support you taking the CETV. But if they do then obviously everything is on you to save for your future. The downside is maybe you might make bad choices, the upside is no one cares more than you!

20/60ths of £40k would be £13,333 poer year pension not £8k.

Out of interest how do "people who work less than 2yrs at USS get stiffed"?

garmeg

AlanP_2 said:

euanlowe said:

I think what is going on on this thread is that most people would give their hind teeth for a DB pension. In addition to this you haven't given out much info. I worked for less than 2yrs for a university and am currently taking the cash equivalent transfer value over to Vanguard so maybe I can provide a little info. You said something about a 20/60 scheme, so say you're on £40k/yr, I'm guessing the pension is worth £8,000 a year? First things first, this will rise by a bit every year, scheme's vary but maybe CPI or 2-3%, so that's your minimum benchmark on trying to outdo it yourself. Then hopefully you will fully accrue a state pension of £175.20/wk or 9.1k a year. So already I'm guessing an income of 17k. The big problem many will face is if you don't own a house - in which case its not enough to pay rent. Only you know that. Now as others have mentioned, there's also the hope that you will now accrue some DC assets over the rest of your career.
In terms of my CETV, I had a tiny income built up in USS, and they have offered 20-23x that small amount. If they offer you 23 x £8k = £184k you should say no. That's not a good offer. I'm going to take it, but that's because people who work less than 2yrs at USS get stiffed, so separate matter. Every so often you read of people getting offered 40-50x and that is more interesting. In that circumstance you will be obliged to get an IFA anyways and I suggest you have a good read of the advice they provide. There's a real question mark over whether they will support you taking the CETV. But if they do then obviously everything is on you to save for your future. The downside is maybe you might make bad choices, the upside is no one cares more than you!

20/60ths of £40k would be £13,333 poer year pension not £8k.

Out of interest how do "people who work less than 2yrs at USS get stiffed"?

Presumably because no deferred pension is available, just a CETV or refund of own contributions.

Rule applies to most DB schemes not just USS.

Stiffed? Depends on the generosity, or otherwise, of the CETV.

AlanP_2

garmeg said:

AlanP_2 said:

euanlowe said:

I think what is going on on this thread is that most people would give their hind teeth for a DB pension. In addition to this you haven't given out much info. I worked for less than 2yrs for a university and am currently taking the cash equivalent transfer value over to Vanguard so maybe I can provide a little info. You said something about a 20/60 scheme, so say you're on £40k/yr, I'm guessing the pension is worth £8,000 a year? First things first, this will rise by a bit every year, scheme's vary but maybe CPI or 2-3%, so that's your minimum benchmark on trying to outdo it yourself. Then hopefully you will fully accrue a state pension of £175.20/wk or 9.1k a year. So already I'm guessing an income of 17k. The big problem many will face is if you don't own a house - in which case its not enough to pay rent. Only you know that. Now as others have mentioned, there's also the hope that you will now accrue some DC assets over the rest of your career.
In terms of my CETV, I had a tiny income built up in USS, and they have offered 20-23x that small amount. If they offer you 23 x £8k = £184k you should say no. That's not a good offer. I'm going to take it, but that's because people who work less than 2yrs at USS get stiffed, so separate matter. Every so often you read of people getting offered 40-50x and that is more interesting. In that circumstance you will be obliged to get an IFA anyways and I suggest you have a good read of the advice they provide. There's a real question mark over whether they will support you taking the CETV. But if they do then obviously everything is on you to save for your future. The downside is maybe you might make bad choices, the upside is no one cares more than you!

20/60ths of £40k would be £13,333 poer year pension not £8k.

Out of interest how do "people who work less than 2yrs at USS get stiffed"?

Presumably because no deferred pension is available, just a CETV or refund of own contributions.

Rule applies to most DB schemes not just USS.

Stiffed? Depends on the generosity, or otherwise, of the CETV.

That is what I suspected, and as you say fairly typical for DB schemes so was trying to uncover why those is the USS were stiffed whilst those in other schemes with same rules weren't.

euanlowe

AlanP_2 said:

20/60ths of £40k would be £13,333 poer year pension not £8k.

Out of interest how do "people who work less than 2yrs at USS get stiffed"?

Hello - yes I've made a mistake, getting confused and trying to adjust for career average type schemes.
There is actually an annuity on offer even <2yrs.
I'd rather not given the exact numbers. But if you have £1k of accrued annuity at USS, it goes down to £160 for someone who has only been there 2 years. I had long chat with person at USS at this, starting with me thinking they had the years wrong. I don't have a problem with this, but it makes the choice very clear between working longer or taking the CETV.

AlanP_2

euanlowe said:

AlanP_2 said:

20/60ths of £40k would be £13,333 poer year pension not £8k.

Out of interest how do "people who work less than 2yrs at USS get stiffed"?

Hello - yes I've made a mistake, getting confused and trying to adjust for career average type schemes.
There is actually an annuity on offer even <2yrs.
I'd rather not given the exact numbers. But if you have £1k of accrued annuity at USS, it goes down to £160 for someone who has only been there 2 years. I had long chat with person at USS at this, starting with me thinking they had the years wrong. I don't have a problem with this, but it makes the choice very clear between working longer or taking the CETV.

I was intrigues so googled it and found this:

https://www.ucu.org.uk/media/10686/USS-information-for-UCU-members-on-contracts-of-less-than-two-years/pdf/ucu_acc_uss-leaflet_jan20.pdf

If less than 2 years then a deferred pension based on YOUR contributions and NOT INCLUDING employer contributions would lead me to agree with your "people who work less than 2yrs at USS get stiffed".

Whether a CETV is better, as that doesn't inclue employer contributions either, is debateable I suppose.

garmeg

AlanP_2 said:

euanlowe said:

AlanP_2 said:

20/60ths of £40k would be £13,333 poer year pension not £8k.

Out of interest how do "people who work less than 2yrs at USS get stiffed"?

Hello - yes I've made a mistake, getting confused and trying to adjust for career average type schemes.
There is actually an annuity on offer even <2yrs.
I'd rather not given the exact numbers. But if you have £1k of accrued annuity at USS, it goes down to £160 for someone who has only been there 2 years. I had long chat with person at USS at this, starting with me thinking they had the years wrong. I don't have a problem with this, but it makes the choice very clear between working longer or taking the CETV.

I was intrigues so googled it and found this:

https://www.ucu.org.uk/media/10686/USS-information-for-UCU-members-on-contracts-of-less-than-two-years/pdf/ucu_acc_uss-leaflet_jan20.pdf

If less than 2 years then a deferred pension based on YOUR contributions and NOT INCLUDING employer contributions would lead me to agree with your "people who work less than 2yrs at USS get stiffed".

Whether a CETV is better, as that doesn't inclue employer contributions either, is debateable I suppose.

Wow that is just 💩

RoadToRiches

There are many good reasons for giving up a DB scheme for a high CETV, just as much as there are to remain in a DB scheme.  I have weighted the options, please do not assume I have not, I know I am giving up a index linked payment for life.  What I was asking was for indicative costs for a IFA to OK the deal.

Now I know, cause I've gone round a few.  I cannot get a CETV yet cause I am still in the NG scheme and need to be deferred member first.  The other scheme I was given £75K CETV but costs are going to eat into that so reluctantly I will leave that as it is.  The NG one though will be a different story.

Tell me, as a single person with no dependents, and no one to leave a spouces pension to, with health being a factor I drop dead in a short period of time following retirement at say 65.  What would my DB pension provide me then?  It is just as easy to get this wrong by saying stay in the scheme as it is to say take the transfer value, don't you agree?  And with gilt rates this low and CETV's at highs like this, there is a option here to take the lump sum now and not have to worry.

dunstonh

Tell me, as a single person with no dependents, and no one to leave a spouces pension to, with health being a factor I drop dead in a short period of time following retirement at say 65.  What would my DB pension provide me then? 

What would any pension provide you (DC or DB)?  You would be dead and it wouldn't matter.