DB Pension Transfer Advice

Pablo7474

Malthusian said:

Pablo7474 said:

I wonder if DB transfer advice moaners ever consider how lucky they are to have a DB pension. If they started working in the last 20 years they would be in the DC world and nowhere near the level of 

I have a pet theory that in 40 years' time, millennials' grandchildren will be looking enviously at their grandparents' defined contribution pension funds and moaning about the crappy "collective defined contribution" or "pension ISA" schemes they have to contribute to. You don't know what you got till it's gone, sonny.

Yes, millennials will be telling how good it was back in the 2020’s etc. I reckon by those times they will have also got rid of being able to pass DC pensions on upon death so generously, I am sure that will go soon. Kids of 2060 will get the pension ISA you mention and heavily taxed DC pots when the earlier generation pass. 

In my day!!

Pablo7474

arty688 said:

Pablo7474 said:

I wonder if DB transfer advice moaners ever consider how lucky they are to have a DB pension. If they started working in the last 20 years they would be in the DC world and nowhere near the level of benefits. 

You could extend that argument to just about any situation people are moaning about. You have to deal with your own situation and what's best for you (whist not disadvantaging other or course).

You don’t know how lucky you are, GMP or no GMP 🤣

Decision_Time

"You really think DC benefits would be higher? Many DB members are non contributory and end up with half pay or a CETV circa 30-40 times. DC would be much less surely? "

But if the employer had to pay a similar contribution rate as they do for DB members then I'm sure DC would beat DB over the recent (and not so recent) past. Whether that will happen for the future is of course in the lap of the stock market gods.

Pablo7474

Yes, but that wasn’t my point as that is meaningless. I am saying that people with DB are far better off as it cost them very little, they get a good pension, yet they still moan they can’t transfer it easily. It’s all take take take.

Further to this, the LTA even works better for them! 

QrizB

Pablo7474 said:

You really think DC benefits would be higher? Many DB members are non contributory and end up with half pay or a CETV circa 30-40 times. DC would be much less surely?

My employer had a DB scheme with 1/80th accrual and 5% employer employee contribution. Someone earning 10k pa for 40 years would retire on 5k pa.

When they closed the DB scheme the unions negotiated a 12% employer contribution to the replacement DC scheme.

Using the compound interest calculator at investor.gov it suggests that someone earning 10k pa and saving 12% employer + 5% employee (so 17% total) pa (142/month) for 40 years, with real growth of 3% pa, would end up with a pot worth just over 128k, or 5120 pa at a 4% SWR.

That's pretty much the same as the DB scheme.

Pablo7474

QrizB said:

Pablo7474 said:

You really think DC benefits would be higher? Many DB members are non contributory and end up with half pay or a CETV circa 30-40 times. DC would be much less surely?

When they closed the DB scheme the unions negotiated a 12% employer contribution to the replacement DC scheme.

Was this 12% only for employees who were members of the DB scheme previously, therefore did a new joiner get this? 

Pablo7474

Also, where did 17% come from?

Decision_Time

"Also, where did 17% come from? "

I think the poster meant to say an employee contribution of 5% rather than an employer contribution, so: 12% (employer) + 5% (employee) = 17%.

Terron

MallyGirl said:

if you earn, you pay NI (until 75). You can't opt out

Some earnings don't count. Some allow for voluntary contributions or not. I opted in for last year. I intend to opt out this year.

Terron

Malthusian said:

I have a pet theory that in 40 years' time, millennials' grandchildren will be looking enviously at their grandparents' defined contribution pension funds and moaning about the crappy "collective defined contribution" or "pension ISA" schemes they have to contribute to. You don't know what you got till it's gone, sonny.

But civil servants (and MPs) will still have their fully indexed DB pensions.