3 option's. Which is the most attractive?

oysterman

Morning guy's.  I have a db pension & a AVC fund of approx £8000 with the co-op. I asked last year(2020) for a forecast if i took it next year(2022) when i'm 60

Opt-1 Using all my AVC fund, a pension for me & spouses pension. Lump sum £20,500 + my pension £60pw & spouse £26

Opt-2 Not using AVC fund. Lump sum £19000 + £54 & spouses £26

Opt-3 Not using AVC fund. No lump sum & a pension of £69 & spouses £26

My pension will be reduced by a deductive component of £17 pw with effect from age 65

I know these figures could change. Looking at what you see, which is the most attractive in your opinion?

What do i need to take into consideration to  make my mind up?

Anything i have missed, just ask. Cheers for any replies.

Marcon

oysterman said:

Morning guy's.  I have a db pension & a AVC fund of approx £8000 with the co-op. I asked last year(2020) for a forecast if i took it next year(2022) when i'm 60

Opt-1 Using all my AVC fund, a pension for me & spouses pension. Lump sum £20,500 + my pension £60pw & spouse £26

Opt-2 Not using AVC fund. Lump sum £19000 + £54 & spouses £26

Opt-3 Not using AVC fund. No lump sum & a pension of £69 & spouses £26

My pension will be reduced by a deductive component of £17 pw with effect from age 65

I know these figures could change. Looking at what you see, which is the most attractive in your opinion?

What do i need to take into consideration to  make my mind up?

Anything i have missed, just ask. Cheers for any replies.

The most attractive option depends on what your goal is, how long you expect to live (crystal ball at the ready!) and what you'd do with a lump sum if you took maximum tax free cash. Given how similar all the figures are, whatever you decide is unlikely to have a major impact on your future finances, so the prospect of making a completely 'wrong' choice is minimal.

Albermarle

Normally spouses pensions only kick in when you die . Are you saying they will be paid a pension whilst you are still alive ?

cf1972

Hi Oysterman,

What'll happen to the AVC of 8k in options 2 and 3? 

What would your plans be for the lump sums in options 1 and 2 and I assume they are tax-free?

And will the weekly sums increase with inflation?

xylophone

Do you have a Scheme Guide for whichever Co-op DB Scheme you were in?

If you take your pension at age 60, will you be subject to an actuarial reduction?

 What does your statement of benefits on leaving the scheme show concerning pre 88 /post 88 GMP/ excess?

When did you leave the scheme?

Have you obtained a State Pension Forecast?

My pension will be reduced by a deductive component of £17 pw with effect from age 65

Is this a State Pension Reduction (clawback)? How does your Guide explain it?

oysterman

Albermarle said:

Normally spouses pensions only kick in when you die . Are you saying they will be paid a pension whilst you are still alive ?

Sorry, didn't explain properly. Spouses pension is if i die.

oysterman

cf1972 said:

Hi Oysterman,

What'll happen to the AVC of 8k in options 2 and 3? 

What would your plans be for the lump sums in options 1 and 2 and I assume they are tax-free?

And will the weekly sums increase with inflation?

I can use the AVC to purchase benefit's outside the scheme provider with Royal London or another pension provider.

The lump sums are tax free & i would be using  it for living expenses if taking 1 or 2

They will increase in line with RPI, so would the DC

oysterman

xylophone said:

Do you have a Scheme Guide for whichever Co-op DB Scheme you were in?

If you take your pension at age 60, will you be subject to an actuarial reduction?

 What does your statement of benefits on leaving the scheme show concerning pre 88 /post 88 GMP/ excess?

When did you leave the scheme?

Have you obtained a State Pension Forecast?

My pension will be reduced by a deductive component of £17 pw with effect from age 65

Is this a State Pension Reduction (clawback)? How does your Guide explain it?

Not sure about the guide

 

These figures have been reduced for early payment.

 

Can't find anything about pre 88/ post 88 GMP/ excess

Left the scheme in 1998

State pension forecast done, can't get anymore £180.0

The scheme has been designed in a generous way to pay an initial higher pension to those that take the decission to retire before their NRD(65).  The design was intended to recognise that at NRD most individuals would benefit from additional income from a state pension.

The purpose of the DC is to remove this extra portion of pension when you reach your NRD to bring your pension to the correct, ongoing level

xylophone

Can't find anything about pre 88/ post 88 GMP/ excess

Were you given a statement of deferred benefits when you left the scheme?

Did you join the scheme before or after 6/4/88?

oysterman

xylophone said:

Can't find anything about pre 88/ post 88 GMP/ excess

Were you given a statement of deferred benefits when you left the scheme?

Did you join the scheme before or after 6/4/88?

I don't know if i was given a statement, or if i did where it is when i left.

Joined the scheme before 6/4/88

xylophone

This is rather old (2003) - see Introduction p2 which mentions that there may be certain differences for those who joined pre 1988.


https://coop.pacepensions.co.uk/Uploads/Documents/00/00/01/27/DocumentDocument_FILE/Co-operative-Group-Pension-Fund-Scheme-Booklet.pdf



The Administrators should be able to provide you with the details of your situation as to pre 88 GMP (once your pension is in payment and you have reached GMP age (65 for a man), the scheme  is no longer bound to pay increases on this part of the pension).

The post 88 GMP must be increased by up to 3% GMP and the excess by Scheme Rules.