DB pension transfer cost

malc_b

Albermarle you don't quite have that right.  It is joint (50%) but inflation link is rpi 3-5% so minimum of 3% but capped at 5% if rpi is higher.

I took a simpler approach and used excel to calculate pension each year incrementing by 3%, and 5% and then apply 1% increase to remainder.  The money runs out aged 88 at 3% or 84 at 5%.  Those are the limits of the pension and in fact this is based on 75k figure for last July and it presumably is higher now or will in April when this year's increment is given (I've assumed 3 or 5%).  My expected death is aged 85 and my wife 87.  It doesn't seem that good a return to me but I accept that it is guaranteed for whole life.

eskbanker

malc_b said:

My expected death is aged 85 and my wife 87.  It doesn't seem that good a return to me but I accept that it is guaranteed for whole life.

To what extent are you taking into account that median average life expectancies signify that you have roughly a 50% chance of living longer?

malc_b

True, so a personal decision might be different.

Marcon

malc_b said:

Why when I'm 6mths from age 65?  I've only just received some paperwork from them.  They are not being very fast on replying either.  No had a reply to email I sent a while back.  I had to phone.  I was promised forms in the post but they haven't turned up yet either.

I can do transfers after 65 with the trustees approval.  I rather get it done before obviously rather than need approval.  However I note from the scheme newletter in 2020 "every June we calculate the value of your deferred pension" and this can be accessed online - not true for me as I just have a single July 2021 statement.  Then the 2021 newsletter says "every 3 months we will calculate the value of your deferred pension" and this can be accessed online - again not true. Hence if I don't get values in time for age 65 the delay is down to them which I think would make it hard for the trustees to refuse transfer.

Because that's the legal position. To have a statutory right to a transfer, you have to be at least 12 months away from reaching a scheme's normal retirement age.

Your scheme rules may provide for members to have a right to a transfer value up to the age of 65, or the trustees may have a policy in place to offer such transfers - but those are scheme specific, not a statutory right.

Albermarle

 I've only just received some paperwork from them.  They are not being very fast on replying either.  No had a reply to email I sent a while back.  I had to phone.  I was promised forms in the post but they haven't turned up yet either.

I am afraid long delays and poor service are rather commonplace in this area, especially if you ae dealing with a pension administrator company rather than the scheme directly 

malc_b

Thanks for the info.  I'm repeating what I was told over the phone so I presume that 65 is a scheme specific date then.

af1963

Something else to consider - you will know the general state of your own health.  Those average life expectancy figures quoted above are for the whole population, including people who already have significant health problems before retirement.  If you know your own health is generally good, then your expected lifespan is longer. If you have underlying health conditions, it will probably be shorter.

Albermarle

af1963 said:

Something else to consider - you will know the general state of your own health.  Those average life expectancy figures quoted above are for the whole population, including people who already have significant health problems before retirement.  If you know your own health is generally good, then your expected lifespan is longer. If you have underlying health conditions, it will probably be shorter.

Also if you have plenty of money and are well educated and live in a 'nice ' part of the UK , with good health and care provisions, that all helps as well. 

malc_b

Good points.

malc_b

A few follow up questions

1)  It seems like I could transfer to another DB scheme without needing IFA approval.  Are there private DB schemes?  Or are all DB schemes employer based so I would need new employment and an employer who DB scheme allowed transfers in.

2)  I'm thinking about taking the tax free cash as halfway house in that it gives me control of some of my pension pot.  The Lump Sum is 23.5 x pension drop (for the rpi 3-5%)  or for the level 15 x pension drop.  Lump sum on the level pension is higher than for rpi indexed.  Any idea why?  The scheme office is not open weekends so a question for Monday is 25% of what tax free cash?  It isn't the transfer value as the level lump sum is 23.5% and rpi indexed lump sum is 17.6% of the transfer value.