DB v DC pros and cons

[Deleted User]

Also just wanted to add, I received a decent tax free lump sum that enabled me to pay off my remaining mortgage, become debt free and have a useful back up in the bank for emergencies, house maintenance and a few treats.

Thrugelmir

DrSparsamkeit said:

Terron said:

If you are lucky. I have two DB pensions. One has rises "entirely at the discretion of the trustees" and they have been deciding on no rises for years. The other rises in line with inflation capped at 5%, so won't be keeping up with inflation this year. 

Having a guaranteed inflation proof income looks like a great upside to me.

There appears to be a commonly held belief that all DB pensions have increases to counter inflation.

Schemes differ. One of my long closed ones. Has a fixed uplift once in payment of 5%. Sounds great now. Wasn't so good for those that retired in eras of high inflation. 

[Deleted User]

Sorry, I don't get the fixation with having to leave money to relatives. Most people work very hard to build up a pension pot and then some continue to deny themselves to leave something behind!
I have made it clear to my relatives that anything I may leave they can consider a bonus rather than a given. Fortunately they are of the same opinion!

Kim1965

[Deleted User] said:

Sorry, I don't get the fixation with having to leave money to relatives. Most people work very hard to build up a pension pot and then some continue to deny themselves to leave something behind!
I have made it clear to my relatives that anything I may leave they can consider a bonus rather than a given. Fortunately they are of the same opinion!

Me also. Cannot understand how someone can get 40%  tax  relief growing a pension pot to pass on as inheritance. Thought saving into a pension was for a persons retirement. 

DT2001

[Deleted User] said:

Sorry, I don't get the fixation with having to leave money to relatives. Most people work very hard to build up a pension pot and then some continue to deny themselves to leave something behind!
I have made it clear to my relatives that anything I may leave they can consider a bonus rather than a given. Fortunately they are of the same opinion!

My mother was left money by her mother and she seemed to think it was the ‘right’ thing to do despite all of her children being better off than her. So maybe it is a parent child ‘thing’?

This is where the DC v DB favours the former but possibly to the detriment of the person giving as their income is less of a known. 

OH is looking at Oz for T20 cricket World Cup and back via USA so definitely not denying ourselves.

NedS

Kim1965 said:

Baron_Dale said:

Sorry, I don't get the fixation with having to leave money to relatives. Most people work very hard to build up a pension pot and then some continue to deny themselves to leave something behind!
I have made it clear to my relatives that anything I may leave they can consider a bonus rather than a given. Fortunately they are of the same opinion!

Me also. Cannot understand how someone can get 40%  tax  relief growing a pension pot to pass on as inheritance. Thought saving into a pension was for a persons retirement. 

I think the expectation is that income tax will be collected[*] at some point when the pension is withdrawn, so it doesn't really matter whether that's the original owner of the pension who pays that tax or whether it comes from income tax collected from an inherited pension. It's just a method of tax deferment.

[*] Where the person dies under 75, withdraws can be tax free.

mountaindreams

[Deleted User] said:

Sorry, I don't get the fixation with having to leave money to relatives. Most people work very hard to build up a pension pot and then some continue to deny themselves to leave something behind!
I have made it clear to my relatives that anything I may leave they can consider a bonus rather than a given. Fortunately they are of the same opinion!

I understand and agree with this to a certain extent however.... I had my kids later on so am an older parent, I also have a health condition that will make it difficult for me to get life insurance at a sensible price once my existing one runs out in a couple of years. So although the main focus of my pension planning is not on being able to provide an inheritance to my kids it is a consideration, although I certainly wouldn't tell them that or let them expect anything from me!!

Albermarle

[Deleted User] said:

Sorry, I don't get the fixation with having to leave money to relatives. Most people work very hard to build up a pension pot and then some continue to deny themselves to leave something behind!
I have made it clear to my relatives that anything I may leave they can consider a bonus rather than a given. Fortunately they are of the same opinion!

Not all families or situations are the same , some may be leaving behind vulnerable relatives for example .
Also not all people are the same . Some may be comforted in their later years that close friends or relatives will receive something . Others like your self may feel differently .
Also if you have enough , you can leave some without denying yourself . 

Ibrahim5

You can pay into a DC pension until 75 so you can push a bit of DB into DC if desired.