Planning for retirement depends upon DB transfer

xylophone

Not up to DB schemes to allow or not allow transfers -

Unfunded Public Sector Schemes will not permit transfers to pensions offering flexible benefits.

https://commonslibrary.parliament.uk/research-briefings/cbp-8382/

NedS

Albermarle said:

One compromise ( and probably more sensible ) solution would be for one of you to transfer out their CETV, and the other one to keep their DB pension .
On the other hand as said above , it is probably unlikely that either of your will be able to transfer , so the whole plan is probably dead in the water anyway .

Not sure if that would be a viable option. Would an IFA have to treat each client individually or would they be able to consider spousal assets? There would still be considerable risks. What happens if the couple divorced shortly after transferring? One member has the full benefit of a DB and the other only has DC. What happens if the partner keeping the DB dies shortly after transferring, with the surviving partner now only having surviving partners reduced entitlement having given up their own DB benefits. The person transferring out is taking a disproportionately high risk - it is not spread evenly between them.
Anyway, all extremely hypothetical as like  you say it is unlikely either would get a recommendation to transfer.

Dazed_and_C0nfused

Marcon said:

Retireinten said:

The challenge is finding someone to approve the transfer and accepting you'll need deep pockets to fund it. As you have CETVs I assume you can transfer your DB funds out, not all allow this so best to check. 

Not up to DB schemes to allow or not allow transfers - there is a statutory right to do so up until 12 months before the scheme's normal retirement age, and OP is clearly well below that.

It is true that not all DB schemes will allow it

Albermarle

NedS said:

Albermarle said:

One compromise ( and probably more sensible ) solution would be for one of you to transfer out their CETV, and the other one to keep their DB pension .
On the other hand as said above , it is probably unlikely that either of your will be able to transfer , so the whole plan is probably dead in the water anyway .

Not sure if that would be a viable option. Would an IFA have to treat each client individually or would they be able to consider spousal assets? There would still be considerable risks. What happens if the couple divorced shortly after transferring? One member has the full benefit of a DB and the other only has DC. What happens if the partner keeping the DB dies shortly after transferring, with the surviving partner now only having surviving partners reduced entitlement having given up their own DB benefits. The person transferring out is taking a disproportionately high risk - it is not spread evenly between them.
Anyway, all extremely hypothetical as like  you say it is unlikely either would get a recommendation to transfer.

I was thinking more that it was possibly a sensible compromise plan from the OP's point of view . Whether it would make much difference to the IFA pension transfer assessment , I really don't know.

bostonerimus

DB pensions are fantastic to have in retirement as they really take the pressure off you, particularly when the markets have fallen by 20% and a DC pot would have decreased rapidly... So before you make any decisions you need to come up with a detailed retirement budget and income plan. It might be a good idea to only cash in one DB plan. But you need a detailed understanding of how you will generate income from your potential DC pots, and how that might fail, before you do anything else. Also blowing 25% on trips and luxuries fright from the start is not prudent. get your self set first.

Decked

Wow, first of all thanks to everybody that has taken trouble to respond. I will look through each response in detail (i do genuinely appreciate each and every one), but here are some of my general thoughts.

As pointed out by Marcon, I was on a DMP with £58k of debt 9 years ago. (we don't always make the right decisions, sometimes life throws unexpected challenges at us) but that is all in the past, not proud to have got in a mess, but I am proud to have cleared £58k off  in less than 5 years, on top of that I have managed to put together over £200k in a DC pension during the last 9 years, I have paid £40 in interest on a credit card, again since 2013, in 3 years time I will not owe anybody any money other than about £55k on my house which is worth £375k, So I think I have rebounded pretty well.
 
Considering the £300k  DC pot, if I retire at 58, arguably that only gives me £30k per for 10 years, so not quite enough for what I want.
Moving one lot of DB to DC does make some sense, and that may be an option.
Obviously these pots aren't massive, but they are pretty good in my book, should anything happen to one of us, the remaining benefit is very much reduced for the remaining person. (this has happened to a friend of ours, their husband had a pot worth over £400k, but she will realise maybe only £230k, had it been in a DC, my understanding is that she would have got the lot)

So putting money into DC pots (subject to performance) does protect the value bulk of the fund to be passed on.

I need to get the pension payable values, but one of them is showing £17k at age 65, need to check exactly what this means.
The tax free lump sum on the DB pots seems low compared to the Cetv.

Somebody mentioned transferring some of my wife's tax allowance which I will look into.

I know a lot a people scoff at giving up a DB scheme, but I feel that we have a good length of time before the NRA which we can make some memories and have some experiences whilst we hopefully have good health. When we reach NRA and have the extra pension, I just feel that we would have missed an opportunity. We are not after blowing all of our funds, quite the opposite, but with kids leaving home etc. our outgoings are reducing and why shouldn't we enjoy what we have worked for. Tbh there are probably quite a few on these forums who will never get close to some of the sums of money we are talking about (I think my age group is amongst some of the last with sizeable DB pots)

When I refer to buying some luxury items, I am not talking £10k watches and the like, but maybe a few grand on a classic motorbike (arguably and investments) or maybe £1k on a mountain bike.

I have spoken to an IFA, they have certainly not refused to look at DB transfers, yes it is likely to cost , maybe 3%, but the whole scenario needs some more detailed cash modelling to see relevant merits

Still a lot of research to do, thanks for the info

Hot off the press update - I can get an estimate of the Cetv for my DB scheme using the pension providers website. Before Christmas it was over £500k, today it has dropped again to £426k, this is only an estimate, but the guaranteed figures I have received in the past have been broadly in line with the basic estimate. I believe the calculation of a Cetv is somewhat mystical!

Decked

bostonerimus said:

 Also blowing 25% on trips and luxuries fright from the start is not prudent. get your self set first.

To be honest, this is certainly not the intention, but we do want to have the option to do things when we want. 

sammyjammy

Decked said:

I have spoken to an IFA, they have certainly not refused to look at DB transfers, yes it is likely to cost , maybe 3%, but the whole scenario needs some more detailed cash modelling to see relevant merits

No reason why they would, they get paid whether they recommend it or not!

I think when it comes to a DB scheme you have to look at it collectively, some win and some lose, if everyone was a winner in cash terms then DB pensions would cease to exist altogether (as they are beginning to be)

bostonerimus

Decked said:

bostonerimus said:

 Also blowing 25% on trips and luxuries fright from the start is not prudent. get your self set first.

To be honest, this is certainly not the intention, but we do want to have the option to do things when we want. 

You should only be spending within your retirement income plan. By spending capital at the beginning of retirement you decrease the amount you will have to live on in future years and increase the probability of running out of money before you die. So any expenditure needs to be included in a plan. Do you have a withdrawal strategy and tactics to deal with specific situations? How much do you need and how much will you be drawing. I'm not convinced you have compared the DB option to the DC option in any detail.

Marcon

Dazed_and_C0nfused said:

Marcon said:

Retireinten said:

The challenge is finding someone to approve the transfer and accepting you'll need deep pockets to fund it. As you have CETVs I assume you can transfer your DB funds out, not all allow this so best to check. 

Not up to DB schemes to allow or not allow transfers - there is a statutory right to do so up until 12 months before the scheme's normal retirement age, and OP is clearly well below that.

It is true that not all DB schemes will allow it

Sorry - I should have qualified that comment. Unfunded public sector schemes don't allow transfers out (but then of course they wouldn't be issuing a CETV...brain sidetracked at that point!).