Advice on moving DC pensions to DB pension

EsoTarek

I don't like the idea of investing too much into a pension pot as I may die before even reaching the age of retirement. I already invest 10% of my salary in additional voluntary contributions with my existing employee and I think that's enough for me. I'd rather use any savings I have in doing overpayments for my mortgage so that I'm saving thousands in interest over the long run.
I also see them as a risk as funds are not guaranteed to go up (unlike on a DB scheme) and so could potentially lose out. 
Unfortunately I don't think I will have THAT much in cash savings that will mean I'm losing out to inflation too much lol

If you do AVCs can you use that money at 55-60 and then leave the pension fund alone till 65? 
If so, that could be another good source of income. 

QrizB

EsoTarek said:

I don't like the idea of investing too much into a pension pot as I may die before even reaching the age of retirement.

If you're dead, it doesn't really matter. Whether saved as an ISA or invested in a DC pension, whatever you've got will be inherited by your heirs.

(DB pensions are different although I would hope there's some sort of death-in-service benefit from TfL.)

Albermarle

EsoTarek said:

I don't like the idea of investing too much into a pension pot as I may die before even reaching the age of retirement. I already invest 10% of my salary in additional voluntary contributions with my existing employee and I think that's enough for me. I'd rather use any savings I have in doing overpayments for my mortgage so that I'm saving thousands in interest over the long run.
I also see them as a risk as funds are not guaranteed to go up (unlike on a DB scheme) and so could potentially lose out. 
Unfortunately I don't think I will have THAT much in cash savings that will mean I'm losing out to inflation too much lol

If you do AVCs can you use that money at 55-60 and then leave the pension fund alone till 65? 
If so, that could be another good source of income. 

Investing in other pensions or investing in AVC's is pretty much the same thing .

I don't like the idea of investing too much into a pension pot as I may die before even reaching the age of retirement.

Although we can all die at any time , statistically it is highly unlikely you will die that early.
The current average life expectancy for a man is early eighties , which means 50% will live longer than that.

Bimbly

If it were me, I would merge the two DC pots into one. Then you can take that pot of money when you retire and it will be a nice little bonus/lump sum to pay for something like a holiday, house repairs etc.

You are not buying a great deal of DB pension if you transfer them, so it really doesn't benefit you greatly to do this.

Albermarle

I do not think anyone has mentioned this yet, but due to the fact that the OP is a minimum 20 years away from retirement, probably longer . The two DC pensions ( merged or not ) and the AVC , should be invested at a higher risk/higher equity level . Normally this should mean better growth over that long time period than more cautious investments .

EsoTarek

Brie said:

Find out from the DB scheme where transferred in money goes.  I suspect it will go in to your AVC pot and I suspect that you may well be able to use that differently than your actual DB money so potentially it will be both a DB & DC scheme in one place. 

Also I would almost guarantee that the DB scheme will close at some point.  Likely first to new joiners but possibly also close to current members who will be transferred into a related DC only scheme.  My best guess would be that this will happen within the next 5 years so well before retirement early or otherwise.  

I've just double checked this and it goes into the pension fund scheme and not the AVC pot unfortunately. 

Our pensions were actually under review thanks to the outrageous demands set by this tory government with the bailout money because of covid. Fortunately the RMT union have managed to hold off any attacks on the pension for now but I do fear that this is something that they will come back to attack again in the near future even though the scheme is healthy.

EsoTarek

QrizB said:

 I would hope there's some sort of death-in-service benefit from TfL.)

There is, don't quote me but I think it's approx £120k, best not to tell the missus lol 

EsoTarek

Bimbly said:

If it were me, I would merge the two DC pots into one. Then you can take that pot of money when you retire and it will be a nice little bonus/lump sum to pay for something like a holiday, house repairs etc.

You are not buying a great deal of DB pension if you transfer them, so it really doesn't benefit you greatly to do this.

Thanks, I think this is what I will do, I'll move the Aviva one into my SW one due to it having a lower annual management charge and just hope that it grows into something decent. It's final value in 20 years time will probably determine or at least have a say in whether I will be able to retire early or not

EsoTarek

Albermarle said:

I do not think anyone has mentioned this yet, but due to the fact that the OP is a minimum 20 years away from retirement, probably longer . The two DC pensions ( merged or not ) and the AVC , should be invested at a higher risk/higher equity level . Normally this should mean better growth over that long time period than more cautious investments .

This is a good point, I recently had them in medium risk mixed portfolios for years but have recently moved them all to the HSBC Islamic global equity fund as this is the only shariah compliant fund available so my options in that regard are limited as a Muslim. This fund is mostly made up of tech and low risk companies so probably close to low/medium risk in terms of investment. 

Thank you to all who have replied and helped, you've all swayed me into keeping my DC pot for now!

Albermarle

EsoTarek said:

Albermarle said:

I do not think anyone has mentioned this yet, but due to the fact that the OP is a minimum 20 years away from retirement, probably longer . The two DC pensions ( merged or not ) and the AVC , should be invested at a higher risk/higher equity level . Normally this should mean better growth over that long time period than more cautious investments .

This is a good point, I recently had them in medium risk mixed portfolios for years but have recently moved them all to the HSBC Islamic global equity fund as this is the only shariah compliant fund available so my options in that regard are limited as a Muslim. This fund is mostly made up of tech and low risk companies so probably close to low/medium risk in terms of investment. 

Thank you to all who have replied and helped, you've all swayed me into keeping my DC pot for now!

Most Shariah funds are rather high risk , as they are usually 100% equity ,so I would check this again .  
Although as said higher risk , higher equity is better at your age .