Transferring DC pots to DB scheme

chelseablue

I joined the police last year after being a PA for 20 years

I am in the police officer pension scheme which is Defined Benefit (not final salary anymore, its a Career Average Related Earnings scheme) and I can transfer my previous DC pots into it

I understand DB public service pensions are considered to be a lot better than private pensions so is it a no-brainer and I should go ahead and transfer them or just leave them where they are? 

Any advice welcome! 

Linton

\Can you get a quote from the DB pension scheme as to how much income a transfer would gain you?  Without knowing the figures it is impossible to say whether the upside of extra secure income in retirement is worth the downside of decreased  flexibility in how the money is used.  

chelseablue

Linton said:

\Can you get a quote from the DB pension scheme as to how much income a transfer would gain you?  Without knowing the figures it is impossible to say whether the upside of extra secure income in retirement is worth the downside of decreased  flexibility in how the money is used.  

Thank you, my main pot has £98,000 in and I have had a quote from the police pension saying that if I transfer this to them I will be awarded an additional police pension of £5,300 a year 

I have a few other pots but the biggest only has 7k in

Marcon

chelseablue said:

I joined the police last year after being a PA for 20 years

I am in the police officer pension scheme which is Defined Benefit (not final salary anymore, its a Career Average Related Earnings scheme) and I can transfer my previous DC pots into it

I understand DB public service pensions are considered to be a lot better than private pensions so is it a no-brainer and I should go ahead and transfer them or just leave them where they are? 

Any advice welcome! 

They are generally considered 'better' because they are defined benefit schemes and underwritten by the taxpayer. 

Whether it is a good idea to transfer depends on a number of things, in particular the terms on which your transfer in would be treated, whether you would like the flexibility offered by having several different types of pension arrangement, and how important factors such as security and predictability are.

As suggested above, ask the scheme to give you an indication of what your transfer would secure if you did decide to proceed, and then consider whether you wish to go ahead. Keeping one DC pot might be all you need to give you flexibility if that's important to you - it isn't an 'all pots or nothing' choice.

chelseablue

Marcon said:

chelseablue said:

I joined the police last year after being a PA for 20 years

I am in the police officer pension scheme which is Defined Benefit (not final salary anymore, its a Career Average Related Earnings scheme) and I can transfer my previous DC pots into it

I understand DB public service pensions are considered to be a lot better than private pensions so is it a no-brainer and I should go ahead and transfer them or just leave them where they are? 

Any advice welcome! 

They are generally considered 'better' because they are defined benefit schemes and underwritten by the taxpayer. 

Whether it is a good idea to transfer depends on a number of things, in particular the terms on which your transfer in would be treated, whether you would like the flexibility offered by having several different types of pension arrangement, and how important factors such as security and predictability are.

As suggested above, ask the scheme to give you an indication of what your transfer would secure if you did decide to proceed, and then consider whether you wish to go ahead. Keeping one DC pot might be all you need to give you flexibility if that's important to you - it isn't an 'all pots or nothing' choice.

Thank you, my main pot has £98,000 in and I have had a quote from the police pension saying that if I transfer this to them I will be awarded an additional police pension of £5,300 a year 

bostonerimus

I transferred a DC balance to a DB scheme in 2014. The critical factors are going to be the DC lump sum, the size of the annual pension, the age that it starts and the inflation indexing of the annual amount. You can then develop a spreadsheet to find out the annual interest rate/gain that you would need on your DC pot to supply the lifetime income of the pension. You'll have to make some assumptions like lifespan, and inflation rates, but you will be able to make some sort of comparison.

Flugelhorn

chelseablue said:

Marcon said:

chelseablue said:

I joined the police last year after being a PA for 20 years

I am in the police officer pension scheme which is Defined Benefit (not final salary anymore, its a Career Average Related Earnings scheme) and I can transfer my previous DC pots into it

I understand DB public service pensions are considered to be a lot better than private pensions so is it a no-brainer and I should go ahead and transfer them or just leave them where they are? 

Any advice welcome! 

They are generally considered 'better' because they are defined benefit schemes and underwritten by the taxpayer. 

Whether it is a good idea to transfer depends on a number of things, in particular the terms on which your transfer in would be treated, whether you would like the flexibility offered by having several different types of pension arrangement, and how important factors such as security and predictability are.

As suggested above, ask the scheme to give you an indication of what your transfer would secure if you did decide to proceed, and then consider whether you wish to go ahead. Keeping one DC pot might be all you need to give you flexibility if that's important to you - it isn't an 'all pots or nothing' choice.

Thank you, my main pot has £98,000 in and I have had a quote from the police pension saying that if I transfer this to them I will be awarded an additional police pension of £5,300 a year 

presume that £5,300 in today's money - does the pot revalue annually (like many public sector pensions)?

MX5huggy

Flugelhorn said:

chelseablue said:

Marcon said:

chelseablue said:

I joined the police last year after being a PA for 20 years

I am in the police officer pension scheme which is Defined Benefit (not final salary anymore, its a Career Average Related Earnings scheme) and I can transfer my previous DC pots into it

I understand DB public service pensions are considered to be a lot better than private pensions so is it a no-brainer and I should go ahead and transfer them or just leave them where they are? 

Any advice welcome! 

They are generally considered 'better' because they are defined benefit schemes and underwritten by the taxpayer. 

Whether it is a good idea to transfer depends on a number of things, in particular the terms on which your transfer in would be treated, whether you would like the flexibility offered by having several different types of pension arrangement, and how important factors such as security and predictability are.

As suggested above, ask the scheme to give you an indication of what your transfer would secure if you did decide to proceed, and then consider whether you wish to go ahead. Keeping one DC pot might be all you need to give you flexibility if that's important to you - it isn't an 'all pots or nothing' choice.

Thank you, my main pot has £98,000 in and I have had a quote from the police pension saying that if I transfer this to them I will be awarded an additional police pension of £5,300 a year 

presume that £5,300 in today's money - does the pot revalue annually (like many public sector pensions)?

Yes by Septembers CPI figure each April. 

Albermarle

chelseablue said:

Marcon said:

chelseablue said:

I joined the police last year after being a PA for 20 years

I am in the police officer pension scheme which is Defined Benefit (not final salary anymore, its a Career Average Related Earnings scheme) and I can transfer my previous DC pots into it

I understand DB public service pensions are considered to be a lot better than private pensions so is it a no-brainer and I should go ahead and transfer them or just leave them where they are? 

Any advice welcome! 

They are generally considered 'better' because they are defined benefit schemes and underwritten by the taxpayer. 

Whether it is a good idea to transfer depends on a number of things, in particular the terms on which your transfer in would be treated, whether you would like the flexibility offered by having several different types of pension arrangement, and how important factors such as security and predictability are.

As suggested above, ask the scheme to give you an indication of what your transfer would secure if you did decide to proceed, and then consider whether you wish to go ahead. Keeping one DC pot might be all you need to give you flexibility if that's important to you - it isn't an 'all pots or nothing' choice.

Thank you, my main pot has £98,000 in and I have had a quote from the police pension saying that if I transfer this to them I will be awarded an additional police pension of £5,300 a year 

On the surface at least ( without knowing every detail ) it looks like a good deal.

For example if you were say 60 today and you wanted to buy a lifetime annuity with CPI linking, it would definitely cost more than £100K.

One factor to think about is how long you expect to be in this job accruing this pension? If it could be many years, in which time you will build up a substantial guaranteed pension income. Then it might be better to have a separate pension pot that you could use more flexibly. You could even continue to add to it if you could afford it.
On the other hand if you will only be in the job a few years, I think this would swing it more to transferring the DC pot in to get more of that valuable guaranteed pension.

chelseablue

Albermarle said:

chelseablue said:

Marcon said:

chelseablue said:

I joined the police last year after being a PA for 20 years

I am in the police officer pension scheme which is Defined Benefit (not final salary anymore, its a Career Average Related Earnings scheme) and I can transfer my previous DC pots into it

I understand DB public service pensions are considered to be a lot better than private pensions so is it a no-brainer and I should go ahead and transfer them or just leave them where they are? 

Any advice welcome! 

They are generally considered 'better' because they are defined benefit schemes and underwritten by the taxpayer. 

Whether it is a good idea to transfer depends on a number of things, in particular the terms on which your transfer in would be treated, whether you would like the flexibility offered by having several different types of pension arrangement, and how important factors such as security and predictability are.

As suggested above, ask the scheme to give you an indication of what your transfer would secure if you did decide to proceed, and then consider whether you wish to go ahead. Keeping one DC pot might be all you need to give you flexibility if that's important to you - it isn't an 'all pots or nothing' choice.

Thank you, my main pot has £98,000 in and I have had a quote from the police pension saying that if I transfer this to them I will be awarded an additional police pension of £5,300 a year 

On the surface at least ( without knowing every detail ) it looks like a good deal.

For example if you were say 60 today and you wanted to buy a lifetime annuity with CPI linking, it would definitely cost more than £100K.

One factor to think about is how long you expect to be in this job accruing this pension? If it could be many years, in which time you will build up a substantial guaranteed pension income. Then it might be better to have a separate pension pot that you could use more flexibly. You could even continue to add to it if you could afford it.
On the other hand if you will only be in the job a few years, I think this would swing it more to transferring the DC pot in to get more of that valuable guaranteed pension.

Im 39 now and planning to stay until retirement age which is 60 

Linton

At the moment the offered pension looks very good compared with market annuity rates especially as it presumably will include spouse pension and possible other benefits.

On the other hand if you wish to retire early having a separate DC pension can be very useful as you can use it to fund your day to day expenditure until you can take your full DB pension at the normal age or possibly leave a reasonable inheritance for the kids, if any.  Your choice, in my view taking either option could be justified dependent on your particular circumstances.