Transferring DC pots to DB scheme

Albermarle

I understand DB public service pensions are considered to be a lot better than private pensions so is it a no-brainer

Just to be clear, the main reason why they are better, is that the employer ( taxpayer) funds these public sector pensions at a much higher level than an employer normally funds a DC pension. 

If you do keep the DC pot, then make sure you understand how your money is invested within the pension. Having the right investments for your age/profile could make a significant difference to the end result.

ewaste

I personally think it's an easy decision based on what I remember, £98k for £5.3k CPI linked pension from Age 60. While an active member it will also revalue by CPI + 1.25%... 

Terron

MX5huggy said:

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. 

I believe that is only for pensions in payment. Whilst you are an active member it is CPI + 1.25%.
3.1% for ones in payment this year, 4.35% for active members.

bostonerimus

A combination of DB and DC pensions can give you the security of a guaranteed income floor and the flexibility and possible inheritance of an invested lump sum. Look at your current budget and DC and DB pensions including SP and project it out to age 60 and think about how you'd like to construct your income sources. IMO any chance for a DB plan (within in reason) should be taken and then supplemented by savings to ISAs and SIPPs.

Bimbly

Looks a good deal to me! I'd be inclined to transfer the big one - £98k - and merge the smaller ones into one DC pot to give you a little flexibility.

But then I'm a big fan of getting pension income like it's a salary and not having to worry about what your DC pot is invested in.

Of course, I am not you. Some people, for example, want to keep a DC pot because it can be inherited whereas DB (apart from spousal payments) cannot.

Albermarle

Looks a good deal to me! I'd be inclined to transfer the big one - £98k - and merge the smaller ones into one DC pot to give you a little flexibility.

Also they could be added to over the next 20 years, benefitting from tax relief and hopefully some investment growth.

marlot

There is probably a 12-month time limit to take up the transfer offer (from joining the scheme).

At those rates, I would transfer.

LHW99

marlot said:

There is probably a 12-month time limit to take up the transfer offer (from joining the scheme).

At those rates, I would transfer.

And at age 39 you would have time to put any spare money into a new DC (SIPP / PP) to build up something that could be used to retire a year or two before the DB NPA if you wished.

Chickereeeee

Bimbly said:

Looks a good deal to me! I'd be inclined to transfer the big one - £98k - and merge the smaller ones into one DC pot to give you a little flexibility.

But then I'm a big fan of getting pension income like it's a salary and not having to worry about what your DC pot is invested in.

Of course, I am not you. Some people, for example, want to keep a DC pot because it can be inherited whereas DB (apart from spousal payments) cannot.

This would be my favourite.