interest rates and pension

northernstar007

hi all 
can someone tell me with the interest rates moving up/ down that has a effect on my final salary pension which i am getting close to 55 and wanting to draw on it asap
ive read all over on here that i will find it hard to do a transfer out to a drawdown, so that leaves it down to drawing off my pension
what happens then at 55 do i still need a financial advisor? its worth over the 30k mark, i read but someone could correct me that when i come to collect my pension not sure who but my funds go and buy a gov bonds etc that pays out till my death, and also could get enhanced pay out for health reasons and no next of kin or any children,
now as the bonds are going up in price will this work in my fav when i come to buy the bonds? any help please as i am completely lost and this is my life pension i cant get it wrong

Flugelhorn

just a bit puzzled - I thought if it was a "final salary pension" then it would have defined benefits and way in which it was paid out

northernstar007

going back a longtime ago in the 90s i went to a few meetings (20s wasnt taking much notice, excuse to get away from workplace) i`m sure the pension person doing the meeting from HO was mentioning about buying the bonds etc when u come to retire, as i said i maybe completely wrong but i wana know now what to do when the time comes in 18 mths

Albermarle

northernstar007 said:

hi all 
can someone tell me with the interest rates moving up/ down that has a effect on my final salary pension which i am getting close to 55 and wanting to draw on it asap
ive read all over on here that i will find it hard to do a transfer out to a drawdown, so that leaves it down to drawing off my pension
what happens then at 55 do i still need a financial advisor? its worth over the 30k mark, i read but someone could correct me that when i come to collect my pension not sure who but my funds go and buy a gov bonds etc that pays out till my death, and also could get enhanced pay out for health reasons and no next of kin or any children,
now as the bonds are going up in price will this work in my fav when i come to buy the bonds? any help please as i am completely lost and this is my life pension i cant get it wrong

Final salary pension, also known as a defined benefit pension. It will pay out a defined annual pension, with the amount being based on how many years you worked for that employer and your salary . It will normally have a Normal Retirment Age of 60 or 65. If you want to take it earlier, then you need to contact the scheme administrators and ask how much pension you will get if you take it early/at 55. Normally it is OK to take it early but of course it will be reduced compared to what it would be at the Normal retirement age. Normally you will also be offered an alternative of a lump sum with a reduced pension.

You do not have to do anything like buying bonds etc, the scheme will simply pay you the pension that is due to you.

What is happening in financial markets or interest rates will not affect your pension at all. 

If you are not transferring out, which is very difficult and not usually recommended anyway, you do not need a financial advisor.

Be aware that some pension administrators are rather slow in responding.

[Deleted User]

Different final salary pension schemes have different rules.  You don’t need an advisor to understand the rules of your pension. You need to contact your pension administrator and ask for information booklet containing the terms of your pension.  Then you need to read it. If you have questions after that, go back to pension administrator and ask them. If something the administrator says isn’t clear then you could ask on this forum. 

A couple of questions… When you say “worth 30k”, do you mean annually or is that the estimated transfer value? Why do you need to buy government bonds? What “funds” will you use to buy government bonds? 

That would be my suggestion. 

dunstonh

can someone tell me with the interest rates moving up/ down that has a effect on my final salary pension which i am getting close to 55 and wanting to draw on it asap

It will have no impact as final salary pensions are based on the defined benefits of your scheme.  Not market rates (other than inflation).

ive read all over on here that i will find it hard to do a transfer out to a drawdown, so that leaves it down to drawing off my pension

The boom period in CETVs due to low gilt yields is now over.  Things are reverting back to the historical norm.

what happens then at 55 do i still need a financial advisor? its worth over the 30k mark, i read but someone could correct me that when i come to collect my pension not sure who but my funds go and buy a gov bonds etc that pays out till my death, and also could get enhanced pay out for health reasons and no next of kin or any children,

You start drawing a scheme pension when you qualify and want to draw it.  No financial instruments are bought by you.  There are no enhancements for health or children or lack of.  You just get the scheme pension.

now as the bonds are going up in price will this work in my fav when i come to buy the bonds? 

You wont be buying bonds.  So, no impact.

northernstar007

thanks a lot all for them answers, i ment its over 30k transfer value
i still would rather move it to a drawdown in my shoes and lifestyle etc and no reductions as its been said on here of i think its 3% per year i lose for retiring early also no ex`s no kids the co going to be laughing 

Albermarle

northernstar007 said:

thanks a lot all for them answers, i ment its over 30k transfer value
i still would rather move it to a drawdown in my shoes and lifestyle etc and no reductions as its been said on here of i think its 3% per year i lose for retiring early also no ex`s no kids the co going to be laughing 

Having a pension in drawdown, means that you need a certain level of knowledge about investments, markets, drawdown strategies, or you could make a big mess of it.

In any case it is very difficult to transfer, and not usually a very good idea to give up guaranteed income. 

3% per year is very good.

Your pension would not support any children in the event of your death, even  if you had any.

The company will have been contributing a lot of money to this pension. Most private companies have stopped offering them as they are too costly. Typically an employer running a final salary scheme will be adding 25% of your salary to a scheme. Whereas typically for non final salary schemes it is about 5%. Many people who do not have a final salary pension would give their right arm for one, so really you should think yourself lucky.

xylophone

 my final salary pension 

Is the pension  deferred or your current workplace scheme?

Do you have a copy of the scheme guide?

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

LV_426

northernstar007 said:

thanks a lot all for them answers, i ment its over 30k transfer value
i still would rather move it to a drawdown in my shoes and lifestyle etc and no reductions as its been said on here of i think its 3% per year i lose for retiring early also no ex`s no kids the co going to be laughing 

So what income would this final salary (DB) pension provide you with? Do you have a statement of benefits from the trustees?
30k wouldn't provide very much long term income by itself as a drawdown pension.
You've received some very good advice in this thread.

[Deleted User]

Its a very small pension. Hopefully you have other sources of income. 

Unless your life expectancy is very short, transferring this out of DB pension and buying bonds within a SIPP wrapper would be a really, really bad idea.