Defined benefit pension

Mousey66

dunstonh said:

Mousey66 said:

MarkCarnage said:

When did you get that 'current' transfer value....?

If it's more than 3 months ago, you may find it's now under £30k....

MarkCarnage said:

When did you get that 'current' transfer value....?

If it's more than 3 months ago, you may find it's now under £30k....

It was about a month ago. I might hang on then and get another TV in December, if its gone under 30k problem solved! 🙏🏻🤞🏻

That CETV was probably around £75k this time last year.

With such a low CETV, i can't see any adviser recommending it.   And the breakeven point, if below £30k CETV, will be so low that it would be daft to do it.

It works out at £7,500 lump sum and about £1,200 a year.

Is that figure up-to-date?  i.e. has it been updated to reflect the increases since you left?

Yes it was at the same time I got the TV.
Im honestly not bothered if it goes below the 30k as long as I can free up some money for what I need it for now. It would save me paying for financial advice that would probably go against transferring anyway.

Albermarle

Mousey66 said:

dunstonh said:

I will have my NHS pension and state pension, so I’m sure I’d be fine to live on them

From what you have written, you have not been in the NHS long.  Again, its the amounts that matter. 

I would also like to do some home improvements, buy a decent car, ours is very old, and use some to enable a better quality of life before we get too old.

Unlikely any of those would persuade an adviser to agree that a transfer is suitable.

If you cannot afford things when you are working, then robbing your retirement years to pay for current lifestyle isn't going to work.

Or can I still move it if advised not to?

If the advice is not to transfer, you will have around a £5000+ fee to pay and no providers are accepting transfers without an adviser recommending it.

It works out at £7,500 lump sum and about £1,200 a year. So not really enough for what I was hoping to use it for.

What is the CETV?

I could also die between now and retirement, no one knows what our future holds. I think it’s very unfair that I can’t use this money to help me now, when I need it most. Paying a chunk off my mortgage will help me financially in the future too.

When you took out the Tesco pension, you agreed to it doing exactly what it is going to do.   Its not unfair that you cannot choose an option that is likely to leave you worse off.

The CETV is £41,500 ish.
I didn’t know when I took the Tesco pension out that it would be so much of a hassle to move it.

On the other hand if the Tesco pension had been a standard DC autoenrolment pension, like many people have, it would now be worth a fraction of that. So it would have been more flexible, but worth a lot less. 
Employer contributions to DB schemes are usually many multiples of what they pay to DC schemes, which is why most have been stopped in the private sector, but not the public sector who still enjoy very generous pension schemes, like the NHS one.

dunstonh

Tesco's DB scheme used to be non-contributory.    They also had a matched contribution AVC for a while as well.  The scheme was very generous in its time.

L9XSS

The Tesco DB benefit is far more valuable to you than the “potential” transfer value. As others have stated the CETV will have dropped. (I know because I have had CETVs from my Sainsburys pension administrators for the last 6 years). My advice would be to stay put. Based on the limited information we have it would seem that a transfer would be deemed unsuitable for you. The cost for providing a negative report(s) could be between £4K to £8k. Just my tuppence.

Mousey66

L9XSS said:

The Tesco DB benefit is far more valuable to you than the “potential” transfer value. As others have stated the CETV will have dropped. (I know because I have had CETVs from my Sainsburys pension administrators for the last 6 years). My advice would be to stay put. Based on the limited information we have it would seem that a transfer would be deemed unsuitable for you. The cost for providing a negative report(s) could be between £4K to £8k. Just my tuppence.

I appreciate your opinion but as I’ve stated several times, I ideally would like to pay a chunk off my mortgage, a few home improvements, a better car, and generally better quality of life before we’re too old. Obviously all this depends on the TV come December, when my current one expires. Though hopefully it’s below £30,000 taking the hassle of using and paying a financial adviser, who would probably advise against.

theoretica

Mousey66 said:

 I ideally would like to pay a chunk off my mortgage, a few home improvements, a better car, and generally better quality of life before we’re too old.

All with under £30k? 

With the £7.5k lump sum you could do a bit of that, maybe home improvements, and then have the extra £1200 a year to go towards the mortgage payments which would have a similar effect to paying off a lump of it.

Mousey66

theoretica said:

Mousey66 said:

 I ideally would like to pay a chunk off my mortgage, a few home improvements, a better car, and generally better quality of life before we’re too old.

All with under £30k? 

With the £7.5k lump sum you could do a bit of that, maybe home improvements, and then have the extra £1200 a year to go towards the mortgage payments which would have a similar effect to paying off a lump of it.

That is very true, though it also depends what the TV is in December really. If it’s still over 30k I’ll probably take the lump sum and do similar to as you suggest. If it’s below 30k, but obviously not too much I would transfer it then I think.
just the more I can pay off the mortgage the better, I’ve got a decent fixed rate until April, then I imagine I’ll be paying a lot more.

Dazed_and_C0nfused

Mousey66 said:

theoretica said:

Mousey66 said:

 I ideally would like to pay a chunk off my mortgage, a few home improvements, a better car, and generally better quality of life before we’re too old.

All with under £30k? 

With the £7.5k lump sum you could do a bit of that, maybe home improvements, and then have the extra £1200 a year to go towards the mortgage payments which would have a similar effect to paying off a lump of it.

That is very true, though it also depends what the TV is in December really. If it’s still over 30k I’ll probably take the lump sum and do similar to as you suggest. If it’s below 30k, but obviously not too much I would transfer it then I think.
just the more I can pay off the mortgage the better, I’ve got a decent fixed rate until April, then I imagine I’ll be paying a lot more.

But a transfer value of say £29k doesn't mean you will have £29k to spend.

If you take it all in one tax year you would have £7,250 TFLS and £21,750 taxable income.

Which is likely to mean 20% tax or maybe a mid of 20% and 40% depending on your other taxable income. 

So what started as £41,500 ends up being say £24,650.  Or maybe as little as £20k in your hand.

And you will have invoked MPAA limiting any future DC pension contributions.

Mousey66

Dazed_and_C0nfused said:

Mousey66 said:

theoretica said:

Mousey66 said:

 I ideally would like to pay a chunk off my mortgage, a few home improvements, a better car, and generally better quality of life before we’re too old.

All with under £30k? 

With the £7.5k lump sum you could do a bit of that, maybe home improvements, and then have the extra £1200 a year to go towards the mortgage payments which would have a similar effect to paying off a lump of it.

That is very true, though it also depends what the TV is in December really. If it’s still over 30k I’ll probably take the lump sum and do similar to as you suggest. If it’s below 30k, but obviously not too much I would transfer it then I think.
just the more I can pay off the mortgage the better, I’ve got a decent fixed rate until April, then I imagine I’ll be paying a lot more.

But a transfer value of say £29k doesn't mean you will have £29k to spend.

If you take it all in one tax year you would have £7,250 TFLS and £21,750 taxable income.

Which is likely to mean 20% tax or maybe a mid of 20% and 40% depending on your other taxable income. 

So what started as £41,500 ends up being say £24,650.  Or maybe as little as £20k in your hand.

And you will have invoked MPAA limiting any future DC pension contributions.

I don’t mind losing money on it, I’d prefer to free up this pension, as long as the TV is below 30k, to use as I feel would benefit us more. If I take the £7,500 lump sum and just under £1,200 a year I could possibly be dead by the time I’ve had £41,500 anyway!

Kim1965

Could even stick it on the nose of a 3 legged horse.