DB pension

Missjayne

HappyHarry said:

Missjayne said:

My pension was a non contributory pension with my job. I left there in 1993 so what ever I get is a bonus but just wondered why it has gone down so much. If I were to take it yearly I would only get £1,007.76 a year. If I take a lump sum I could do something with it. I have to transfer it first I know. Just wondered why it has gone down. I was told it wasn’t linked to inflation. 

Are you sure you would only get £1,007 a year? Could it be that it was worth £1,007 a year in 1993 and you have had 30 years of inflation to be applied to that? 

hi you are correct that is the total scheme pension £1007.76 the pension amount I will get when I retire at 60 will be £2,113.32 pa. It would take me 44 years to get my current guaranteed value of 88k in 2021-22 it was a value of 130k I so wished I had transferred it and cashed it in then.  So you don’t think it will go up anytime soon. 

Missjayne

daveyjp said:

If the annual pension really is only £1,000 a year I would be surprised the transfer value would be large enough to lose as much as £42k in a year.

It suggests the CETV calculation has a huge multiplier.

My total pension at the current date is £2113.32 pa. 

xylophone

What would be offered as the tax free Pension Commencement Lump Sum?

If you took the option of a PCLS, what would the monthly payment be?

Are you able to answer the question in my previous?

xylophone

Have you obtained a state pension forecast?


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


Presumably your deferred DB pension was contracted out (almost certain that it was).


 If so, was your only contracted out pension between 1978 and 2012 (DC) 0r 2016 (DB)?

Is a COPE shown on your state pension forecast?

jimi_man

As has been pointed out it’s extremely difficult to transfer DB pensions now. Personally I would focus on the positives. That’s £2100 of guaranteed income that is (presumably) going to rise with some measure of inflation every year, so the break even point is likely to be a lot less than 44 years. 

Is it index linked and if so is there a cap? And is there a lump sum attached and if so how much is it?

Missjayne

jimi_man said:

As has been pointed out it’s extremely difficult to transfer DB pensions now. Personally I would focus on the positives. That’s £2100 of guaranteed income that is (presumably) going to rise with some measure of inflation every year, so the break even point is likely to be a lot less than 44 years. 

Is it index linked and if so is there a cap? And is there a lump sum attached and if so how much is it?

jimi_man said:

As has been pointed out it’s extremely difficult to transfer DB pensions now. Personally I would focus on the positives. That’s £2100 of guaranteed income that is (presumably) going to rise with some measure of inflation every year, so the break even point is likely to be a lot less than 44 years. 

Is it index linked and if so is there a cap? And is there a lump sum attached and if so how much is it?

jimi_man said:

As has been pointed out it’s extremely difficult to transfer DB pensions now. Personally I would focus on the positives. That’s £2100 of guaranteed income that is (presumably) going to rise with some measure of inflation every year, so the break even point is likely to be a lot less than 44 years. 

Is it index linked and if so is there a cap? And is there a lump sum attached and if so how much is it?

Why is it so difficult to transfer a DB pension now. Surely if it’s my money I can do what I want with it. 

moedeeb

There are numerous threads on this forum on your question but in summary. 

Defined benefit pensions are generally seen as good pension schemes and there are regulations in place to make certain people don’t take cash alternatives without proper advice.

The advice needs a specially qualified IFA which can be costly partly because the IFA needs to have insurance against people saying they didn’t get appropriate advice e.g once they have run out of money!

The advice can be ignored but you need to get it in the first place and the sum you are talking about is “small” in the grand scheme of things. Very few IFA’s will offer this service mainly because of the insurance costs and risks.

The DB scheme is exactly that there is no pot of your money to take out.  You are simply been offered something to allow the scheme administrators to remove you from the DB pension.

dunstonh

 It would take me 44 years to get my current guaranteed value of 88k in 2021-22 it was a value of 130k I so wished I had transferred it and cashed it in then. 

Where are you getting 44 years from?    An indexed pension will breakeven much earlier than that.
Plus, how much tax free cash is paid on top of the pension?

Why is it so difficult to transfer a DB pension now. Surely if it’s my money I can do what I want with it. 

a) it is not your money.
b) in 9 out of 10 cases, it is unsuitable to transfer out of a DB pension.  We cannot tell yet as we have insufficient information.  However, because it is unlikely to be suitable, there are requirements to protect you from being scammed out of the money or making a very bad choice.

daveyjp

Missjayne said:

HappyHarry said:

Missjayne said:

My pension was a non contributory pension with my job. I left there in 1993 so what ever I get is a bonus but just wondered why it has gone down so much. If I were to take it yearly I would only get £1,007.76 a year. If I take a lump sum I could do something with it. I have to transfer it first I know. Just wondered why it has gone down. I was told it wasn’t linked to inflation. 

Are you sure you would only get £1,007 a year? Could it be that it was worth £1,007 a year in 1993 and you have had 30 years of inflation to be applied to that? 

hi you are correct that is the total scheme pension £1007.76 the pension amount I will get when I retire at 60 will be £2,113.32 pa. It would take me 44 years to get my current guaranteed value of 88k in 2021-22 it was a value of 130k I so wished I had transferred it and cashed it in then.  So you don’t think it will go up anytime soon. 

If you had taken the £130k, invested all of it and now find its worth £88k how would you feel?  Who would you be blaming for your decisions?

That's why transfers are now so difficult.

Sarahspangles

I’ve got pensions that start at 60, 65 and 67. The DB ones are the ones I’m not worrying about because there’s an element of guarantee with them - in my case they will keep up with inflation. Other DB schemes are capped but in normal years (which this isn’t) they will also keep pace with inflation.

Some people like to take a lump sum of part or all of their pension, but if you just put it in savings and admire it, it’s losing spending power fast, because savings tend not to keep pace with inflation. If you think of a pension as more like a guaranteed replacement salary - with cost of living pay rises - that you don’t actually have to work for, you might feel differently about it.