Success Stories - Pensions

Cobbler_tone

MallyGirl said:

Cobbler_tone said:

Not sure it is a success story but I managed to keep my pension post divorce...little else, but that was my motivation!

In 2019 my DB pot was valued at £670k...this year it is £420k, which was similar to last year so I want this to pick up a bit. This scheme was closed in 2021.
With bonuses, a small transfer and increasing contributions I have £85k in my active DC pension and contributing around £24k per year.

The conundrum I have is that I want to retire ASAP, I'm 55, don't own a property, although have a stable fiance I live with who is mortgage free. The DB scheme doesn't pay enough to retire now, so I could cash in and waiting for an imminent bridging option to be introduced.
 
The one thing I see time and time again is that in those last 10 years+ of life you don't actually spend much.
We can all fall into that trap of trying to build and build for our future, when in fact we have enough to enjoy those later years. 

transfer values have come down a lot.
what do you mean by 'cash in'?
You might not spend much in your last 10 years - or you might need to fund significant care

Sorry, 'cash in' as transfer the DB value into a more accessible pot to allow flexibility. I know several people who have done this successfully. The transfer values are thanks to that infamous budget. My preference would be to access the DB scheme more flexibly, which will soon be the case. 

As for the last years, I certainly don't mean 55! It is more about when you stop having the big holidays, no longer buying new cars, basically eating well and having a warm house 365.
I personally think it is a bit sad if one of the main motivations of having (to pick a figure) £500k left in the bank is to ensure you can fund private care. I've been close to a couple of absolute disasters recently of people funding their own care.
I guess it comes down to personal outlook but that isn't going to be me and one of the reasons people think they need to work until they drop.

barnstar2077

If the transfer value of your DB scheme has dropped drastically, while presumably the benefits it will provide have stayed the same or increased, then trading it in for the cash doesn't sound like a good deal to me!

Can you not put some money in an ISA to use until you can access the DC pension at 57, and see what age you can take the DB at, even reduced?

If a reduced DB and state pension are enough to live on, then you need only concentrate your efforts on getting from 55/57 to 67.

MallyGirl

Cobbler_tone said:

MallyGirl said:

Cobbler_tone said:

Not sure it is a success story but I managed to keep my pension post divorce...little else, but that was my motivation!

In 2019 my DB pot was valued at £670k...this year it is £420k, which was similar to last year so I want this to pick up a bit. This scheme was closed in 2021.
With bonuses, a small transfer and increasing contributions I have £85k in my active DC pension and contributing around £24k per year.

The conundrum I have is that I want to retire ASAP, I'm 55, don't own a property, although have a stable fiance I live with who is mortgage free. The DB scheme doesn't pay enough to retire now, so I could cash in and waiting for an imminent bridging option to be introduced.
 
The one thing I see time and time again is that in those last 10 years+ of life you don't actually spend much.
We can all fall into that trap of trying to build and build for our future, when in fact we have enough to enjoy those later years. 

transfer values have come down a lot.
what do you mean by 'cash in'?
You might not spend much in your last 10 years - or you might need to fund significant care

Sorry, 'cash in' as transfer the DB value into a more accessible pot to allow flexibility. I know several people who have done this successfully. The transfer values are thanks to that infamous budget. My preference would be to access the DB scheme more flexibly, which will soon be the case. 

Recently? You are unlikely to get a positive recommendation to transfer so are probably constrained to the insistent client route via a stakeholder pension these days.

Cobbler_tone

barnstar2077 said:

If a reduced DB and state pension are enough to live on, then you need only concentrate your efforts on getting from 55/57 to 67.

I think that is the route I will take. Pile into my DC scheme for a couple more years and then use that (via lump sum and drawdown) for a couple of years before taking the DB pension (probably around 60) through to state pension. The downside with DB being that if you pop your clogs after a couple of years no-one benefits if you are not married/civil partner, or at the mercy of the trustees. I find that extremely antiquated in 2024.
The thing I always think reading any of these forums is that life and finances should become a lot simpler when you retire!  

Unclefoobar

Cobbler_tone said:

 
The one thing I see time and time again is that in those last 10 years+ of life you don't actually spend much.
We can all fall into that trap of trying to build and build for our future, when in fact we have enough to enjoy those later years. 

I agree 100% As someone in their early 50's with parents in their 80's, they lead a very sedentary life with little need to spend. I hope to reduce my hours aged in 55-58, then finish completely. Enjoy it while I still can 

pterri

Cobbler_tone said:

barnstar2077 said:

If a reduced DB and state pension are enough to live on, then you need only concentrate your efforts on getting from 55/57 to 67.

I think that is the route I will take. Pile into my DC scheme for a couple more years and then use that (via lump sum and drawdown) for a couple of years before taking the DB pension (probably around 60) through to state pension. The downside with DB being that if you pop your clogs after a couple of years no-one benefits if you are not married/civil partner, or at the mercy of the trustees. I find that extremely antiquated in 2024.
The thing I always think reading any of these forums is that life and finances should become a lot simpler when you retire!  

Disagree, one reason why DBs are so generous (guaranteed index linked for life) is because the DB fund is used to benefit those who paid in. Its insurance. Those who pop off early help pay for those who live to 100. If you were able to pass 9n your contributions to someone else not directly dependant  then the schemes would collapse. 

barnstar2077

pterri said:

Cobbler_tone said:

barnstar2077 said:

If a reduced DB and state pension are enough to live on, then you need only concentrate your efforts on getting from 55/57 to 67.

I think that is the route I will take. Pile into my DC scheme for a couple more years and then use that (via lump sum and drawdown) for a couple of years before taking the DB pension (probably around 60) through to state pension. The downside with DB being that if you pop your clogs after a couple of years no-one benefits if you are not married/civil partner, or at the mercy of the trustees. I find that extremely antiquated in 2024.
The thing I always think reading any of these forums is that life and finances should become a lot simpler when you retire!  

Disagree, one reason why DBs are so generous (guaranteed index linked for life) is because the DB fund is used to benefit those who paid in. Its insurance. Those who pop off early help pay for those who live to 100. If you were able to pass 9n your contributions to someone else not directly dependant  then the schemes would collapse. 

Yes, I have seen similar posts on the internet about how insurance companies should give you some of the money back if you don't make a claim.  Which would result in the insurance company putting the cost up in order to give it back to you later.  Effectively creating a cheap loan from you to the insurance company with no benefit to the individual at all.

Cobbler_tone

pterri said:

Cobbler_tone said:

barnstar2077 said:

If a reduced DB and state pension are enough to live on, then you need only concentrate your efforts on getting from 55/57 to 67.

I think that is the route I will take. Pile into my DC scheme for a couple more years and then use that (via lump sum and drawdown) for a couple of years before taking the DB pension (probably around 60) through to state pension. The downside with DB being that if you pop your clogs after a couple of years no-one benefits if you are not married/civil partner, or at the mercy of the trustees. I find that extremely antiquated in 2024.
The thing I always think reading any of these forums is that life and finances should become a lot simpler when you retire!  

Disagree, one reason why DBs are so generous (guaranteed index linked for life) is because the DB fund is used to benefit those who paid in. Its insurance. Those who pop off early help pay for those who live to 100. If you were able to pass 9n your contributions to someone else not directly dependant  then the schemes would collapse. 

That's why pensions are so individual and never 'one size fits all'
A DB pension could pay a full £20k a year for life (no lump sum taken) or have a transfer value of £450k. If you have no spouse but have kids you want to benefit it could be a better option. It's a balanced decision on circumstances, health and approach to risk. You also have to factor in state pension and likely outgoings. 
I agree that a DB pension is worth its weight in gold, hence why they are rare these days. Between 1995-2021 the total contributions (with mine at 8%) were 49%!

Sarahspangles

barnstar2077 said:

pterri said:

Disagree, one reason why DBs are so generous (guaranteed index linked for life) is because the DB fund is used to benefit those who paid in. Its insurance. Those who pop off early help pay for those who live to 100. If you were able to pass 9n your contributions to someone else not directly dependant  then the schemes would collapse. 

Yes, I have seen similar posts on the internet about how insurance companies should give you some of the money back if you don't make a claim.  Which would result in the insurance company putting the cost up in order to give it back to you later.  Effectively creating a cheap loan from you to the insurance company with no benefit to the individual at all.

Agree, OH and I have pensions in order to provide for our old age.  I’m already hearing that people are accessing their pension lump sums to fund Bank of Mum and Dad gifts/loans. 

pterri

I’ve seen some talk in the FT for some DBs that are well in surplus. There’s an argument that as well as the employers/employees contribution being reduced that the some of the surplus could be returned to pensioners and employers. I doubt that would happen? The surplus would have to be so large before the risk of future underfunding was taken into account.