Options for DB Pension upon retirement

gammyleg

Hi,

After an 18 month wait I have finally received my CETV from my DB pension administrator. 

In short, it values the transfer @ £173k and estimates an annual income from this pension at about £4,500k per year on retirement, or less if I extracted some of my 25% tax free allowance.

In my simple world, I divided the CETV value by the annual return from the annuity to see how long the pot will last which equates to roughly 39 years or the ripe old age of 101 ( very unlikely to reach that age )

What other options are available to me as far as investing the fund elsewhere or is the annuity route the best choice?

Dazed_and_C0nfused

gammyleg said:

Hi,

After an 18 month wait I have finally received my CETV from my DB pension administrator. 

In short, it values the transfer @ £173k and estimates an annual income from this pension at about £4,500k per year on retirement, or less if I extracted some of my 25% tax free allowance.

In my simple world, I divided the CETV value by the annual return from the annuity to see how long the pot will last which equates to roughly 39 years or the ripe old age of 101 ( very unlikely to reach that age )

What other options are available to me as far as investing the fund elsewhere or is the annuity route the best choice?

What is the current pension accrued amount?

I suspect you already know this but there is no pot.  The £173k is the amount the scheme is willing to give you to get out of paying the pension you have accrued.

With most DB schemes there is no 25% tax free element like you get with a DC pension.  There is a (tax free) PCLS which will be based on the scheme rules.

What is the rate applied for giving up some pension in return for a PCLS?

xylophone

By "annuity" presumably you mean the scheme pension?

Have you reached Normal Scheme Pension Age?

How does the pension increase in payment?

Dazed_and_C0nfused

xylophone said:

By "annuity" presumably you mean the scheme pension?

Have you reached Normal Scheme Pension Age?

How does the pension increase in payment?

Interesting!  I'd read that comment as referring to taking the £173k and then (eventually) buying an annuity with it.

Hopefully the op will clarify.

What other options are available to me as far as investing the fund elsewhere or is the annuity route the best choice?

Keep_pedalling

You best option is almost certainly to leave it where it is. Did you factor the index links rises associated with your DB scheme?

HappyHarry

That’s a very high CETV for a £4500pa pension. 

Are you sure that is the value of the pension at retirement and not the value as it was at the date you left service?

Albermarle

gammyleg said:

Hi,

After an 18 month wait I have finally received my CETV from my DB pension administrator. 

In short, it values the transfer @ £173k and estimates an annual income from this pension at about £4,500k per year on retirement, or less if I extracted some of my 25% tax free allowance.

In my simple world, I divided the CETV value by the annual return from the annuity to see how long the pot will last which equates to roughly 39 years or the ripe old age of 101 ( very unlikely to reach that age )

What other options are available to me as far as investing the fund elsewhere or is the annuity route the best choice?

Are you aware that transferring the CETV out of a DB pension is not an easy process and a very expensive one?
If you search this forum for 'DB Transfer' you should see some interesting threads.

That’s a very high CETV for a £4500pa pension. 

Are you sure that is the value of the pension at retirement and not the value as it was at the date you left service?

OP - As above something does not add up. Either you are using an old CETV ( they have halved in recent times) or you as above the £4500 is when you left the company, as it will ahve been uprated for inflation in the meantime.

Dazed_and_C0nfused

Albermarle said:

gammyleg said:

Hi,

After an 18 month wait I have finally received my CETV from my DB pension administrator. 

In short, it values the transfer @ £173k and estimates an annual income from this pension at about £4,500k per year on retirement, or less if I extracted some of my 25% tax free allowance.

In my simple world, I divided the CETV value by the annual return from the annuity to see how long the pot will last which equates to roughly 39 years or the ripe old age of 101 ( very unlikely to reach that age )

What other options are available to me as far as investing the fund elsewhere or is the annuity route the best choice?

Are you aware that transferring the CETV out of a DB pension is not an easy process and a very expensive one?
If you search this forum for 'DB Transfer' you should see some interesting threads.

That’s a very high CETV for a £4500pa pension. 

Are you sure that is the value of the pension at retirement and not the value as it was at the date you left service?

OP - As above something does not add up. Either you are using an old CETV ( they have halved in recent times) or you as above the £4500 is when you left the company, as it will ahve been uprated for inflation in the meantime.

I guess there is third option, the £4,500 is the value when leaving the scheme inclusive of subsequent revaluation to when the CETV was produced i.e. it is the current value, which isn't what the op originally seem to be saying.

In short, it values the transfer @ £173k and estimates an annual income from this pension at about £4,500k per year on retirement

tacpot12

Your investment options will probably all be subject to a safe withdrawal rattle of no more than 5% (assuming you have a full state pension). This means you would receive nearly double the retirement income offered by your DB pension. (Assuming £4500 is the amount you would start to receive at retirement). 

So it would seem to be worth getting the professional advice from a pensions specialist to see if they will recommend that you transfer out of your DB scheme. Expect it to take another 18 months for your advisor to get another CETV, unless they are prepared to use the one you have obtained, which I doubt they will. 

Linton

gammyleg said:

Hi,

After an 18 month wait I have finally received my CETV from my DB pension administrator. 

In short, it values the transfer @ £173k and estimates an annual income from this pension at about £4,500k per year on retirement, or less if I extracted some of my 25% tax free allowance.

In my simple world, I divided the CETV value by the annual return from the annuity to see how long the pot will last which equates to roughly 39 years or the ripe old age of 101 ( very unlikely to reach that age )

What other options are available to me as far as investing the fund elsewhere or is the annuity route the best choice?

Are you aware that to transfer a DB pension of this size you will need to pay for advice from an IFA who will almost certainly recommend that you dont transfer, unless you have severely life-limiting ill health or the pension is insignificant compared with other income/wealth you may have in retirement..

Marcon

tacpot12 said:

Your investment options will probably all be subject to a safe withdrawal rattle of no more than 5% (assuming you have a full state pension). This means you would receive nearly double the retirement income offered by your DB pension. (Assuming £4500 is the amount you would start to receive at retirement). 

So it would seem to be worth getting the professional advice from a pensions specialist to see if they will recommend that you transfer out of your DB scheme. 

Doesn't matter what the advice says: the requirement is for the member to receive advice, not follow it (although listening to your adviser is no bad idea!).

tacpot12 said:

Expect it to take another 18 months for your advisor to get another CETV, unless they are prepared to use the one you have obtained, which I doubt they will. 

A scheme has 3 months to provide a CETV when requested to do so, unless the member has had a CETV within the previous 12 months (they are only entitled to one quote, free, per 12 month period. Some schemes allow more than one quote, but may charge for quotes in excess of the one 'free' per year). Occasionally schemes have a 'valid reason' for taking longer than 3 months eg factors are being reviewed. We seem to have been through all this with OP on an earlier thread: https://forums.moneysavingexpert.com/discussion/6475858/how-long-should-i-wait-for-a-cev/p1

Advice in respect of a possible transfer is specific to a valid transfer value - and a CETV is only guaranteed for 3 months from the date of calculation.

HappyHarry said:

That’s a very high CETV for a £4500pa pension. 

Are you sure that is the value of the pension at retirement and not the value as it was at the date you left service?

The delay of 18 months is excessive, even allowing for the scheme taking its time to revalue the factors. Possibly any quotes requested and 'in the system' before the review are being calculated on old factors/conditions to compensate for the delay?