Transfer a small DB Pension or not?

JillyC8

Hi, some advice needed. I have an old deferred DB pension from a part-time job I had years ago. The CTV is just £20,400 with an attached money purchase plan currently worth just over £10,000. The expected pension at age 65 (in 6 years) is forecast at approximately £1200 a year with an approximate £8k lump sum. 

Would it be worth transferring into a DC pension in the hope it will grow? I'm not sure it's worth leaving where it is as it just doesn't increase at all and hasn't for years, although I recognise DB pensions are valuable.

Thanks.

Marcon

JillyC8 said:

Hi, some advice needed. I have an old deferred DB pension from a part-time job I had years ago. The CTV is just £20,400 with an attached money purchase plan currently worth just over £10,000. The expected pension at age 65 (in 6 years) is forecast at approximately £1200 a year with an approximate £8k lump sum. 

Would it be worth transferring into a DC pension in the hope it will grow? I'm not sure it's worth leaving where it is as it just doesn't increase at all and hasn't for years, although I recognise DB pensions are valuable.

Thanks.

Did you leave this 'years ago' job/membership of the employer's pension scheme before 1 January 1991? 

If the answer to that is no, you left on or after 1 January 1991, then the whole of your DB pension is increasing each year in line with the better of the scheme's own rules or statutory revaluation.

Even if you left membership before 1991, there could still be a 'GMP' which increases each year...

Whiterose23

No I left in 2009 after 8 years. I check it regularly and it only grows slightly each year but the CTV has reduced over the past few years.

Marcon

Whiterose23 said:

No I left in 2009 after 8 years. I check it regularly and it only grows slightly each year but the CTV has reduced over the past few years.

CETVs have dropped considerably in the last 3 or 4 years - in some cases they have halved, to reflect market conditions.

daveyjp

There is no 'growth' in a DB pension.

What increases is the promised annual pension payment and how this is calculated will be based on the scheme rules, but usually based on an inflation figure, with possible caps and collars of maximum and minimum increase.

Albermarle

It depends to some extent on how annual increases are calculated and if your spouse( if you have one ) will get some of the pension if you die, but exchanging a guaranteed £1200 pa probably with an increase each year( + £8K lump sum ) for £20K, sounds like a pretty poor deal. 

Whiterose23

I’m divorced so no spouse to consider. I was weighing up the guaranteed £100 a month with the potential of placing it somewhere it might grow but I see your point.

Cobbler_tone

Whiterose23 said:

I’m divorced so no spouse to consider. I was weighing up the guaranteed £100 a month with the potential of placing it somewhere it might grow but I see your point.

When you read about small values/pensions I think it is down to attitude and circumstances, as opposed to numbers on a spreadsheet.
If someone has £100 a month coming in (with growth) it might not make a tangible difference to their overall situation. It could mean someone splashing the lump sum cash on a holiday or replacing their car.

If is purely to try and invest and make more, I'd probably leave it where it is. 

Albermarle

Whiterose23 said:

I’m divorced so no spouse to consider. I was weighing up the guaranteed £100 a month with the potential of placing it somewhere it might grow but I see your point.

The key words are that the DB pension is  guaranteed and that by placing it somewhere else it might grow.

LHW99

Would there be an option to exchange some / all of the lump sum to give you more guaranteed income (if you don't have a specific use for the lump sum?)

Marcon

JillyC8 said:

Hi, some advice needed. I have an old deferred DB pension from a part-time job I had years ago. The CTV is just £20,400 with an attached money purchase plan currently worth just over £10,000. The expected pension at age 65 (in 6 years) is forecast at approximately £1200 a year with an approximate £8k lump sum. 

Would it be worth transferring into a DC pension in the hope it will grow? I'm not sure it's worth leaving where it is as it just doesn't increase at all and hasn't for years, although I recognise DB pensions are valuable.

Thanks.

Whiterose23 said:

No I left in 2009 after 8 years. I check it regularly and it only grows slightly each year but the CTV has reduced over the past few years.

Whiterose23 said:

I’m divorced so no spouse to consider. I was weighing up the guaranteed £100 a month with the potential of placing it somewhere it might grow but I see your point.

Are you posting under 2 different names? I think you'll find forum rules limit you to one!