My pension calculations

Mr_Jones

Looking for some general advice with regards to my pension.

 

I am 57 and have worked for the same company all my working

Assume I retire at 67

My Current salary = £48000

 

State Pension - as per the Government website it states I should get £11,541 per annum 

 

Company Final Salary - scheme has closed 10 years ago (they switched it to a DC scheme) and it is locked at £7,089 per annum plus annual increase - available to me from 65

 

Company DC Scheme - scheme currently holds a fund of £135,000 - this in itself would give me an annuity of around £5500 per annum if taken now.  Approx. £500 is going in there per month including an AVC so this pot should reach around £200,000 so an annuity could pay approx. £8500 per annum

 

Zurich Private Pension - I no longer contribute.  Scheme currently holds £50,000 - this would give an annuity of around £2000 per annum if taken now

 

I am thinking drawback more likely for me than annuities although no decision has been made on this

 

My calculation therefore is these 4 pensions should give me around £30K at 67 - are my calculations about correct ?

 

 

 

 

Dazed_and_C0nfused

Well I get ~£29k but I suspect your £7,089 is using a different valuation point so that is probably where we differ.

Are you certain that £7,089 figure is correct?  It seems very low if you mean you have worked for the same company for nearly 40 years.

When the DB pension closed was the link to your final salary maintained or did it become a deferred pension that now has some form of inflation protection?  Being "locked" at £7,089 would be unusual.

Doonhamer

Would a pot of £135k plus £500 a month for 10 years not get you closer to £300k than the £200k you mention?

Flugelhorn

the "annual increase" on the DB pension could make a significant difference - have you got the details of what that entials?

Mr_Jones

Thanks for your reply

I started working for the company aged 22 after college and stayed until 30 - at that time I took out a private pension with Allied Dunbar now Zurich = 50K currently.  I don't pay into that currently but it increases as per the funds it is invested in

I re-joined at 31 and still there now at 57.  When I came back I joined their DC scheme from 1998 to 2014 when it closed.  The document states My Defined Benefit Pension value = £7089 so this just covers 16 years of my working life

The new DC scheme opened in 2014 and in 11 years I have build up a pot of £135K

I don't believe my DB pension is linked to my current salary - I am told it increases by a small percentage each year linked to inflation.  The document states Membership Status - Special Deferred

Dazed_and_C0nfused

Mr_Jones said:

Thanks for your reply

I started working for the company aged 22 after college and stayed until 30 - at that time I took out a private pension with Allied Dunbar now Zurich = 50K currently.  I don't pay into that currently but it increases as per the funds it is invested in

I re-joined at 31 and still there now at 57.  When I came back I joined their DC scheme from 1998 to 2014 when it closed.  The document states My Defined Benefit Pension value = £7089 so this just covers 16 years of my working life

The new DC scheme opened in 2014 and in 11 years I have build up a pot of £135K

I don't believe my DB pension is linked to my current salary - I am told it increases by a small percentage each year linked to inflation.  The document states Membership Status - Special Deferred

I think you could well be underplaying the annual pension the DB pension will pay.

I would say it's well worth you finding out exactly how that works as even if the annual pension was expected to be £7,089 10 years ago the annual revaluation will have a noticeable impact.

Also worth checking exactly how it revalues.

Flugelhorn

Dazed_and_C0nfused said:

Also worth checking exactly how it revalues.

I agree this is the bit of info that is needed. DH deferred his NHS pension for 12 years and by that time it was 50% higher than when he left job - there have probably been some higher increases over the last few years so OP's pension may well have increased more

Albermarle

 so this pot should reach around £200,000 so an annuity could pay approx. £8500 per annum

Probably current annuity rates will slowly drop over the next year or two ( but might not) . Also it depends a lot on the type of annuity ( inflation linked? spouse pension ? etc )

 

Zurich Private Pension - I no longer contribute.  Scheme currently holds £50,000 - this would give an annuity of around £2000 per annum if taken now

Zurich have largely withdrawn from the pensions market and have old fashioned products. If you decide to drawdown this pension, then probably best to move it first.

 

Phossy

To echo a couple of others, I'd get an update on your DB pensions worth. I have a deferred pension from 2015 and it has grown by ~ 28% since then.

Albermarle

Phossy said:

To echo a couple of others, I'd get an update on your DB pensions worth. I have a deferred pension from 2015 and it has grown by ~ 28% since then.

The problem can be getting this info out of some DB schemes. It can be easier to calculate an approx amount yourself, if you have a copy of the scheme rules and inflation figures can be googled. 

DRS1

You are doing your sums on a very conservative basis which is probably sensible.  One question is why are doing them?  Is it to work out if you have enough to live on at 67 if everything carries on as is?  Or is it to see if you should be taking some action now?

If it is action now then one place to look would be the Zurich pension - what is it invested in what are the charges?  Would it do better if eg it was transferred into your main DC scheme?  Or to a SIPP if you don't want all your eggs in one basket.  From what @Albemarle says you will probably need to transfer it sometime to get drawdown.

Another thing to check is what happens when you retire under the main DC scheme?  If it is an occupational scheme does it do drawdown or will you need to set up a new scheme at retirement to handle that?