Financial Advice for Cashing in a DB Pension

Silvertabby

Not a penalty - but an actuarial reduction to reflect that the pension will be taken early, and therefore for a longer period. 

Just a thought, but both of these small DBs are either private sector or LGPS aren't they?   

Blumonday

Silvertabby said:

Not a penalty - but an actuarial reduction to reflect that the pension will be taken early, and therefore for a longer period. 

Just a thought, but both of these small DBs are either private sector or LGPS aren't they?   

Both private sector. Both schemes are now closed.

Blumonday

TheSpectator said:

So what are these tansfer valuesof £35k and £55k paying out as an actual pension. Do they come with a lump sum?

Both come with the option of a 25% lumps sum. The £35k one is £9,760 lump sum and annual income of £1,464. I don't have the other figures for the larger scheme to hand.

Marcon

Blumonday said:

Marcon said:

Blumonday said:

Taking our main pension pots early has a 9% penalty each year which will lose us more income than cashing in these plans and living off them for a few years. We've modelled it all out - like I say we are both qualified accountants - and believe it is the best option for our current plans. I will have a search on DB transfers thanks.

9% each year is exceptionally high. Is that actually enshrined in the Trust Deed & Rules? If not, I'd be writing to the trustees and asking them when they last reviewed their early retirement factors and how such a big reduction can still offer members fair value.  

That's over two pension schemes - one is 4% penalty and one 5%.

You're an accountant...that's not 9% when you set it against the fact there are two income streams. Is it possible you've over-egged the 'reduction' pudding? With current interest rates, getting something in the same sort of ball park might not be that difficult, especially if you took the pension with the lower reduction rate. What are the respective commutation rates like for each scheme? That might be another consideration which could help you achieve your objective without shelling out upwards of £10K for financial advice.

Marcon

Blumonday said:

TheSpectator said:

So what are these tansfer valuesof £35k and £55k paying out as an actual pension. Do they come with a lump sum?

Both come with the option of a 25% lumps sum. The £35k one is £9,760 lump sum and annual income of £1,464. I don't have the other figures for the larger scheme to hand.

£9,760 isn't 25% of 35K (transfer values and capital values aren't the same thing, of course...). Evern so, are you quite sure you've done all your calculations based on the fantasyland of pensions, rather than your normal (and real world!) accounting numbers?

FIREDreamer

Dazed_and_C0nfused said:

Blumonday said:

Marcon said:

Blumonday said:

Taking our main pension pots early has a 9% penalty each year which will lose us more income than cashing in these plans and living off them for a few years. We've modelled it all out - like I say we are both qualified accountants - and believe it is the best option for our current plans. I will have a search on DB transfers thanks.

9% each year is exceptionally high. Is that actually enshrined in the Trust Deed & Rules? If not, I'd be writing to the trustees and asking them when they last reviewed their early retirement factors and how such a big reduction can still offer members fair value.  

That's over two pension schemes - one is 4% penalty and one 5%.

So not 9% by any stretch of the imagination.

Unless you are a Daily Express journalist …

bjorn_toby_wilde

FIREDreamer said:

Dazed_and_C0nfused said:

Blumonday said:

Marcon said:

Blumonday said:

Taking our main pension pots early has a 9% penalty each year which will lose us more income than cashing in these plans and living off them for a few years. We've modelled it all out - like I say we are both qualified accountants - and believe it is the best option for our current plans. I will have a search on DB transfers thanks.

9% each year is exceptionally high. Is that actually enshrined in the Trust Deed & Rules? If not, I'd be writing to the trustees and asking them when they last reviewed their early retirement factors and how such a big reduction can still offer members fair value.  

That's over two pension schemes - one is 4% penalty and one 5%.

So not 9% by any stretch of the imagination.

Unless you are a Daily Express journalist …

And she’s a Senior Personal Finance Reporter!!!

QrizB

Marcon said:

Blumonday said:

Marcon said:

Blumonday said:

Taking our main pension pots early has a 9% penalty each year which will lose us more income than cashing in these plans and living off them for a few years. We've modelled it all out - like I say we are both qualified accountants - and believe it is the best option for our current plans. I will have a search on DB transfers thanks.

9% each year is exceptionally high. Is that actually enshrined in the Trust Deed & Rules? If not, I'd be writing to the trustees and asking them when they last reviewed their early retirement factors and how such a big reduction can still offer members fair value.  

That's over two pension schemes - one is 4% penalty and one 5%.

You're an accountant...that's not 9% ...

My immediate thought was "are you sure you're an accountant?" Followed swiftly by "I'm glad you're not *my* accountant!"

Marcon

Blumonday said:

We are both qualified accountants but I assume that won't count for anything or provide any alternative approach? 

I think OP has just provided their own alternative approach! Clearly weighted averages don't feature any more in their world...

DRS1

Blumonday said:

Marcon said:

Blumonday said:

Taking our main pension pots early has a 9% penalty each year which will lose us more income than cashing in these plans and living off them for a few years. We've modelled it all out - like I say we are both qualified accountants - and believe it is the best option for our current plans. I will have a search on DB transfers thanks.

9% each year is exceptionally high. Is that actually enshrined in the Trust Deed & Rules? If not, I'd be writing to the trustees and asking them when they last reviewed their early retirement factors and how such a big reduction can still offer members fair value.  

That's over two pension schemes - one is 4% penalty and one 5%.

Are you sure you are accountants?