Deferred pension poor performance

squirrelpie

Download the scheme document for your pension rather than looking at the website itself. It will contain more detail.

Lemon_dr1zzle

The illustrator might not be using hypothetical increases between now and retirement. The scheme I work for doesn’t. 

Walesman

Hello all, merry xmas, I queried the pension with EON who now run the scheme, they have informed me the pension increases in line with RPI up to a max of 2.5% per year, so the amount I was quoted for retirement in 2033 (£4631), looks to be correct. 
They also sent me a quote for taking the pension now £2507 per annum or lump sum £12 & £1800 per annum.

Just interested in what the boards thoughts are on if I should leave the pension as it is, move it or take it early.

This is thankfully not my only pension I have a bigger final salary pension with another employer & some smaller AVC's.

Thanks

Marcon

Walesman said:

Hello all, merry xmas, I queried the pension with EON who now run the scheme, they have informed me the pension increases in line with RPI up to a max of 2.5% per year, so the amount I was quoted for retirement in 2033 (£4631), looks to be correct. 
They also sent me a quote for taking the pension now £2507 per annum or lump sum £12 & £1800 per annum.

Just interested in what the boards thoughts are on if I should leave the pension as it is, move it or take it early.

This is thankfully not my only pension I have a bigger final salary pension with another employer & some smaller AVC's.

Thanks

Nobody here could have a clue what would best suit you, bearing in mind the lack of information about your financial situation, attitude to risk etc etc. It really is a personal decision; there's unlikely to be an 'obvious' best course of action - and if there is, nothing you have posted would enable anyone to work out that's the case, so it would be a lucky guess if anyone did accidentally come to a 'suitable' conclusion!

The transfer value is going to be over £30K, so you'd need to receive regulated advice, which would cost upwards of £5K, before you could transfer it to another scheme.

Dazed_and_C0nfused

Walesman said:

Hello all, merry xmas, I queried the pension with EON who now run the scheme, they have informed me the pension increases in line with RPI up to a max of 2.5% per year, so the amount I was quoted for retirement in 2033 (£4631), looks to be correct. 
They also sent me a quote for taking the pension now £2507 per annum or lump sum £12 & £1800 per annum.

Just interested in what the boards thoughts are on if I should leave the pension as it is, move it or take it early.

This is thankfully not my only pension I have a bigger final salary pension with another employer & some smaller AVC's.

Thanks

Presumably you have missed something there as no one is going to give up £707 of annual pension, which has an element of inflation protection, for £12 😳

Did you mean £12,000?

Walesman

Marcon said:

Walesman said:

Hello all, merry xmas, I queried the pension with EON who now run the scheme, they have informed me the pension increases in line with RPI up to a max of 2.5% per year, so the amount I was quoted for retirement in 2033 (£4631), looks to be correct. 
They also sent me a quote for taking the pension now £2507 per annum or lump sum £12 & £1800 per annum.

Just interested in what the boards thoughts are on if I should leave the pension as it is, move it or take it early.

This is thankfully not my only pension I have a bigger final salary pension with another employer & some smaller AVC's.

Thanks

Nobody here could have a clue what would best suit you, bearing in mind the lack of information about your financial situation, attitude to risk etc etc. It really is a personal decision; there's unlikely to be an 'obvious' best course of action - and if there is, nothing you have posted would enable anyone to work out that's the case, so it would be a lucky guess if anyone did accidentally come to a 'suitable' conclusion!

The transfer value is going to be over £30K, so you'd need to receive regulated advice, which would cost upwards of £5K, before you could transfer it to another scheme.

Hi thanks for the reply, sorry I posted in haste this morning, it wasn't a Q necessarily on my circumstances, more the math, with the current deferment being capped at 2.5% of RPI & the pension if taken capped at 5% RPI.
That would be 8yrs so just trying to work out if the gap would be so large come 2033, assuming inflation settles back to its 3-4% norms.

Walesman

Dazed_and_C0nfused said:

Walesman said:

Hello all, merry xmas, I queried the pension with EON who now run the scheme, they have informed me the pension increases in line with RPI up to a max of 2.5% per year, so the amount I was quoted for retirement in 2033 (£4631), looks to be correct. 
They also sent me a quote for taking the pension now £2507 per annum or lump sum £12 & £1800 per annum.

Just interested in what the boards thoughts are on if I should leave the pension as it is, move it or take it early.

This is thankfully not my only pension I have a bigger final salary pension with another employer & some smaller AVC's.

Thanks

Presumably you have missed something there as no one is going to give up £707 of annual pension, which has an element of inflation protection, for £12 😳

Did you mean £12,000?

Yes £12k sorry posting in haste & assuming you experts auto correct, apologies.

bjorn_toby_wilde

Moving it is unlikely to be a good option. There are lots of threads on this board about transferring DB pensions if you search. It’s expensive, complicated and unlikely to be in your best interests, hence the high fees for the advice which you would need to take if you were to go down that line.

Whether or not it would be a good idea to take it early really depends on your personal circumstances, which we don’t know. Even if we did, it’s not a straightforward decision.

If you did take it before NRD then bear in mind that the annual pension will normally be reduced (usually anywhere between 3.5 and 5.5% for every year early) to reflect the fact that you will be paid the pension over a longer period.

Secret2ndAccount

Inflatoin since 2019 has averaged about 6%, so you are up against your cap. It's currently around 3.5% If you foresee it staying above 2.5% for a while, that would be a reason to start payment now. The actuarial reduction for taking it early seems to be in the ballpark - you get less money for more years. If you expect to live to a very old age, and keep spending, that would be a reason to wait.
Your commutation rate - pension/lump sum is 17. That's not great, especially in your fifties, but it's not completely horrible. If you were to be a 40% taxpayer in retirment, the lump sum would look much more attractive.
So, without knowing anything about you, I would lean towards a smaller lump sum, and a larger pension. As for taking it now vs later, you need to take a look at your life plan. Will it benefit you more now, or later? Will it push you into higher rate tax if you take it? Then maybe your picture will be clearer.