Interesting report about retirement lifestyle (Quilter Retirement Lifestyle Report 2025)

hugheskevi

Silvertabby said:

zagfles said:

Albermarle said:

ewaste said:

I'm pretty sure it's saying that of those who took part in the survey and of those who had previously transferred DB to DC, 35% had done so for potential inheritance tax reasons. That makes perfect sense as it's often a reason for people to transfer out of a DB scheme.  

Well it says this>

Our research found that a little over a third (35%) of retirees chose to transfer out their defined benefit pension into a defined contribution pot in retirement. Of this group, 40% did so because they wanted to pass it on to family in a tax-efficient way.

It doesn't surprise me. A lot of people look at their pension statement and see a smallish annual amount say £15k and then see a massive transfer amount say £500k and they would rather have half a million up than £15k a year. 

It's like people in schemes like the LGPS who take lump sums at a ridiculous commutation rate of 12:1, people see a large lump sum as more valuable than a guaranteed index linked income. 

Unless things have changed since I retired over 90% of LGPS pensioners take the maximum tax free lump sum.  And many still do transfer out to DC schemes, despite the low transfer factors (set by GAD) used.  

The Scheme Valuation reports show that about 80% of the maximum possible lump sum that could be taken across all scheme members is selected by members. 

Members usually either select standard (minimum) lump sum or maximum lump sum, it is rare that a member chooses a specific amount higher than than the minimum but less than the maximum.

So that all means that about 4 out of every 5 retiring from public service pension schemes choose to take the maximum possible lump sum, despite the dire commutation rate of 12:1.

So nothing has changed. 

Albermarle

SVaz said:

For the beneficiaries of a DC pot after 2027,    having 60% of something is far better than getting a big fat zero,  which is what people who aren’t spouses or dependent children would get from a DB.  Even spouses generally only get a 50% . 

That is not really a fair comparison, as on the other side the DB pensioner could get decades of guaranteed income increasing each year, whilst the DC pensioner is partly at least at the mercy of the markets.

Silvertabby

hugheskevi said:

Silvertabby said:

zagfles said:

Albermarle said:

ewaste said:

I'm pretty sure it's saying that of those who took part in the survey and of those who had previously transferred DB to DC, 35% had done so for potential inheritance tax reasons. That makes perfect sense as it's often a reason for people to transfer out of a DB scheme.  

Well it says this>

Our research found that a little over a third (35%) of retirees chose to transfer out their defined benefit pension into a defined contribution pot in retirement. Of this group, 40% did so because they wanted to pass it on to family in a tax-efficient way.

It doesn't surprise me. A lot of people look at their pension statement and see a smallish annual amount say £15k and then see a massive transfer amount say £500k and they would rather have half a million up than £15k a year. 

It's like people in schemes like the LGPS who take lump sums at a ridiculous commutation rate of 12:1, people see a large lump sum as more valuable than a guaranteed index linked income. 

Unless things have changed since I retired over 90% of LGPS pensioners take the maximum tax free lump sum.  And many still do transfer out to DC schemes, despite the low transfer factors (set by GAD) used.  

The Scheme Valuation reports show that about 80% of the maximum possible lump sum that could be taken across all scheme members is selected by members. 

Members usually either select standard (minimum) lump sum or maximum lump sum, it is rare that a member chooses a specific amount higher than than the minimum but less than the maximum.

So that all means that about 4 out of every 5 retiring from public service pension schemes choose to take the maximum possible lump sum, despite the dire commutation rate of 12:1.

So nothing has changed. 

Most of those who took the standard lump sum used AVCs to top up their tax free cash.  Cases of standard lump sums without AVCs were very rare.

But this helps to keep the scheme affordable.  

michaels

hugheskevi said:

Silvertabby said:

zagfles said:

Albermarle said:

ewaste said:

I'm pretty sure it's saying that of those who took part in the survey and of those who had previously transferred DB to DC, 35% had done so for potential inheritance tax reasons. That makes perfect sense as it's often a reason for people to transfer out of a DB scheme.  

Well it says this>

Our research found that a little over a third (35%) of retirees chose to transfer out their defined benefit pension into a defined contribution pot in retirement. Of this group, 40% did so because they wanted to pass it on to family in a tax-efficient way.

It doesn't surprise me. A lot of people look at their pension statement and see a smallish annual amount say £15k and then see a massive transfer amount say £500k and they would rather have half a million up than £15k a year. 

It's like people in schemes like the LGPS who take lump sums at a ridiculous commutation rate of 12:1, people see a large lump sum as more valuable than a guaranteed index linked income. 

Unless things have changed since I retired over 90% of LGPS pensioners take the maximum tax free lump sum.  And many still do transfer out to DC schemes, despite the low transfer factors (set by GAD) used.  

The Scheme Valuation reports show that about 80% of the maximum possible lump sum that could be taken across all scheme members is selected by members. 

Members usually either select standard (minimum) lump sum or maximum lump sum, it is rare that a member chooses a specific amount higher than than the minimum but less than the maximum.

So that all means that about 4 out of every 5 retiring from public service pension schemes choose to take the maximum possible lump sum, despite the dire commutation rate of 12:1.

So nothing has changed. 

Don't forget the PCLS is tax free so worth a bit more than 12x if you are a BR tax payer and even more if you are a higher rate tax payer - and that is even before we start talking about impaired life expectancy and potential inheritance.

zagfles

michaels said:

hugheskevi said:

Silvertabby said:

zagfles said:

Albermarle said:

ewaste said:

I'm pretty sure it's saying that of those who took part in the survey and of those who had previously transferred DB to DC, 35% had done so for potential inheritance tax reasons. That makes perfect sense as it's often a reason for people to transfer out of a DB scheme.  

Well it says this>

Our research found that a little over a third (35%) of retirees chose to transfer out their defined benefit pension into a defined contribution pot in retirement. Of this group, 40% did so because they wanted to pass it on to family in a tax-efficient way.

It doesn't surprise me. A lot of people look at their pension statement and see a smallish annual amount say £15k and then see a massive transfer amount say £500k and they would rather have half a million up than £15k a year. 

It's like people in schemes like the LGPS who take lump sums at a ridiculous commutation rate of 12:1, people see a large lump sum as more valuable than a guaranteed index linked income. 

Unless things have changed since I retired over 90% of LGPS pensioners take the maximum tax free lump sum.  And many still do transfer out to DC schemes, despite the low transfer factors (set by GAD) used.  

The Scheme Valuation reports show that about 80% of the maximum possible lump sum that could be taken across all scheme members is selected by members. 

Members usually either select standard (minimum) lump sum or maximum lump sum, it is rare that a member chooses a specific amount higher than than the minimum but less than the maximum.

So that all means that about 4 out of every 5 retiring from public service pension schemes choose to take the maximum possible lump sum, despite the dire commutation rate of 12:1.

So nothing has changed. 

Don't forget the PCLS is tax free so worth a bit more than 12x if you are a BR tax payer and even more if you are a higher rate tax payer - and that is even before we start talking about impaired life expectancy and potential inheritance.

But even so it's still pretty dire, with 80% opting for it I doubt most are thinking about impaired life expectancy or inheritance, more likely they just see big £££ signs and not even attempt to work out whether it's good value or not. 

michaels

zagfles said:

michaels said:

hugheskevi said:

Silvertabby said:

zagfles said:

Albermarle said:

ewaste said:

I'm pretty sure it's saying that of those who took part in the survey and of those who had previously transferred DB to DC, 35% had done so for potential inheritance tax reasons. That makes perfect sense as it's often a reason for people to transfer out of a DB scheme.  

Well it says this>

Our research found that a little over a third (35%) of retirees chose to transfer out their defined benefit pension into a defined contribution pot in retirement. Of this group, 40% did so because they wanted to pass it on to family in a tax-efficient way.

It doesn't surprise me. A lot of people look at their pension statement and see a smallish annual amount say £15k and then see a massive transfer amount say £500k and they would rather have half a million up than £15k a year. 

It's like people in schemes like the LGPS who take lump sums at a ridiculous commutation rate of 12:1, people see a large lump sum as more valuable than a guaranteed index linked income. 

Unless things have changed since I retired over 90% of LGPS pensioners take the maximum tax free lump sum.  And many still do transfer out to DC schemes, despite the low transfer factors (set by GAD) used.  

The Scheme Valuation reports show that about 80% of the maximum possible lump sum that could be taken across all scheme members is selected by members. 

Members usually either select standard (minimum) lump sum or maximum lump sum, it is rare that a member chooses a specific amount higher than than the minimum but less than the maximum.

So that all means that about 4 out of every 5 retiring from public service pension schemes choose to take the maximum possible lump sum, despite the dire commutation rate of 12:1.

So nothing has changed. 

Don't forget the PCLS is tax free so worth a bit more than 12x if you are a BR tax payer and even more if you are a higher rate tax payer - and that is even before we start talking about impaired life expectancy and potential inheritance.

But even so it's still pretty dire, with 80% opting for it I doubt most are thinking about impaired life expectancy or inheritance, more likely they just see big £££ signs and not even attempt to work out whether it's good value or not. 

Which as a tax payer I am all in favour of - it seems many DB pensioners are not aware of how valuable their pension is and are therefore happy to swap it for an inferior cash sum.  Personally I think we should probably increase the max PCLS proportion for DB pensions, it would save the country a fortune.

I suspect many still in employment would also happily swap some of their pension entitlement for a much less costly to the employer increase in salary.  Who are we to deny adults the ability to make their own choices on this?

singhini

Ive not looked at the report yet but would be interested in trying to work out how much i would need when i come to retire (currently 54 and not retired but living off savings. im frugal and spending roughly £1,000 a month and i have no mortgage thank god).
I'm struggling to see how anyone is spending over £18,000 a year as a single person (£26.000 as a couple)

Also when it comes to the question "is a 12:1 commutation good or bad" i think its fine  -----> i give up £1 of annual pension for a £12 tax-free lump sum -----> my final salary pension is currently £5,700 so lets say it will be £6,000 when i come to retire, therefore if i give up £1,500 i get £18,000 tax free plus £4,500 annually (that seems fine)
For anyone who interested the annual pension is currently £5,700 and the CETV is £103,000

cfw1994

If you were frugal when you were working, I guess you are unlikely to become a big spender in retirement!
How much you need is hugely subjective.  Some have no cars, some have several.  Some hobbies are cheap, others very expensive.  Some houses are low cost, others hugely expensive to run.  Some have a second holiday home/timeshare.  Some have spendy partners, others not!
We could not live the lifestyle we have on £18,000, but I understand how many can happily do so.

Grumpy_chap

singhini said:

not retired but living off savings. im frugal and spending roughly £1,000 a month and i have no mortgage thank god).
I'm struggling to see how anyone is spending over £18,000 a year as a single person (£26.000 as a couple)

Well, your £1k per month is £12k per year.
You struggle to see how anyone spends over £18k per year.  An extra £6k.
Well, one unplanned house maintenance bill, or car maintenance, or a nice holiday could eat well into that £6k.  Get a couple land together and the £6k is busted.

Albermarle

im frugal and spending roughly £1,000 a month and i have no mortgage thank god).
I'm struggling to see how anyone is spending over £18,000 a year as a single person

Away from these reports, it has been said a few times on this forum ( and seems to be some agreement about it) that it is a struggle for most people to live just on the state pension ( £12Kpa for most) .
An extra £5K/£6K pa gives an extra bit of leeway and the ability to buy a few luxuries/holiday etc and/or to cover emergencies. 

Nor everybody is frugal. Many people with normal incomes will easily spend £18K just on a wedding or a new car, or a new kitchen.