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

daveyjp

michaels said:

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?

Is there any evidence it would 'save the country a fortune'?  DBs work in part because many pensioners receive very little compared to what they may have paid in.

BikingBud

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. 

Doesn't that indicate that our financial education is again woeful.

We don't educate about mortgages, or credit or loans or pensions, so they don't understand the enduring impact of the decisions that they might make.

So many think purely in the here and now rather than the longer term and because of that so many poor decisions are made.

None of it helped by the government being unable to manage its (our) finances and we habitually find there is nothing left in the pot because we have squandered and not saved for the rainy day.

And it is always somebody else's fault!

Albermarle

daveyjp said:

michaels said:

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?

Is there any evidence it would 'save the country a fortune'?  DBs work in part because many pensioners receive very little compared to what they may have paid in.

Not sure that is the case, because typically with a DB scheme, the employee pays in a lot less than the employer.
So for the large majority they will get a lot more out of a DB scheme than they have paid in themselves.

Silvertabby

Albermarle said:

daveyjp said:

michaels said:

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?

Is there any evidence it would 'save the country a fortune'?  DBs work in part because many pensioners receive very little compared to what they may have paid in.

Not sure that is the case, because typically with a DB scheme, the employee pays in a lot less than the employer.
So for the large majority they will get a lot more out of a DB scheme than they have paid in themselves.

I think Davey is referring to those who die young without any eligible dependants.  Not as many as you would think, especially now that most schemes pay survivor's pensions to eligible co-habiting partners and not just legally married spouses.  

But, when it does happen, these 'savings' help pay for the benefits paid to pensioners/dependants who live to 90 or even older.  Such is the way of all pensions.