Annuity or take the CETV

Albermarle

SVaz said:

I know a few ex-forces who transferred their military pensions when it was possible to do so and spent the lot when they later cashed them in. 

Stupid is as stupid does I suppose. 

I don’t know what multiplier was used for the cetv but I doubt it was very high. 

There was a poster recently who had been persuaded to transfer his Army pension out some years ago to some non mainstream DC pension, where his money was invested in speculative property deals in Europe. Needless to say the money had largely gone, partly in hefty commissions to the various 'service providers' 
Pretty much what happened to the British Steel workers, which sparked this big clampdown on DB transfers.

Argonauts

When taking a CETV and making a db pension into a dc pension 
isn’t the main factor the commutation figure
Eg 
a £10000 pension and offered £400k
a £20000 pension and offered £800k
these where figures in late 2016 I got given 
guys I know also got similar figures the year later 

taking it I believed was correct 
I’ve not touched it yet 
however the new IHT rules will hit my kids 
thats why taking the tax free sun and giving it away 


now the figures are not as good 
I’m guessing £10000 get offered £180k ish 

hard now to get an Ifa to do the swap


you make your decision 
you live with it 

onwards and upwards 

Cobbler_tone

We can get full advice (from a named external advisor) for £1,295 as a taxable benefit, i.e. paying the relevant tax on that amount. No idea if anyone does so these days, I guess some probably do. Still money to tell you it probably isn’t the best idea.

artyboy

QrizB said:

Like others in this thread, if I'd known in 2020 that annuity prices would rise to the current heights by 2025, I could've taken my CETV and then, today, purchased a pension roughly 2x the size of my deferred DB. And that's ignoring any growth in the DC pot from 2020 to 2025.

In 2020 however, none of this was inevitable. I'm happy with my choices.

And if I'd known BTC would be 10x what it was in 2020, then I'd have piled in to that then... maybe...

Cobbler_tone

£10k of Tesla shares in 2010 etc…one Musk is enough.

Bostonerimus1

QrizB said:

Like others in this thread, if I'd known in 2020 that annuity prices would rise to the current heights by 2025, I could've taken my CETV and then, today, purchased a pension roughly 2x the size of my deferred DB. And that's ignoring any growth in the DC pot from 2020 to 2025.

In 2020 however, none of this was inevitable. I'm happy with my choices.

And that's the right attitude to take.

There is no room for conditional statements involving "if, might, could, should" etc. in personal finances. We cannot change the past and we cannot know the future so make peace with the present and do what seems right to you now and have no regrets.

Cus

A CETV of £100k in 2018 would obtain you an annuity with RPI linked rises of x% a year.  In 2025 the CETV might now be £50k.  But £50k now could buy you an annuity with RPI linked rises of the same x% a year. So moving out of a DB pension and using it to buy an annuity is net net the same whatever year you did it. Surely the only benefit of transferring the DB pension was to invest it in in non-bond assets and hope that you time the market right, meaning that the CETV value is not better then and worse now, because it's designed  for one thing.  What am I missing?

Silvertabby

SVaz said:

I know a few ex-forces who transferred their military pensions when it was possible to do so and spent the lot when they later cashed them in. 

Stupid is as stupid does I suppose. 

I don’t know what multiplier was used for the cetv but I doubt it was very high. 

Public sector transfer factors are set by GAD.  Other factors apply (NRA, DOB  etc) but, from.my LGPS days, multiples of X18 or X20 wouldn't have raised my eyebrows.  But people still did it.