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DB pension transfer......update

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  • stephenadarglasstephenadarglas Forumite
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    A little greediness creeping in to the mind perhaps?
  • AlbermarleAlbermarle Forumite
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    I have a similar dilemma myself (have posted mine on here) , however my DB is £26k and spouse £15k
    Mick 70 you have an even much higher CETV , even though the pension is lower, so an exceptional situation and an easy decision.
    Normally, like in this case it is probably a bit more 50:50, and depends on personal circumstances and personality . I had an offer of £475K for £16 K ( RPI linked 2/3rds spouse ) and turned it down although it was tempting. ...
  • AudaxerAudaxer Forumite
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    My wife is 8 years younger than me and has no pension to mention so the transfer out would also ensure her financial position should I pass away. She’d only get 2/3rds of my DB if we left it in and the kids get nothing.
    The usual spouse pension is 50% so 2/3rds in your wife's case is even better. Most DB pensions also ensure the spouse's pension is based on the full pension even if you were to take the lump sum. So check your pension scheme rules - I think you'll find that if you took the lump sum, when you die your wife would still get 2/3rds of full pension of £36k, adjusted for inflation to when you died. Therefore she would still have your £180k lump sum which when taken could have been invested for extra income. That might be a better solution than the stress of transferring the full pension, especially as these figure show that in your case the commutation factor for taking the lump sum is 20 - meaning you get £20 of lump sum for every £1 of pension you give up. That's a fairly good commutation factor so definitely worth considering.
  • jsincjsinc Forumite
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    Albermarle wrote: »
    If you assume that the DB pension of £36K is what it will pay at 60, then if he took it early ( say for sake of argument at 55) it would be significantly less, which gives a rather more striking multiple.
    According to expert opinion on another thread this is strictly how the multiple should be calculated .

    On the other side another poster was right to point out that some of the gloss could come off , due to incurring LTA penalties . especially as he already has a DC pot .
    Maybe although in this case they have a view to retire at 60 anyway. Could also take the reverse perspective of DC assessment at 60 - which incorporates assumptions about interim returns and/or drawdown. My personal opinion is that many transfer decisions seem predicated on extrapolating overly optimistic returns and risk appetite/ongoing investing interest in older age.

    But I should probably have emphasised the appeal of 36k risk free income vs expenditure over the multiple.
  • Mick70Mick70 Forumite
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    How do you quote a previous post ?
  • AlbermarleAlbermarle Forumite
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    How do you quote a previous post ?

    You highlight the relevant part by clicking and dragging your mouse across it . Then copy this by right clicking on it and selecting copy .
    Go to your new post . rightclick and select paste .
    Highlight again in your post and then click on the icon on the right above , next to the letter symbol.
  • Mick70Mick70 Forumite
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    Albermarle wrote: »
    Mick 70 you have an even much higher CETV , even though the pension is lower, so an exceptional situation and an easy decision.
    Normally, like in this case it is probably a bit more 50:50, and depends on personal circumstances and personality . I had an offer of £475K for £16 K ( RPI linked 2/3rds spouse ) and turned it down although it was tempting. ...
    And to be fair I’m in 2 minds myself which route to take my friend , the OP has a better DB than me but less CETV , he should definitely stick in my humble opinion .
  • ffacoffipawbffacoffipawb Forumite
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    Albermarle wrote: »
    Mick 70 you have an even much higher CETV , even though the pension is lower, so an exceptional situation and an easy decision.
    Normally, like in this case it is probably a bit more 50:50, and depends on personal circumstances and personality . I had an offer of £475K for £16 K ( RPI linked 2/3rds spouse ) and turned it down although it was tempting. ...

    I was quoted a £396k CETV at age 55 for an early retirement pension of £9,500 with a 2/3rds widows pension and RPI on the non GMP element. The GMP element is a minuscule amount.

    That is a multiplier of over 40.

    I decided to take a PCLS of about £49k and a reduced pension of £7,500 with an unchanged / unreduced spouse pension.

    The pension starts next month.

    The early retirement is also a no brainer. I would have to live to 88 to be worse off taking the early pension (though a lower age of about 82 at higher inflation assumptions).

    NRA is 62 and the early retirement factor is 3% per annum compound (months counted as part year).

    At least this amount of pension income is immune to moronic tweets.
    Retired Cymro

    🏴󠁧󠁢󠁷󠁬󠁳󠁿 Cymru am Byth 🏴󠁧󠁢󠁷󠁬󠁳󠁿
  • jsincjsinc Forumite
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    Mick70 wrote: »
    And to be fair I’m in 2 minds myself which route to take my friend , the OP has a better DB than me but less CETV , he should definitely stick in my humble opinion .
    But yours is from age 50 so not comparable as just p/a amount
  • edited 23 August 2019 at 11:13PM
    AudaxerAudaxer Forumite
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    edited 23 August 2019 at 11:13PM
    I was quoted a £396k CETV at age 55 for an early retirement pension of £9,500 with a 2/3rds widows pension and RPI on the non GMP element. The GMP element is a minuscule amount.

    That is a multiplier of over 40.

    I decided to take a PCLS of about £49k and a reduced pension of £7,500 with an unchanged / unreduced spouse pension.

    The pension starts next month.

    The early retirement is also a no brainer. I would have to live to 88 to be worse off taking the early pension (though a lower age of about 82 at higher inflation assumptions).

    NRA is 62 and the early retirement factor is 3% per annum compound (months counted as part year).

    At least this amount of pension income is immune to moronic tweets.
    Like you I would also take guaranteed income from the DB pension rather than rely totally on the markets for income. However looking at the figures, I think some people would have opted to transfer. If you had transferred and got £396k, and taken out £49k as a tax free lump sum, that would leave you with £347k to invest for income drawdown. A fairly safe drawdown rate of 3% pa increasing with inflation, would give you an income of £10,410 per year.
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