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  • FIRST POST
    • Lemily14
    • By Lemily14 18th Nov 19, 7:23 PM
    • 16Posts
    • 0Thanks
    Lemily14
    Advice on CETV
    • #1
    • 18th Nov 19, 7:23 PM
    Advice on CETV 18th Nov 19 at 7:23 PM
    Hi guys,

    Sorry, another CETV thread. My company closed my DB pension scheme in June this year. I have been with the company 11.5 years and my pension of £8450 can be taken when I hit 55. I got a CETV today of £230,750 which is just over 27 times by my calculation. I know it’s a hard question to answer but what would people do? Would you transfer out?

    I’m enrolled into a DC scheme not, paying in 9% and company paying in 16%, so when I retire I will have this pot of money. I do t know whether it makes sense to keep my £8450 so I have guaranteed income and also a DC pot. A few guys in my work have taken the CETV over the past couple of years and they seem to be doing ok. Just looking for some advice or questions I should be asking a FA if I speak to one.

    Thanks
Page 1
    • Dazed and confused
    • By Dazed and confused 18th Nov 19, 7:29 PM
    • 5,680 Posts
    • 3,015 Thanks
    Dazed and confused
    • #2
    • 18th Nov 19, 7:29 PM
    • #2
    • 18th Nov 19, 7:29 PM
    Your age and State Pension entitlement might be useful.
    • p00hsticks
    • By p00hsticks 18th Nov 19, 7:34 PM
    • 7,280 Posts
    • 8,134 Thanks
    p00hsticks
    • #3
    • 18th Nov 19, 7:34 PM
    • #3
    • 18th Nov 19, 7:34 PM
    If you;re going to speak to an FA you'll need all the details about the DB pension and be able to give some idea of your personal and financial situation and aspirations.



    So a few questions off the top of my head .....



    is 55 the normal retirement date ?

    Or the earliest you can take it ?
    If the latter, what is the percentage deduction applied and what is the normal retirement date ?
    How is the pension going to be increased between now and when you reach retirement age, and afterwards ?
    Are there any spouse benefits ?
    What would it pay out if you died before or shortly after reaching retirement age ?


    Do you have any reasons to think you may have a shortened life expectancy ?
    Are you on track for a full state pension ?



    Also think about your attitude to risk and whether you'd be comfortable looking after a pot that size and if you could handle a 10% drop in the markets overnight.....



    finally - if you speak to anyone, make sure it's an Independent Financial Advisor (IFA) - not an FA who will be tied into a particular provider. to
    • Marcon
    • By Marcon 18th Nov 19, 8:05 PM
    • 1,436 Posts
    • 1,143 Thanks
    Marcon
    • #4
    • 18th Nov 19, 8:05 PM
    • #4
    • 18th Nov 19, 8:05 PM
    As you say, yet another DB thread - and just as impossible to answer. Read some of the other threads to get an idea of the issues (ditto using google), then decide if you want to shell out upwards of £5K for the financial advice you are required to receive if you are seriously considering transferring out.

    What other people would do is completely irrelevant, because nobody is in your position with your attitude to risk, etc etc.
    • sandsy
    • By sandsy 18th Nov 19, 8:19 PM
    • 1,527 Posts
    • 942 Thanks
    sandsy
    • #5
    • 18th Nov 19, 8:19 PM
    • #5
    • 18th Nov 19, 8:19 PM
    It never just depends on the level of the transfer value and the amount of income.

    Nobody here knows enough about you and your circumstances, your preferences for security/flexibility and your retirement objectives/income need throughout retirement to say what you should do.

    That's why professional advice from a trusted, suitably qualified adviser is essential.
    • xylophone
    • By xylophone 18th Nov 19, 9:35 PM
    • 31,698 Posts
    • 19,658 Thanks
    xylophone
    • #6
    • 18th Nov 19, 9:35 PM
    • #6
    • 18th Nov 19, 9:35 PM
    Your age and State Pension entitlement might be useful.
    Around age 34

    https://forums.moneysavingexpert.com/showthread.php?p=74951489#post74951489
    • Malthusian
    • By Malthusian 18th Nov 19, 11:22 PM
    • 7,115 Posts
    • 11,452 Thanks
    Malthusian
    • #7
    • 18th Nov 19, 11:22 PM
    • #7
    • 18th Nov 19, 11:22 PM
    Also think about your attitude to risk and whether you'd be comfortable looking after a pot that size and if you could handle a 10% drop in the markets overnight.....
    Originally posted by p00hsticks
    Far more important is whether the OP would have accepted a CETV of £150,000 if the world economy was grinding to a halt, all the experts were predicting a decade of recession and all their friends were telling them that it would be absolutely bonkers to cash in a DB pension.

    If they wouldn't then they won't be able to handle the next 2008 event, as that is what it will feel like, only worse. (Because accepting a CETV at the top of a bull market and then watching the market fall by 33% is exactly the same as being offered a 33% lower CETV in the middle of the same crash, but in the latter you still have the DB scheme and in the former you're stuck with your decision to cash it in, so the former feels worse.)

    Unless it's a quite unusual DB scheme, possibly in a hazardous industry, the figure at 55 is the wrong one to be using for a comparison. The pension at normal retirement date needs to be looked at.
    • Thrugelmir
    • By Thrugelmir 18th Nov 19, 11:32 PM
    • 65,940 Posts
    • 58,059 Thanks
    Thrugelmir
    • #8
    • 18th Nov 19, 11:32 PM
    • #8
    • 18th Nov 19, 11:32 PM
    I got a CETV today of £230,750 which is just over 27 times by my calculation.
    Originally posted by Lemily14
    Where do you intend investing the money in order to generate a guaranteed inflation linked return?
    ““there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.””
    ― Niall Ferguson
    • badmemory
    • By badmemory 19th Nov 19, 12:50 AM
    • 2,938 Posts
    • 4,678 Thanks
    badmemory
    • #9
    • 19th Nov 19, 12:50 AM
    • #9
    • 19th Nov 19, 12:50 AM
    Why would they offer you more than they would save in the long run?
    • Mick70
    • By Mick70 19th Nov 19, 9:07 AM
    • 157 Posts
    • 16 Thanks
    Mick70
    Why would they offer you more than they would save in the long run?
    Originally posted by badmemory
    million dollar question that one
    • Albermarle
    • By Albermarle 19th Nov 19, 12:05 PM
    • 1,883 Posts
    • 1,200 Thanks
    Albermarle
    You should have a look at this :
    https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/five-good-reasons-good-with-your-money-guide-2018-edition.pdf

    Personally as a broad brush comment , I would say going from a situation where you have a DB and a DC scheme ( best of both worlds ) and changing to a 100% DC is not good diversification .
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