Another CETV Q; Help Me Thrash It Through...
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I had 12 years in a db scheme . db pension of £12, 350 (as at 2012) when db scheme access stopped. RPI increases capped at 10% until retirement at 63. Spouse 50%. ... CETV 2017 was £422,000.
At the moment I'd be expecting something like £40,000 a year income from that sort of transfer value, via P2P lending interest after allowing for bad debt. Not inflation linked. 100% spouse or anyone else. Can't readily get it all into P2P, though 25% would be a nice income base.
More traditionally, it'd be expected to deliver £23,000 initially, increasing with inflation most years, if you used the Guyton-Klinger rules and were prepared to cut more if you lived through something comparable to the worst 10% of UK historic 40 year retirement periods (90% success rate).0 -
bostonerimus wrote: »I still have the vast majority of my money in the stock market, but when the markets fall by +10% I'm happy I don't get my day to day income from drawdown.
Though I would prefer it if equities bounced back and waited til fall to drop 40%. Not yet quite as low in equities as my by summer plan but way lower than my usual positioning because I've been following my own advice.0 -
Limited time in a DB scheme can make it easier to stay in because you're getting flexibility from DC schemes.
At the moment I'd be expecting something like £40,000 a year income from that sort of transfer value, via P2P lending interest after allowing for bad debt. Not inflation linked. 100% spouse or anyone else. Can't readily get it all into P2P, though 25% would be a nice income base.
More traditionally, it'd be expected to deliver £23,000 initially, increasing with inflation most years, if you used the Guyton-Klinger rules and were prepared to cut more if you lived through something comparable to the worst 10% of UK historic 40 year retirement periods (90% success rate).
So, if I am reading this correctly you are saying that a CETV value of c£425000 should yield £23,000pa if invested in traditional places?
That is of interest to me as we have DB transfer value of c£850k and the aspect which is most worrying is that if OH died before it goes into payment, the spousal benefit is only the return of premiums not a pension.
For this reason, and others we are actively considering transfer, but we keep reading for and against and our financial adviser hasn't yet given us a definitive steer.
The LTA is also an issue as we have DC pots too.
If only it was simple!0 -
Though I would prefer it if equities bounced back and waited til fall to drop 40%.
Corrections are rarely as dramatic. Simply a return to more normal times may take the current level of exuberant interest away. Then attention will turn to the next fad. You may simply find yourself at the bus stop waiting for the bus that never arrives.0 -
happyandcontented wrote: »So, if I am reading this correctly you are saying that a CETV value of c£425000 should yield £23,000pa if invested in traditional places?
1. Use the more modern Guyton-Klinger rules that skip inflation increases, cut more or increase the budget depending on how your investments do.
2. It's the 90% success rate figure so it skips the worst cases, notably those where the world wars affected things. If you find yourself living through such times you'll need to cut more, but it'll be obvious if that's the situation.
It didn't use Guyton's sequence of return risk reduction technique that can further improve results and I am using and do recommend that sort of thing, which cuts equity holdings when prices look high.
It's also worth knowing that spending typically decreases as people get older as they save more and this drop is sooner and greater for the better off.happyandcontented wrote: »That is of interest to me as we have DB transfer value of c£850k and the aspect which is most worrying is that if OH died before it goes into payment, the spousal benefit is only the return of premiums not a pension.happyandcontented wrote: »For this reason, and others we are actively considering transfer, but we keep reading for and against and our financial adviser hasn't yet given us a definitive steer.happyandcontented wrote: »If only it was simple!0 -
Thrugelmir wrote: »Corrections are rarely as dramatic. Simply a return to more normal times may take the current level of exuberant interest away. Then attention will turn to the next fad. You may simply find yourself at the bus stop waiting for the bus that never arrives.
I'll be happy waiting for the bus. After a bit of selling on Monday I had about 42% in fixed interest (P2P) and cash, about 8% in VCTs and about 50% other equities.
I write about Guyton but it's not just writing, it's also acting myself.0 -
I've received confirmation from the scheme administrators regarding another element to my planning considerations / scenarios. This is that should I leave the company (before NRA) then I would be able to transfer out my AVC and leave the DB (main) scheme intact.
This is useful for working through options to allow flexibility, i.e. dump as much as possible in to the AVC, stop work before NRA and use the AVCs to fund 'retirement' prior to drawing the main DB scheme.
A question for you knowledgeable folks.... Would the transfer out of the AVCs also fall under the regulation to obtain (DB) transfer advice before actioning?
If it does then that may detract from it as an option, possibly from a cost perspective.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
If the AVC account is just a pension pot with no promises about the future level of income, no transfer advice should be needed.0
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If the AVC account is just a pension pot with no promises about the future level of income, no transfer advice should be needed.
I wasn't sure if the fact that I can use the AVC monies to buy additional years/benefit from the DB scheme may skew it towards needing to be assessed due to the possible value/benefit of buying additional years/benefits?Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Ok so Capita have been quite efficient and I have received the (not guaranteed) CETV. There are three numbers:
- Total DB Transfer Value
- Pre April 1997 Transfer Value Arising from GMP
- Post April 1997 Transfer Value From Post Contracted Out Services
Time to play the numbers.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0
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