CETV & DB pension
lexington013
Posts: 335 Forumite
Just wanted some advice on the above. I requested a statement from a previous DB pension scheme outlining pension at 65.
Basically the pension would provide £21,740 per annum. What is a CETV? and what does this mean regarding my above DB pension scheme? Do I request a CETV figure from the DB pension scheme.
Are we talking a large cash figure to reinvest?
Am I right in thinking I could reinvest the CETV in lieu of the £21,740 per annum at 65?
I have a personal pension pot also with circa £90,000 in it that I could take 25% tax free at 55 and utilise drawdown thereafter.
I'm paying into a DC company scheme at present, but have only being paying into this for 3 years at 7% and employer puts in 7%.
I'm currently 50 and looking to reduce my hours at 55 To part time (probably 3 days per week).
Many thanks in advance.
Basically the pension would provide £21,740 per annum. What is a CETV? and what does this mean regarding my above DB pension scheme? Do I request a CETV figure from the DB pension scheme.
Are we talking a large cash figure to reinvest?
Am I right in thinking I could reinvest the CETV in lieu of the £21,740 per annum at 65?
I have a personal pension pot also with circa £90,000 in it that I could take 25% tax free at 55 and utilise drawdown thereafter.
I'm paying into a DC company scheme at present, but have only being paying into this for 3 years at 7% and employer puts in 7%.
I'm currently 50 and looking to reduce my hours at 55 To part time (probably 3 days per week).
Many thanks in advance.
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Comments
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Yes CETV stands for cash equivalent transfer value and if you accept this you would be taking a large pot of money in lieu of your guaranteed DB pension.
Whether it's wise to take this is a whole new can of worms but the 1st step in the decision process would be to request a CETV valuation.0 -
Yes CETV stands for cash equivalent transfer value and if you accept this you would be taking a large pot of money in lieu of your guaranteed DB pension.
Whether it's wise to take this is a whole new can of worms but the 1st step in the decision process would be to request a CETV valuation.
Not guaranteed to get a large pot of money.
I recently requested a CETV from a deferred DB valued at date of leaving £14250 including gmp in 2009
Current value today is £17000 including gmp.
Current age is 58. I was disappointed to receive a value of £290000 this only equates to x17 against today's value.
Why can others equate to x30 or more??
Do different schemes apply widely varied figures when calculating transfer values??
I checked to confirm that the figure was correct and was assured that it was,
So I have an easy decision to make by staying put.0 -
Not guaranteed to get a large pot of money.
I recently requested a CETV from a deferred DB valued at date of leaving £14250 including gmp in 2009
Current value today is £17000 including gmp.
Current age is 58. I was disappointed to receive a value of £290000 this only equates to x17 against today's value.
Why can others equate to x30 or more??
Do different schemes apply widely varied figures when calculating transfer values??
I checked to confirm that the figure was correct and was assured that it was,
So I have an easy decision to make by staying put.
Multiples are generally higher the closer you are to normal retirement age. But will also vary based on the exact mix of GMP to excess, relative rates of revaluation and indexation on each slice of benefit, spouse's benefits etc.0 -
Not guaranteed to get a large pot of money.
I recently requested a CETV from a deferred DB valued at date of leaving £14250 including gmp in 2009
Current value today is £17000 including gmp.
Current age is 58. I was disappointed to receive a value of £290000 this only equates to x17 against today's value.
Why can others equate to x30 or more??
Do different schemes apply widely varied figures when calculating transfer values??
I checked to confirm that the figure was correct and was assured that it was,
So I have an easy decision to make by staying put.
To look at the other side of the argument, if you took the cash you would need to get < 6% on it to get £17,000 per year, which should be achievable. 7 (?) years of that before the pension kicks in would take a lot of making up. Your thoughts?0 -
To look at the other side of the argument, if you took the cash you would need to get < 6% on it to get £17,000 per year, which should be achievable.
What do you mean by "should"? Do you really think that getting 6% p.a. above inflation is a sure thing?Free the dunston one next time too.0 -
What do you mean by "should"? Do you really think that getting 6% p.a. above inflation is a sure thing?
No, not a sure thing. However, 10 years at £17,000 would cover 20 years of 3% inflation so that's up to life expectancy for the poster. That 10 years of £17,000 would also be earning and compounding which would also contribute to his/her coffers.
I'm not necessarily advocating this approach, but the poster said it was an "easy decision" but the arithmetic makes it seem not so cut and dried.0 -
Ok so quick update. CETV figure returned today, it's a multiple of 25. Taking everything into account it makes more sense to leave the DB pension well alone. Plan is to take the private pension pots at 55. Taking the 25% TFLS and using income drawdown for 10 years. This would provide circa £15k per annum and exhaust the pot. Then take the DB pension at 65 which would be around £26k p/y inflation linked. I could take it at 63 years of age but there would be some reduction penalties due to taking it earlier.0
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You have obtained a new state pension statement?
https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY0 -
lexington013 wrote: »Ok so quick update. CETV figure returned today, it's a multiple of 25. Taking everything into account it makes more sense to leave the DB pension well alone. Plan is to take the private pension pots at 55. Taking the 25% TFLS and using income drawdown for 10 years. This would provide circa £15k per annum and exhaust the pot. Then take the DB pension at 65 which would be around £26k p/y inflation linked. I could take it at 63 years of age but there would be some reduction penalties due to taking it earlier.
Taking Xylophone's point don't forget the SP kicking in at 66 so assuming you will get something like the new maximum of just over £8k a year that would give you £34k with your DB.
If you wanted to smooth the income you could look at either running the DC pot down over say 7/8 years and then taking your DB a couple of years earlier and accepting the reduction they would apply; or, increase your payments into the DC pot whilst you are working f/time.
Spreadsheet time.0
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