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thebullsback
thebullsback Posts: 550 Forumite
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in Pensions, annuities & retirement planning
Hi all.I asked a couple of questions about this pension last year and decided to just sit on it and leave it.
I have this year asked for a new "retire now" forecast,I am 58 and my normal retirement date is not til February2024.
Last year I was offered-
Option one-£965.40 p/a
option two £963.12 plus £41.28p lump sum
Transfer value £26208.00
Transfer value of GMP inc. in above £13378.99

Last week I received this offer if I take the plan now.
option one £1111.56 p/a
option two £989.16p/a plus lump sum of £2106.39
Transfer value £30046.27
I have also been told I could move to another insurance company OR cash the Transfer value in and receive £7.511.57 tax free out of the £30046.27 pot.

First question is if I leave it another year will my pot increase by about another £4000 ??
Second question is why such a big difference between lump sums last year and this year??
Thank you for reading.
Keep in your thoughts the poor Beasts of burden around the World and curse All who do them harm.
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  • latest_flame
    latest_flame Posts: 927 Forumite
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    thebullsback wrote: »
    Hi all.I asked a couple of questions about this pension last year and decided to just sit on it and leave it.
    I have this year asked for a new "retire now" forecast,I am 58 and my normal retirement date is not til February2024.
    Last year I was offered-
    Option one-£965.40 p/a
    option two £963.12 plus £41.28p lump sum
    Transfer value £26208.00
    Transfer value of GMP inc. in above £13378.99

    Last week I received this offer if I take the plan now.
    option one £1111.56 p/a
    option two £989.16p/a plus lump sum of £2106.39
    Transfer value £30046.27
    I have also been told I could move to another insurance company OR cash the Transfer value in and receive £7.511.57 tax free out of the £30046.27 pot.

    First question is if I leave it another year will my pot increase by about another £4000 ??
    Second question is why such a big difference between lump sums last year and this year??
    Thank you for reading.
    1. No one knows, for what its worth I think it will decrease.
    2. Because of the variable factors the actuaries decided to use.
  • Bazofts_Revenge
    Bazofts_Revenge Posts: 299 Forumite
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    Lasts years lump sum equated to £18.10 for every pound you could give up.

    This year they have offered you £17.21 for every pound you could give up.
    Solar PV cost £5760 (15/03/13)
    FIT inc + Electricity saved £3746 (65% Paid back) Tax free
    Last update 30/09/17
  • thebullsback
    thebullsback Posts: 550 Forumite
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    Any thoughts on next years pot size,more in or lower and what is it dependent on ?
    Keep in your thoughts the poor Beasts of burden around the World and curse All who do them harm.
  • Bazofts_Revenge
    Bazofts_Revenge Posts: 299 Forumite
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    thebullsback wrote: »
    Any thoughts on next years pot size,more in or lower and what is it dependent on ?

    Looking at the difference between the 2 years you quoted there was a difference of 15%, This would consist of the annual nominal rise to keep up with inflation and a reduction in the factor they have used to penalise you for going early.

    Do you know what the Actuarial Reduction factors are for your scheme? Mine is about 5% a year and your quotes may have crept in 2 Birthdays if you didn't get them exactly 12 months apart.

    65 0% reduction
    64 5% reduction
    63 10% reduction
    62 15% reduction
    61 20% reduction
    60 25% reduction
    59 30% reduction
    58 35% reduction

    Bear in mind some schemes do not allow transfers out after 64 years of age.
    Solar PV cost £5760 (15/03/13)
    FIT inc + Electricity saved £3746 (65% Paid back) Tax free
    Last update 30/09/17
  • thebullsback
    thebullsback Posts: 550 Forumite
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    so does it follow like night follows day that if i leave my pot alone till im 60 it will be higher??
    Keep in your thoughts the poor Beasts of burden around the World and curse All who do them harm.
  • latest_flame
    latest_flame Posts: 927 Forumite
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    thebullsback wrote: »
    so does it follow like night follows day that if i leave my pot alone till im 60 it will be higher??
    Definitely not.
  • thebullsback
    thebullsback Posts: 550 Forumite
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    any reasons to suggest I don't just cash in the lot now then as the thought of £1111 p/a don't seem good from the pot size
    Keep in your thoughts the poor Beasts of burden around the World and curse All who do them harm.
  • mgdavid
    mgdavid Posts: 6,705 Forumite
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    Firstly you don't have a pot, this is a Defined Beneifit pension where they guarantee to pay you the annual amount, index-linked, for the rest of your life (even if you live to be 100 or more). Unless you have some health issues you have a 50% chance of reaching close to 90.
    You haven't answered the previous question about the amount of actuarial reduction per year for taking it before your normal retirement age - this matters. If it's 5% then actually you will be getting £1700 per year at age 65.
    The transfer value (CETV) is the amount they will pay to absolve themselves of the responsibility of paying that annual pension for life, i.e. to get rid of you!
    If you have no other pensions apart from State Pension then that £1700-odd every year will make quite a difference.
    By the way, as the CETV is now (just) over £30k then you will need to take advice from an IFA which costs, could be £1000 or more.
    The questions that get the best answers are the questions that give most detail....
  • thebullsback
    thebullsback Posts: 550 Forumite
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    thank you for your helpful replys everyone.
    Tomorrow i will find out the actuarial reduction per year is there anything else i should ask??
    Keep in your thoughts the poor Beasts of burden around the World and curse All who do them harm.
  • xylophone
    xylophone Posts: 44,425 Forumite
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    If you have no other pensions

    http://forums.moneysavingexpert.com/showthread.php?p=70314706#post70314706

    I have a works pension,a Bond 32 and 4 other pensions all of which I would like advice on.


    The "works pension" is NHS DB.

    I assume the pension under discussion is this one - post 96?

    http://forums.moneysavingexpert.com/showthread.php?t=5245197&page=5
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