What would you do?

lexington013
lexington013 Posts: 335 Forumite
in Pensions, annuities & retirement planning
Ok I'm at a crossroads with the best route to take for my pensions.
I'm aged 51 and want to semi retire at 55.
I have received a CETV for a previous employer of £431,000 (valid for 3 months). Total scheme pension is £18,500 per annum, retirement date is 65 years of age (deferred scheme member). Significant penalties for taking pension early.
I have a private pension which as of today has a value of £120,000 and is in a medium to lower risk fund.
I also contribute 7.5% of salary to my employers pension scheme of which they add 7.5%. It's a cash balance scheme and by my calculations would have a fund value of £35,000 at age 55.
I should qualify for full state pension at 67, looking at my contributions and the state forecast on the government website.
Just looking for some advice.
I will be mortgage free at 55 and have savings of circa £75,000.
I have two grown up children and am single therefore spouse benefits not applicable.
My CETV value has dropped by circa £18,000 from the first quote 12 months ago.
Thanks.
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Comments

  • Brynsam
    Brynsam Posts: 3,643 Forumite
    First Anniversary Name Dropper Combo Breaker First Post
    If you're serious about transferring your DB benefits, there is now a legal requirement to demonstrate that you have received advice from a suitably qualified/regulated adviser (even if you decide not to follow it). So I'd get the advice - and I'd get on with it; three months sounds plenty of time but the clock is already ticking and your adviser has masses to do before being in a position to report/recommend a course of action.

    CETVs change all the time in response to market conditions; it may increase or decrease the next time you apply for one.
  • Linton
    Linton Posts: 17,160 Forumite
    Name Dropper First Post First Anniversary Hung up my suit!
    How much money per year do you need to maintain you current lifestyle?

    My immediate thought is that the CETV is not that wonderful by current standards and may not be worth taking if you are intending to continue to invest in medium to lower risk funds. If you are someone who is only happy with medium to lower risk funds I would have thought that transferring out of a DB scheme is not the most logical choice.

    However an IFA should give you a properly worked out assessment.
  • PeacefulWaters
    PeacefulWaters Posts: 8,495 Forumite
    edited 14 April 2018 at 8:39AM
    Gut instinct is to leave your DB scheme as it is and draw it at 65.

    Utilise the tax free lump sums and drawdown from your other schemes to fund 55-65.

    If it's not quite enough consider working an extra couple of years or going part time. Or significantly increasing your current contributions .
  • Joey_Soap
    Joey_Soap Posts: 410 Forumite
    First Anniversary Name Dropper First Post
    Unless you have another reliable source of future income then I would say giving up the DB pension would be a step too far. You should regard the DB pension as the foundation on which to build further income options for retirement.
  • chiefie
    chiefie Posts: 406 Forumite
    First Anniversary First Post
    Joey_Soap wrote: »
    Unless you have another reliable source of future income then I would say giving up the DB pension would be a step too far. You should regard the DB pension as the foundation on which to build further income options for retirement.

    You will get a secure income of about £2,000 net p.m. with your dB pension and state pension.

    You have pensions and cash, which with a part time job will easily give you the same perhaps even by not touching your cash.

    Depends on what you need to live on, what cash surplus you need and whether you want to work or not.
  • justme111
    justme111 Posts: 3,508 Forumite
    First Post First Anniversary Combo Breaker I've been Money Tipped!
    how much you need to live on ?
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
  • lexington013
    lexington013 Posts: 335 Forumite
    justme111 wrote: »
    how much you need to live on ?

    I reckon £15,000 per year is my target, having read through the replies then leaving the DB pension in place would be preferable.
    It's certainly doable to bridge the gap between 55 to 65 whilst working part time to 58.
    Thanks for the awesome replies.:T
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    First Anniversary Name Dropper First Post
    I'm not sure of the timing or the index linking here. An index linked pension of £18500 per year on £431,000, starting now and lasting 30 years is close to the amount you'd probably take out in drawdown.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • justme111
    justme111 Posts: 3,508 Forumite
    First Post First Anniversary Combo Breaker I've been Money Tipped!
    edited 14 April 2018 at 5:51PM
    so if 15 k is fine why would you want to hold onto unreduced pension of 18 k plus SP of 7 k presumably paying tax on it all at 67+? Pension is usually reduced by about 4%/year taken early. I would play with numbers and see how early I can take it to transfer the wealth from future times when you have too much of it to now .
    without giving up the security of defined pension
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    lexington013 wrote: »
    I'm aged 51 and want to semi retire at 55. ... Total scheme pension is £18,500 per annum, retirement date is 65 years of age (deferred scheme member). Significant penalties for taking pension early.


    Oh !!!!!! "significant": how much is it?
    Free the dunston one next time too.
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