Advice on CETV

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

Comments

  • Your age and State Pension entitlement might be useful.
  • p00hsticks
    p00hsticks Posts: 12,672
    First Post Name Dropper Photogenic First Anniversary
    Forumite
    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
    Marcon Posts: 10,326
    First Post First Anniversary Name Dropper Combo Breaker
    Forumite
    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.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • sandsy
    sandsy Posts: 1,716
    Name Dropper First Anniversary First Post
    Forumite
    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
    xylophone Posts: 44,140
    Name Dropper First Anniversary First Post
    Forumite
    Your age and State Pension entitlement might be useful.

    Around age 34

    https://forums.moneysavingexpert.com/showthread.php?p=74951489#post74951489
  • Malthusian
    Malthusian Posts: 10,898
    First Anniversary First Post Name Dropper Photogenic
    Forumite
    p00hsticks wrote: »
    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.....

    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
    Thrugelmir Posts: 89,546
    Name Dropper Photogenic First Anniversary First Post
    Forumite
    Lemily14 wrote: »
    I got a CETV today of £230,750 which is just over 27 times by my calculation.

    Where do you intend investing the money in order to generate a guaranteed inflation linked return?
  • badmemory
    badmemory Posts: 7,633
    First Anniversary Name Dropper First Post
    Forumite
    Why would they offer you more than they would save in the long run?
  • Mick70
    Mick70 Posts: 727
    First Anniversary First Post Name Dropper
    Forumite
    badmemory wrote: »
    Why would they offer you more than they would save in the long run?
    million dollar question that one
  • Albermarle
    Albermarle Posts: 21,642
    First Anniversary First Post Name Dropper
    Forumite
    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 .
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 342.5K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607.1K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards