serious pension question
Discussion
Hi All, Hopefully I can ask for a sensible perspective on my current dilemma. Have a transfer value from my previous employees pension administrator that is a significant amount, that was calculated before the corona virus kicked off. I have two options, transfer out of the DB and DC company pension and buy a number of investment funds that gives me me flexibility to take a much or as little as I need....and potentially buy into the investment market when its low late April time (although I can hold the transfer value in cash and buy when the time is right). Or take the annual pension with approx 2.5% increase every year and the cash lump sum. I guess my concern here is that do we think the markets will settle down within a few years or are we going to see some seismic changes in world of finance that might make an investment into the markets quite risky (more so than normal)? I've waffled on a bit but hopefully you get the picture......thoughts?
As I am currently going through this exact process, let me give some perspectives:
1. The advisor will stack up your retirement benefits against long-term financial market returns, and your risk appetite. the current fluctuation, if anything, could give some people who transfer our a HUGE benefit
2. If you do come out of the DB scheme, hold the proceeds in cash, or near cash for at least 6 months. Wait until this situation is resolved.
3. Don't worry about missing the start of the upturn. Wait for low volatility in the markets. Your advisor can help with this
4. This situation, while unprecedented, is very short-term. Even if it lasts a year, thats short-term.
Don't worry about transferring out. If it made sense for you 6 months ago, it'll make sense now. Nothing has really changed here - it might not seem like it, but it's true.
1. The advisor will stack up your retirement benefits against long-term financial market returns, and your risk appetite. the current fluctuation, if anything, could give some people who transfer our a HUGE benefit
2. If you do come out of the DB scheme, hold the proceeds in cash, or near cash for at least 6 months. Wait until this situation is resolved.
3. Don't worry about missing the start of the upturn. Wait for low volatility in the markets. Your advisor can help with this
4. This situation, while unprecedented, is very short-term. Even if it lasts a year, thats short-term.
Don't worry about transferring out. If it made sense for you 6 months ago, it'll make sense now. Nothing has really changed here - it might not seem like it, but it's true.
Mr Pointy said:
Have you gone through the process of getting informed advice & an actual recommendation to transfer out? It might be difficult to get anyone to agree that cashing in a DB pension is the correct choice given the current state of the global financial system.
The requirement is to seek advice. There is no requirement to take that advice. Hence, the CETV can be paid once the advice has been obtained.R
The Leaper said:
Mr Pointy said:
Have you gone through the process of getting informed advice & an actual recommendation to transfer out? It might be difficult to get anyone to agree that cashing in a DB pension is the correct choice given the current state of the global financial system.
The requirement is to seek advice. There is no requirement to take that advice. Hence, the CETV can be paid once the advice has been obtained.Hi, thanks for the swift feedback - much appreciated. I have taken plenty of independent financial advice (pre Corona though....) however I have a good transfer value and I like the flexibility the drawdown gives me as I can take as little or as much as I need to suit my circumstances, as well if there is any left it will go to my children. As remarked, I would probably get an even better transfer value now due to interest rates falling but it takes ages with Mercer and TBH my adviser says you never quite know what criteria they use and if you did get a lower one they would hold you to that....its always going to be a gamble. I'm confident with the principle of investing in a stable stock market and I guess the crunch question is do we think things will return to normal in a few years time? Clearly I'm taking a med to long term view although I will be 59 this May so hopefully have 25 years left in me!
bompey said:
If you get a new quote the transfer value will probably have gone up due to rates dropping. It could be a great time to transfer from DB to DC but it’s a gamble.
It would be worth getting a new transfer value as op says he has dB and dc today, dc is likely to have dropped somewhat.hypermark said:
Hi All, Hopefully I can ask for a sensible perspective on my current dilemma. Have a transfer value from my previous employees pension administrator that is a significant amount, that was calculated before the corona virus kicked off. I have two options, transfer out of the DB and DC company pension and buy a number of investment funds that gives me me flexibility to take a much or as little as I need....and potentially buy into the investment market when its low late April time (although I can hold the transfer value in cash and buy when the time is right). Or take the annual pension with approx 2.5% increase every year and the cash lump sum. I guess my concern here is that do we think the markets will settle down within a few years or are we going to see some seismic changes in world of finance that might make an investment into the markets quite risky (more so than normal)? I've waffled on a bit but hopefully you get the picture......thoughts?
I’m in the same quandary. I got my CETV from Mercer and it’s valid until 25 May. My DB number is safe but my AVC will be tumbling. I finish work next month with 12 months paid gardening leave to follow. I can be patient and wait but I don’t know what my new CETV will be if I let the current one lapse. The bright side to all this is I might have an opportunity to invest when the markets are at a low point but nobody knows how long it will be before the recovery starts. Some people will think it’s a nice problem to have but this isn’t the way I planned my retirement and it’s unsettling with the chaos that’s happening in the markets right now. I will transfer out and probably do it now based on the CETV I have from Mercer but it’s still a nervy situation
Scaleybrat said:
I’m in the same quandary. I got my CETV from Mercer and it’s valid until 25 May. My DB number is safe but my AVC will be tumbling. I finish work next month with 12 months paid gardening leave to follow. I can be patient and wait but I don’t know what my new CETV will be if I let the current one lapse. The bright side to all this is I might have an opportunity to invest when the markets are at a low point but nobody knows how long it will be before the recovery starts.
Some people will think it’s a nice problem to have but this isn’t the way I planned my retirement and it’s unsettling with the chaos that’s happening in the markets right now. I will transfer out and probably do it now based on the CETV I have from Mercer but it’s still a nervy situation
If your existing quote expires on 25th May you’ll be lucky to get it done in time if it was anything like mine and everyone else that I know that have done it.Some people will think it’s a nice problem to have but this isn’t the way I planned my retirement and it’s unsettling with the chaos that’s happening in the markets right now. I will transfer out and probably do it now based on the CETV I have from Mercer but it’s still a nervy situation
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