Pension help for my dad
Discussion
Trying to assist my dad with sorting his pensions out now he is full retiring.
He is 65 next month, retired from the police around 9 years ago, where he currently receives a pension, final salary.
He now has a Local Government Pension to sort, which is is a defined benefits scheme, it is giving him the option to either take a lump sum and a reduced pension, or just take a straight pension.
What's confusing me is he also has transferred in other pensions, 2 small ones from between the police and his current job, maybe a couple of thousand each and also one from the 80's which was c£30k.
How does transferring cash in to a defined benefits scheme work, I thought they were done based on a set contribution and then a percentage of salary based on time served, how can you combine the 2?
Also, the 2 options being given, the cross over point where taking no lump sum means he gets more out of the pension is in only 12 years time, that seems quite soon, is that sounding correct.
Lastly, although he is quite fit and healthy, he does have diabetes which he has lived with fine for 30 years, but may make an impact on life expectancy and any decision made.
Are these the only things to be considered?
Thanks
He is 65 next month, retired from the police around 9 years ago, where he currently receives a pension, final salary.
He now has a Local Government Pension to sort, which is is a defined benefits scheme, it is giving him the option to either take a lump sum and a reduced pension, or just take a straight pension.
What's confusing me is he also has transferred in other pensions, 2 small ones from between the police and his current job, maybe a couple of thousand each and also one from the 80's which was c£30k.
How does transferring cash in to a defined benefits scheme work, I thought they were done based on a set contribution and then a percentage of salary based on time served, how can you combine the 2?
Also, the 2 options being given, the cross over point where taking no lump sum means he gets more out of the pension is in only 12 years time, that seems quite soon, is that sounding correct.
Lastly, although he is quite fit and healthy, he does have diabetes which he has lived with fine for 30 years, but may make an impact on life expectancy and any decision made.
Are these the only things to be considered?
Thanks
Sometimes if its in the pensions transfer club between public sector type orgs then it can be added to give extra yrs on the DB pension. Sometimes they add them in as AVCs, every scheme seems to be slightly different.
If it all transferred in then presumably the quotes you are getting include those transfers too?
halo34 said:
Sometimes if its in the pensions transfer club between public sector type orgs then it can be added to give extra yrs on the DB pension. Sometimes they add them in as AVCs, every scheme seems to be slightly different.
If it all transferred in then presumably the quotes you are getting include those transfers too?
I'm sure they are, what I'm trying to establish is if he could now take them separately and use Flexi-drawdown on part of it, but perhaps don't make it very clear option, or if now they are all in the same pot then it's one decision for all.If it all transferred in then presumably the quotes you are getting include those transfers too?
Effectively what he has done, correct me if I am wrong, is taken something that could be quite flexible in how he received it and put it in a pot that is effectively an annuity? is that correct?
If its a DB scheme then effectively the figure he gets, is paid for life on retirement usually - local gov is prob few places where its career average too. That should then rise with inflation whether its taken or not.
If the schemes have been merged then technically all of the pot will be under one umbrella t&cs and rules for that particular scheme.
You may find their booklet online as part of their pensions administration?
If the schemes have been merged then technically all of the pot will be under one umbrella t&cs and rules for that particular scheme.
You may find their booklet online as part of their pensions administration?
alistair1234 said:
Trying to assist my dad with sorting his pensions out now he is full retiring.
He is 65 next month, retired from the police around 9 years ago, where he currently receives a pension, final salary.
He now has a Local Government Pension to sort, which is is a defined benefits scheme, it is giving him the option to either take a lump sum and a reduced pension, or just take a straight pension.
Also, the 2 options being given, the cross over point where taking no lump sum means he gets more out of the pension is in only 12 years time, that seems quite soon, is that sounding correct.
Without knowing the figures involved, 12 years on 65 takes him to 77. With diabetes, I'd be taking the lump sum (which if he doesn't need, he could invest and make a return, or even buy premium bonds and maybe have some winnings. He is 65 next month, retired from the police around 9 years ago, where he currently receives a pension, final salary.
He now has a Local Government Pension to sort, which is is a defined benefits scheme, it is giving him the option to either take a lump sum and a reduced pension, or just take a straight pension.
Also, the 2 options being given, the cross over point where taking no lump sum means he gets more out of the pension is in only 12 years time, that seems quite soon, is that sounding correct.
Also, turning down the lump sum and opting for a higher pension might, if he has a police pension and state pension (soon), mean he ends up losing 20% of it in tax.
So, with the limited info provided, take the money and run.
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