Impartial pension Guidance Please

[pauljdh]

Im 57 and have accrued a FS pension with a CTV of £768K GBP. Its split over two schemes within the same company / trustees. I also have some smaller defined contribution stuff totalling about 30K which Ill treat as cash money.

As its final salary my tendency is to leave it as that but as I can use it flexibly due to new rules (my firms rules would mean however transferring it out into an approved scheme once Id taken formal advice) Id like to find out a bit more about what it could look like as an annuity with a cash free lump sump perhaps.

Any thoughts based on this limited info so far? Id like to go within two years, i.e. by 59.

Thanks all

Paul

[PurpleMoonlight]

Your tax free cash would be 25% of the fund.

You could buy an annuity with the remainder which would provide a guaranteed income, or you could utilise flexi-access drawdown which would give you flexibility but with an element of risk.

You need to discuss it with an IFA.

[pauljdh]

Thanks, for the reply, apologies I should have been more specific as I understand about tax free etc I am interested in knowing what the exchange rate is per say £5K of the CTV would be at todays rates for someone my age. Cheers.
Paul

[PurpleMoonlight]

You mean what annuity would it buy?

[pauljdh]

Yes please - guess theres a look up table?

[Jockman]

There would most likely be other complications too. The last FS I looked at for a friend had 4 options to it, including 2 levelling options when SP age was reached.

So which one to benchmark against? All 4? Would spouse pensions be the same? etc etc.

[JulianPH]

You need to take financial advice on this. It it a huge amount of money to gamble with.

You want a charted adviser with G60 permissions.

It is not as simple as you set out. Do you need/want the income? Have you considered the IHT implications? What guarantees would you be giving up? What is your outstanding debt? How do you rate certainty over probability?

If you want to respond (or PM me) I'll help as much as I can. I cannot, however, give you any regulated advice. There are others who have been assisting you on this thread who can.

[Ginge R]

pauljdh said:

Im 57 and have accrued a FS pension with a CTV of £768K GBP. Its split over two schemes within the same company / trustees. I also have some smaller defined contribution stuff totalling about 30K which Ill treat as cash money.

As its final salary my tendency is to leave it as that but as I can use it flexibly due to new rules (my firms rules would mean however transferring it out into an approved scheme once Id taken formal advice) Id like to find out a bit more about what it could look like as an annuity with a cash free lump sump perhaps.

Any thoughts based on this limited info so far? Id like to go within two years, i.e. by 59.

Thanks all

Paul

You say it's over two schemes, in fact you refer to 'it', but it appears to be two schemes; the first thing I'd ask is - what's the asset disposition or breakdown between the schemes, can either do a partial transfer, and do the scheme rules allow you to transfer just one instead of both?

Secondly; why transfer? I understand why it can be done, but why do you want to do it?

[citizensm1th]

JulianPH said:

You need to take financial advice on this. It it a huge amount of money to gamble with.

You want a charted adviser with G60 permissions.

It is not as simple as you set out. Do you need/want the income? Have you considered the IHT implications? What guarantees would you be giving up? What is your outstanding debt? How do you rate certainty over probability?

If you want to respond (or PM me) I'll help as much as I can. I cannot, however, give you any regulated advice. There are others who have been assisting you on this thread who can.

What this fella says i would take as written in stone,get yourself to a financial advisor.

[pauljdh]

Thank you for the reply. My firm will pay for me to take proper related advice (one off session) and I will do that but closer to actual retirement and when I have absorbed as much info as I can in advance. I have a mortgage to clear of approx 60K which I intend to payoff using my AVC pot (Aviva). I would prob want a dual life annuity - are indicative numbers available short of a sit don with an Advisor?

Thanks again

[Ginge R]

pauljdh said:

Thank you for the reply. My firm will pay for me to take proper related advice (one off session) and I will do that but closer to actual retirement and when I have absorbed as much info as I can in advance. I have a mortgage to clear of approx 60K which I intend to payoff using my AVC pot (Aviva). I would prob want a dual life annuity - are indicative numbers available short of a sit don with an Advisor?

Thanks again

Out of interest, ask your firm if they're paying for it, of whether it's coming out of your fund somehow (see link below). If someone says they want an annuity for themselves and their partner (presumably), I'd say.. "why transfer out, then?". Don't forget, your pension will have guaranteed tranches of uplift*; bear those in mind. If you're 'only' 57, that's worth a lot over the course of a lifetime - will an annuity match it?

Caveats: Assuming it's not going into PPF.. assuming the trustees don't change indexation, etc.

https://www.gov.uk/government/consultations/introd...

[Jockman]

Ginge R said:

Out of interest, ask your firm if they're paying for it, of whether it's coming out of your fund somehow (see link below). If someone says they want an annuity for themselves and their partner (presumably), I'd say.. "why transfer out, then?". Don't forget, your pension will have guaranteed tranches of uplift*; bear those in mind. If you're 'only' 57, that's worth a lot over the course of a lifetime - will an annuity match it?

Caveats: Assuming it's not going into PPF.. assuming the trustees don't change indexation, etc.

https://www.gov.uk/government/consultations/introd...

You know what Al, sod the New Year Celebrations, I'm going to stay in and have a really good look through that HMRC Manual.

There'll be other New Years

[Ginge R]

Exactamundo!!

Happy New Year.

[Jockman]

You are the gift that just keeps giving, matey.

All the best

[JulianPH]

Hello Gaylords (Al and Phil)

Happy New beer!

[Ginge R]

And to you too chum, and all other PHers.

[pauljdh]

The firm pay £500 it is not taken from my fund.
I fully appreciate the need to tread very carefully but at this stage all Im after knowing is the size that my current CTV would likely command at todays age in terms of an an annuity so I can compare that with the guaranteed FS payout.
Ta and Happy New Year everyone!

[PurpleMoonlight]

This might do.

http://www.hl.co.uk/pensions/annuities?theSource=P...

[hepy]

Ginge R said:

Secondly; why transfer? I understand why it can be done, but why do you want to do it?

This is something that a few of my colleagues have done at work, transferring from a final salary scheme.

Main driver for doing it is that when you die, your partner only gets 50%, they die, fund gone. If it is invested in another vehicle, then your family can continue to benefit.

OP - would be really interested in what you decide to do.

[Ginge R]

hepy said:

This is something that a few of my colleagues have done at work, transferring from a final salary scheme.

Main driver for doing it is that when you die, your partner only gets 50%, they die, fund gone. If it is invested in another vehicle, then your family can continue to benefit.

OP - would be really interested in what you decide to do.

Yes, and I understand that 100%. The problem is, if that is the main driver, most people can potentially get the same result with decent term or even whole of life insurance if they want it, for not very much to cover the difference between the full amount and the (usually) survivor's 50% pension. A surviving wife would keep the Defined Benefit pension for the remainder of her life and use the insurance pay-out to provide an income with the rest.

This will usually result in a better outcome for a survivor over time because invariably, a transferred DC pot degrades to something very small anyway whereas the DB pot largely remains intact (unless the transfer amount reflects a large annual pension or it is distressed scheme and goes into PPF and might suffer a haircut) and the insurance pay-out will remain a constant or keep pace with inflation.

I chatted with a steelworker yesterday who was married to someone who also had Tata DB benefits. They had both been quickly advised to transfer out by an adviser, so he was speaking with me as a sense check. His wife was a few years younger, they were both in good health and shortly to become financially independent once their final child had left home. Their rational was that they wanted to keep the maximum sum within their estate on death and the adviser had suggested that they both transfer out.

To my mind, it made more sense to retain his within the scheme and to consider transferring her smaller one and to have term insurance for a period of about thirty years to cover an income gap. They were both young, that amount was negligible compared to the safe withdrawal rate the scheme would have to experience in order to cover the gap.

That would allow them both to rely on his core of DB income (which provided for all anticipated needs anyway) and to use hers to give the latitude for the discretionary spend, the estate planning and the little luxuries in life. With two state pensions also coming in down the track, my point was - don't risk a guarantee unless you can afford to - why not have the best of both worlds? This was born out by some cash flow modelling.

That strategy may have worked for them - everyone and their circumstances and numbers are different of course.

pauljdh said:

The firm pay £500 it is not taken from my fund.
I fully appreciate the need to tread very carefully but at this stage all Im after knowing is the size that my current CTV would likely command at todays age in terms of an an annuity so I can compare that with the guaranteed FS payout.

Ta and Happy New Year everyone!

Happy New Year Paul,

There are lots of annuity checkers out there - this one might help, too.

https://www.agepartnership.co.uk/mcx/annuities/do:...