CETV Calculation.

[stuttgartmetal]

How is this worked out?
Can a pension be cashed in for this, or is this a sort of transfer value.

Basic Details.
NHS Pension.
This offered from Pension Scheme.
£40,000 cash free pay out
Plus £14k per year.
I am 48.
25 years paying in nhs.
Can the cetv be worked out from these numbers?
Ball Park Figure?

[anonymous-user]

This needs to go in finance:-

No. You need to know what your accrual rate is and what the increase to pension will be after you leave/take it and your current salary. Then you'll need an actuary.

Why do you need to know?

Is your DB Final salary pension closing and is everyone being put into a DC scheme?

Or is your NHS function being TUPE'd to a non NHS org and you have the opportunity to transfer your pension into the DC scheme?

Or are you leaving and wanting to take your pension to your new employer in a DC scheme?

Or something else?

Edit; Just to clarify you would never transfer/commute a DB Final Salary pension scheme into a money purchase DC scheme:-

Unless in the DC scheme the employer was significantly increasing your basic salary to make your previous salary in your FS scheme look pitiful and was paying so much into your new scheme in terms of their contributions that it would be silly not to increase the starting investment pot, and even then you'd still have to be fairly investment knowledgeable and risk happy to recognise and get the best out of it.

Edited by anonymous-user on Monday 15th November 15:28

[stuttgartmetal]

I want to cash it in

[anonymous-user]

You can't, I believe you can only transfer it to a new pension scheme or retire.

Edited by anonymous-user on Monday 15th November 15:55

[stuttgartmetal]

Court order. Divorce.

[anonymous-user]

Nope, you'd have to be 50 or maybe even 55 dependant on scheme rules to take anything, then only when you retire. The only option to transfer it would be if you were transferred out of the NHS, or the NHS moved to a DC scheme and then you'd still be bound by that scheme rules. Then there are significant reduction on values if it's earlier than full retirement.

The only time people take pensions early is ill health retirements or HMRC recognised professions (footballers).

Edited by anonymous-user on Monday 15th November 16:10

[Ozzie Osmond]

You would need the scheme manager for the specific Transfer Value figure they can offer you. You would then need to compare that figure with the overall "value" to you of £40k tax free plus £14k a year (taxed in payment). The answer to that depends on things which include the amount of future indexation (inflation proofing) and whether you will have other income as well (job, other pension, investment income) which could push you into higher rate tax.

This really isn't my subject but at age 48 a pension of £14k a year must be worth at least 30 times that amount [at the simplest you're likely to live to age 78] which gives you

40,000 tax free, plus
420,000 taxed in payment (that's 30 years x 14k)

460,000 totalish

You need to get your situation looked at by a pensions and annuities expert. The numbers may look big but .... they're not.