I am 61 years old. I have a Deferred Defined Benefit pension in a private company that I left some years ago. The company is solid & I am certain it will be there long term. The DB pension scheme is one of the lucky ones, & is well funded. I have the option of taking an annual pension, increasing each year by the Consumer Price Index or 5%, whichever is lower. I can also take a lower joint annual pension, where my spouse would get the same pension as me for life, if I predeceased my spouse. I also have the option of taking a transfer out of the scheme, & I have got a transfer value from the company. If I took a transfer, my intention would be to put it into an ARF.
I am trying to decide whether to take annual pension, or take transfer.
Pros & Cons I see are -
Annual pension is certain long term & it has CPI inflation protection.
Me or my spouse would have to live to about 85 before we would have drawn annual pension accumulating to the transfer value. If we both died earlier than 85, we would have got more money by taking the transfer -i.e. the transfer option would have money left for our adult kids.
The transfer option would have to invest ARF in safe vehicles like deposits or Gov Bonds. These safe investments are likely to earn less than the inflation growth in the annual pension.
The annual pension is a gamble on how long we live. With the Transfer option, we know the exact amount we have for ourselves, & our kids will benefit if we both die young. Probably more peace of mind with the annual pension - less investment worry than the Transfer option, but then Deposits & Bonds should have little worry attached.
Are there any other things I should consider. Any views on the options appreciated.
I am trying to decide whether to take annual pension, or take transfer.
Pros & Cons I see are -
Annual pension is certain long term & it has CPI inflation protection.
Me or my spouse would have to live to about 85 before we would have drawn annual pension accumulating to the transfer value. If we both died earlier than 85, we would have got more money by taking the transfer -i.e. the transfer option would have money left for our adult kids.
The transfer option would have to invest ARF in safe vehicles like deposits or Gov Bonds. These safe investments are likely to earn less than the inflation growth in the annual pension.
The annual pension is a gamble on how long we live. With the Transfer option, we know the exact amount we have for ourselves, & our kids will benefit if we both die young. Probably more peace of mind with the annual pension - less investment worry than the Transfer option, but then Deposits & Bonds should have little worry attached.
Are there any other things I should consider. Any views on the options appreciated.