If I work with the numbers you outline, then the DB figure might be :
- Full Pension of €37,000, or
- Lump sum of €100,000 Plus
- Reduced Pension of c€26,000 (my estimate)
On the other hand you might get a Transfer Value of c€800,000 into a BOB, which would allow you to :
- Take a lump sum of €200,000 tax free (25%)
- invest c€600,000 into an ARF
The attraction of the latter option is getting an extra €100,000 tax free and maybe you might be leaving some capital to children when both you are your spouse are deceased,BUT
- you give up the security of a guaranteed income for life (subject to scheme remaining fully funded)
- you have to make ongoing investment decisions for the ARF
- you must draw down a minimum of 4% of the ARF up to age 70, and 5% thereafter
- you have to accept that the value of the ARF will fluctuate, based on the investment profile you adopt
- unless you earn 4% or 5% (net of charges), the value of the ARF will gradually reduce (as will the 4% or 5% drawdown)
- depending on how long you live, you could outlive the fund (also depends on investment growth and rate of income drawdown).
So it might be attractive to opt for the extra tax free cash (the €200,000) but it comes with risks. Clearly, if your health was poor, if you family medical history is poor, then the BOB route might be more attractive. If however your health is good, your family history is good, then the security of a guaranteed income might be a priority.
Not an easy (or simple) decision.