Thanks for the reply. The €14K is guaranteed for 5 years and for my lifetime after that is how it is worded.If the fund is only 55% funded I doubt if it will pay out €14 K as a pension - most DB schemes are/were wound up. You need to check is the €14K is a projected figure when you reach 65 . I would be inclined to take the transfer value.
Thanks for reply. The strange thing is I wasn't aware of the Aug date and it only came to light when I asked for a current valuation. I suspect I wouldn't have been told otherwise and wonder if they are just taking the opportunity to try get rid of deferred members. The 100% transfer value has been offered for several years now but only at year end statement time. I know it is a risk to assume it will remain for much longer but the 55% solvency level is the worst i can remember hearing. In the past advisors said "Smurfit wont collapse the fund" and hence was told to leave it but this is the first time i got contrary advice hence my nervousness.You won't get 100% of the transfer value after the end of this month. When these offers close, they close
Many thanks for this explanation - that is very helpful.Some calculations that may help. I'm going to assume that the Normal Retirement Age is 65 and that you'll turn 65 in 2037. I'm also assuming that the DB pension of €14,000 per year is level and will not increase in payment.
- To compare like with like, at present you'd need a fund of roughly €380,000 at 65 to provide you with a level pension of €14,000 per year for life.
- In order for the transfer value of €100,000 to grow to €380,000 in 17 years' time you would require an annual return of over 8% per year after charges. So you'd need to achieve >9% per year before charges. Unlikely.
- Taking the €100,000 transfer value and putting it somewhere that it grows by 3% per year after charges for 17 years provides a fund of around €165,000 at retirement. Less than half of the DB promise.
That's just an attempt to put figures on the decision. If you take the transfer value, you will almost certainly get less than €14,000 per year of a pension. But you will have better options at retirement, including ARF options, provision for spouse etc. If you don't take the transfer value, the scheme may be wound up before you get to 65 in which case you still won't get the €14,000 pension and you might get a lower transfer value then.
Regards,
Liam
www.ferga.com
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