Merge Defined Benefit Scheme to Current Defined Contribution Scheme

[idonno]

Hi

I worked in a private organisation which offered Defined Benefit Scheme and I was a member of that pension for around 8 years. I have now moved on to a different organisation and it offers a defined contributory scheme. My question is

Should I take the money out of my defined benefit scheme and move it to my current defined contributory scheme? (Data points below)

Option 1: Keep the money in the defined benefit Scheme:
- 3300 per/year (to be paid from Aug 2043)

Option 2: Take the money out and move it to my defined contribution scheme.
- Current Value - 37K
- Using formula mentioned on this website http://www.moneychimp.com/calculator/compound_interest_calculator.htm, the growth is below
-- 5% growth - 113K
-- 4% growth - 91K
-- 7% growth - 175K ( this is my current growth rate in pension)

thanks

 

[jpd]

Plenty to ponder here

• 7% growth is far too optimistic for the next few years, at least
• Moving from a Defined Benefit to a Defined Contribution transfers the risk from the pension scheme to you - they have guaranteed 3,300 per year in 23 years time come what may
• Is the DB scheme fully funded? Will it survive to 2043?
• Have you got an actuarial report on the transfer

It is almost impossible to give a definitive answer to your question - even with more details about the DB scheme

 

[lostman]

cheers.

it is not clear which is better
3,300 per / year when I retire or circa 100K in my investment fund.

 

[cremeegg]

Should I take the money out of my defined benefit scheme and move it to my current defined contributory scheme?

Almost certainly not.

Unfortunately there is no way in which you can make a well informed decision. In general the DB scheme is likely to offer less risk than the DC scheme, and having both is probably better than having all in one.

it is not clear which is better
3,300 per / year when I retire or circa 100K in my investment fund.

that should read €3,300 per year when I retire or circa. €37k in my investment fund now.

 

[Feemar5]

I would have reservations about the DB scheme - does your pension depend on it being fully funded . Lots of DB schemes have been wound up . I was a member of a DB scheme and it’s value collapsed during the last recession and my pension was a lot less that it was supposed to be .

 

[Ravima]

Current value is €37K. What is the transfer value? Some DB schemes are giving a bonus if you transfer out, as it reduced the liability of the DB fund.