Pension transfer offer

blowin3

Registered User
Messages
7
I have been made a 500k transfer value on my deferred DB pension or 23k per annum on reaching 65.
I am 59 and am planing on immigrating in 2 years. I own my own house and have a few K in the bank. Whats the best advice if I decided to take the 500k I am not very savvy when it comes to investments I been recommended Zurich prism I think it was called.
 

North Star

Frequent Poster
Messages
213
Hi there blowin3, this is a very nuanced and important decision and if you look at other threads on this topic you will be able to see some of the main issues that you need to consider. Generally giving up a guaranteed income for life is a big step and you would in most cases need a good reason or justification to do so. The 2 situations where the transfer can be a valid decision in my view ( subject to the transfer value representing 'good value' ) would be a) if you were in poor health and unlikely to draw the DB pension for 2O+ years or b) had more than enough pensions/assets to support you in retirement and the ability to pass on any remaining pension balance to the estate was a more important consideration than a guaranteed income, which died with you.
There is a lot for you to think of before considering investment options, but fundamentally you need to be willing and prepared to run investment risk if you opt for the transfer value. I do think you should consider getting some professional help to understand the pros and cons properly.
Just a thought, if by any chance Portugal was your intended destination, DB pensions are tax free for 10 years whereas ARF income ends up being taxable.

Regards Vincent
 

blowin3

Registered User
Messages
7
Thank you for your reply Vincent.
Its SE Asia I plan to retire to. I do have a Financial advisor who is advising me to take the transfer value and reinvest it. The company I worked for 30 years are going trough lots of changes letting people go as I was 4 years ago. At the moment and he has advised me to take control of my pension and future as anything can happen with DB pension. As for my health who knows whats around the corner but I really appreciate your advice.
 

Funnyname

Registered User
Messages
30
Looking at current UK annuity rates (which are in decline - which will make your DB pension more valuable at your retirement age), but for this lets say they stay the same until your retirement) to put a pension pot figure on the DB you are currently being quoted for by your company.

https://www.which.co.uk/money/pensions-and-retirement/options-for-cashing-in-your-pensions/annuities/annuity-rates-aly8c2z86kds

I'm going to assume you are single (also changing the currency from £ to €) so the average single life annuity rate gives you an annual income of €4,886 per €100,000 in your pension pot. Therefore with an annual income £23,000, the expected pension pot of your is notionally 23000/4886*100000 = €470,733.

However if your DB pension escalates annual at 3% with 50% for your spouse then the notional pen pot changes to 23000/2926*100000 = €786,056

Rough examples and only to be taken at face value rather than any advice but hopefully your advisor can run a few more of these simulations for you to help you make up your mind.

btw wrt the £23k pa is there also a lump sum of 150% of your final salary to be taken into consideration.
 

SBarrett

Frequent Poster
Messages
3,003
It's too big a decision to get without looking at all aspects of it with a financial advisor. Get copies of the annual and actuarial reports as well. An advisor has to lay out in writing all the reasons why it makes sense for you to transfer out of a defined benefit scheme.

"anything can happen with a DB pension" - they are well protected by the State that even if the company and scheme goes bust, the State will guarantee 50% at a minimum.



Steven
www.bluewaterfp.ie
 

blowin3

Registered User
Messages
7
No I can't take a lump sum I wavered that right to take bigger payout on being made redundant. I am married but do plan to imergrate in two years time. Thank you so much for all the advice.
 
Top