Defined benefit schemes are pretty rare nowadays. If you have one value it massively. I certainly wouldn't get rid of it. People very much underestimate how good a DB scheme is, in most cases it's worth far more than the cash pot actually held. These schemes are hugely underfunded in an aggregate level.
Anything that's defined contribution or a personal pension the I agree I would be wanting to go into drawdown.
All a long way off for me anyway and I'm sure by the time I get there I will have been mugged off by a combination of govt greed, brexit and the collapse of the UK economy.
I don't think it's as black and white as that at all.
Once upon a time yes, DB schemes were golden and many now drawing them are living very well.
But these days many companies want it off their books. If you are approaching retirement and they offer you 48x the annual pension amount (not so long ago the average rate was probably 20x) it would be difficult to find reasons why not to do it unless you feel you are going to live to 110 or inflation gets out of control.
I cashed mine in a few years back for 38x and since then I've roughly doubled it. So in essence I've achieved something like 70x compared to having left it in the DB scheme which would have had a little index linking. Yes I took some risk (as the return was not guaranteed and indeed could have reduced the capital value) but at the time with 20-25 years to go until official retirement I considered it a low and calculated risk.
So from that DB I now have a far greater pension and flexibility and although yes I've taken on the mortality risk I've more than covered it with the growth (I'd argue at 38x it was all but covered before any growth greater than inflation).
For me the bigger risk is a raid on pensions if Labour ever get in (or moving goalposts/changing rues etc) hence at least in part why I don't really pay anything into my own anymore.
7 years ago I got about 25x, if I had got 48x I would probably retire now.
Assuming you re-invested the proceeds on the markets, that 25x even in average performing funds must have doubled giving you that magic 48x ?
actually I left that job 7 years ago but was only offered the 25x about two years ago when I invested it in a SIPP. I am very cautious and wanted to protect my money as much as was possible so although it has increased in value it's been nowhere near the increase you suggest. I'm happy though. I'm 55 later this month and it's meant that I am drawing down a portion, giving myself a monthly income from that, allowing my wife to retire and I am swapping working in the City for working locally so cutting four hours off my daily commute. Happy days
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
yes, in general much more flexability in say a SIPP. If I had to stuck to my final salary scheme then when I died my wife would have got half my pension and then when she died they would keep what was left. At least in my SIPP my wife get's the whole pot if I die and if she then dies it can be left to someone else.
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
yes, in general much more flexability in say a SIPP. If I had to stuck to my final salary scheme then when I died my wife would have got half my pension and then when she died they would keep what was left. At least in my SIPP my wife get's the whole pot if I die and if she then dies it can be left to someone else.
Indeed @LargeAddick. I'm single, so if this change to the rules hadn't happened, the bank would get the whole pot back. After 33 years there, I'd marry someone on my death-bed just to stop that!!!
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
yes, in general much more flexability in say a SIPP. If I had to stuck to my final salary scheme then when I died my wife would have got half my pension and then when she died they would keep what was left. At least in my SIPP my wife get's the whole pot if I die and if she then dies it can be left to someone else.
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
yes, in general much more flexability in say a SIPP. If I had to stuck to my final salary scheme then when I died my wife would have got half my pension and then when she died they would keep what was left. At least in my SIPP my wife get's the whole pot if I die and if she then dies it can be left to someone else.
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
yes, in general much more flexability in say a SIPP. If I had to stuck to my final salary scheme then when I died my wife would have got half my pension and then when she died they would keep what was left. At least in my SIPP my wife get's the whole pot if I die and if she then dies it can be left to someone else.
Indeed @LargeAddick. I'm single, so if this change to the rules hadn't happened, the bank would get the whole pot back. After 33 years there, I'd marry someone on my death-bed just to stop that!!!
Some Scheme Rules protect the scheme against " death bed marriages" and wouldn't pay a widows pension in that situation.
Also schemes often have reduction factors to the spouse/dependant pension if that person is more than 15 years younger than you. Something like 4% per year. So if 20 years younger a reduction of about 20%.
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
yes, in general much more flexability in say a SIPP. If I had to stuck to my final salary scheme then when I died my wife would have got half my pension and then when she died they would keep what was left. At least in my SIPP my wife get's the whole pot if I die and if she then dies it can be left to someone else.
Indeed @LargeAddick. I'm single, so if this change to the rules hadn't happened, the bank would get the whole pot back. After 33 years there, I'd marry someone on my death-bed just to stop that!!!
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
Tel, why have you used a few different IFA's and what were the fees ? (I can probably guess). Would you recommend one ? I wouldn't use Golfie on the basis that you shouldn't do business with friends & family. Were you offered 48X ?
NB Thanks to everyone for the advice/comment. I'm grateful for the responses of people who I hoped might contribute. I've got a lot of reading & thinking to do.
@Covered End@Rob7Lee I got a quote from Barclays earlier this year. I have since seen a few IFAs, but not taken it just yet. Plan is to work for 3 more years, to 55, but will almost certainly take the pot out and will get another quote in a few months time.
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
Tel, why have you used a few different IFA's and what were the fees ? (I can probably guess). Would you recommend one ? I wouldn't use Golfie on the basis that you should do business with friends & family. Were you offered 48X ?
NB Thanks to everyone for the advice/comment. I'm grateful for the responses of people who I hoped might contribute. I've got a lot of reading & thinking to do.
No problem you not wanting to use me, but please bare in mind the charges. Any IFA worth his salt should be able to discuss & negotaiate his fees. As a starting point I usually charge a % of the investment / pension pot - generally 3% initial & 0.5% ongoing. The initial charge is then reduced depending on size of the fund/investment. Transferring a DB scheme into a private pension is very time consuming & has lots of regulatory requirements. Even so, a fund in excess of £250k I would expect to charge somewhere in the region of £5k.
Comments
There are other benefits to taking out of the DB scheme @cantersaddick. By doing this, I can also then put it in my will and bequeath it to my nephew and niece. If I don't do that, the money goes back to the bank.
Also schemes often have reduction factors to the spouse/dependant pension if that person is more than 15 years younger than you. Something like 4% per year. So if 20 years younger a reduction of about 20%.
Would you recommend one ?
I wouldn't use Golfie on the basis that you shouldn't do business with friends & family.
Were you offered 48X ?
NB Thanks to everyone for the advice/comment.
I'm grateful for the responses of people who I hoped might contribute.
I've got a lot of reading & thinking to do.
I hope this helps