How wealthy?

[BoldonLad]

If you mean a final salary pension/defined benefit then I don't believe so.

The only options I'm aware of that you have are that some DB schemes offer the opportunity to take a tax free lump sum and a reduced annual pension thereafter: or else transfer the DB funds to a no DB pension fund before you retire - although financial advisor generally advise not to do that.

Yes, that was my understanding too, but, I am aware my Pension scheme knowledge is probably out of date, since I have not updated myself since retirement (17 years ago), and, I am even too old to take advantage of SIPP type schemes.

 

[Stevo 666]

Yes, that was my understanding too, but, I am aware my Pension scheme knowledge is probably out of date, since I have not updated myself since retirement (17 years ago), and, I am even too old to take advantage of SIPP type schemes.

Which reminds me, I have a small DB pension dating back to the early 90s from a place I only worked at for about 18 months. I'm likely to get more from that pension than I ever earned working there.

People who have mainly DB/final salary schemes should be laughing all the way to the bank.

 

[Pross]

Which reminds me, I have a small DB pension dating back to the early 90s from a place I only worked at for about 18 months. I'm likely to get more from that pension than I ever earned working there.

People who have mainly DB/final salary schemes should be laughing all the way to the bank.

Public sector employees still don't generally understand their value when they compare their pay to the private sector. I can understand that as it's not helping pay your immediate bills but maybe trade pay rises for reduced pensions. I also have a DB local government scheme for the first 8 years of my career. At a guess it will be worth about 20% of what all my pensions in the following 27 years despite being based on a final salary of about £17k (average earnings over those 8 years were probably around £10-12k).

 

[AuroraSaab]

Then again, accumulated wealth for an oldie should always be higher than a youth in similar circumstances.

Will also be affected by oldies often having a much larger inheritance from parents than they would have had years ago due to recent house inflation. Not surprising the wealth gap between young and old seems to be widening.

 

[Stevo 666]

Public sector employees still don't generally understand their value when they compare their pay to the private sector. I can understand that as it's not helping pay your immediate bills but maybe trade pay rises for reduced pensions. I also have a DB local government scheme for the first 8 years of my career. At a guess it will be worth about 20% of what all my pensions in the following 27 years despite being based on a final salary of about £17k (average earnings over those 8 years were probably around £10-12k).

Agree. Nor do many of them seem to appreciate who is paying for their very generous pensions.

If I had been on DB schemes since I started working then I'd probably be retiring within the next year now that my kid is out of uni and into a job shortly. But that's life and luckily I quite like what I do.

 

[Pblakeney]

Will also be affected by oldies often having a much larger inheritance from parents than they would have had years ago due to recent house inflation. Not surprising the wealth gap between young and old seems to be widening.

And where do you think today’s inheritance will go?
Care homes in all probability I will grant you.

 

[Pross]

Agree. Nor do many of them seem to appreciate who is paying for their very generous pensions.

If I had been on DB schemes since I started working then I'd probably be retiring within the next year now that my kid is out of uni and into a job shortly. But that's life and luckily I quite like what I do.

My grand plan was 40 years and retire at 56 on a full pension. I'm now regretting that boredom tempted me away from that!

 

[Stevo 666]

My grand plan was 40 years and retire at 56 on a full pension. I'm now regretting that boredom tempted me away from that!

If it's any consolation, friends of mine who retired in their mid 50's have now un-retired as they got bored/under the OH's feet or whatever - and not because they needed the money.

 

[Psamathe]

If it's any consolation, friends of mine who retired in their mid 50's have now un-retired as they got bored/under the OH's feet or whatever - and not because they needed the money.

Varies. I retired at 47 and don't have enough time to do everything I want to do.

Ian

 

[Stevo 666]

Varies. I retired at 47 and don't have enough time to do everything I want to do.

Ian

Fair enough, mine is a sample of 3 and two of them were pretty driven types - good careers in the City - the other one realised that his new 'boss' didn't appreciate his work and was overly critical...

 

[laurentian]

A bit of a thread hijack but as a couple of you on here seem to know what you're talking about, I wonder if someone could offer me some advice:

For twenty years up until about 2010, I worked for a company and had a final salary pension. I have since worked and have a couple of other pensions but nothing like the final salary one.

I'd never really paid much attention to the whole pension thing until this year when I turned 60. But as I started to put my life into perspective, I contacted the pension provider and asked them for a valuation based on me drawing the pension now (i.e. at 60) or waiting until I'm 65.

I was surprised at the valuation. By my basic spreadsheet (and I really don't know how accurate this is!*) and on the basis that I take the 25% tax free lump sum, I can start drawing the pension now (at 60 so at a lower annual rate than it would be at 65), top this up with what is in the 25% (simply standing order on this amount into the same account as my taxable pension) until I'm 68 when state pension kicks in, then top up with a lower amount from the 25% pot to maintain the same net income as I have now (which I am happy with) until I'm 80. Or do the same thing but start at 65. The result being that, at 80, I have a bit of cash in the bank if drawing now (at 60) or a lot more in the bank at 80 if I wait until 65.

I was also told (bloke down the pub) that it may be worth looking at getting a cash equivalent transfer valuation and the money from this is paid out (taking the 25% into consideration) by some kind of pension management company (I realise that this company would need to be suitably accredited) one advantage of this would be that my wife would get everything in the pot whereas the former arrangement means that she would receive a percentage of my original pension). I got the valuation which, based on the fact that the tax free amount is about 25% of the whole pot of the pension that I would draw otherwise, is about £200K lower.

* assumed that standard rate of income tax applies to both the annuity and the state pension (after tax threshold) and no tax would be payable on any of the 25%. I have not included the interest that could be accrued whilst drawing down the 25%

Any advice as to your opinion on the best route to take? I realise that nobody here is a pension adviser and that I really need to speak to one!

 

[AuroraSaab]

And where do you think today’s inheritance will go?
Care homes in all probability I will grant you.

Care homes and funding deposits for kids who can't get on the property ladder because gran's 2 bed flat is now £200k not £100k. Then those same kids sell your house to pay your care home fees. It's like an endless cycle of unreal money that circulates round the system.

 

[Stevo 666]

A bit of a thread hijack but as a couple of you on here seem to know what you're talking about, I wonder if someone could offer me some advice:

For twenty years up until about 2010, I worked for a company and had a final salary pension. I have since worked and have a couple of other pensions but nothing like the final salary one.

I'd never really paid much attention to the whole pension thing until this year when I turned 60. But as I started to put my life into perspective, I contacted the pension provider and asked them for a valuation based on me drawing the pension now (i.e. at 60) or waiting until I'm 65.

I was surprised at the valuation. By my basic spreadsheet (and I really don't know how accurate this is!*) and on the basis that I take the 25% tax free lump sum, I can start drawing the pension now (at 60 so at a lower annual rate than it would be at 65), top this up with what is in the 25% (simply standing order on this amount into the same account as my taxable pension) until I'm 68 when state pension kicks in, then top up with a lower amount from the 25% pot to maintain the same net income as I have now (which I am happy with) until I'm 80. Or do the same thing but start at 65. The result being that, at 80, I have a bit of cash in the bank if drawing now (at 60) or a lot more in the bank at 80 if I wait until 65.

I was also told (bloke down the pub) that it may be worth looking at getting a cash equivalent transfer valuation and the money from this is paid out (taking the 25% into consideration) by some kind of pension management company (I realise that this company would need to be suitably accredited) one advantage of this would be that my wife would get everything in the pot whereas the former arrangement means that she would receive a percentage of my original pension). I got the valuation which, based on the fact that the tax free amount is about 25% of the whole pot of the pension that I would draw otherwise, is about £200K lower.

* assumed that standard rate of income tax applies to both the annuity and the state pension (after tax threshold) and no tax would be payable on any of the 25%. I have not included the interest that could be accrued whilst drawing down the 25%

Any advice as to your opinion on the best route to take? I realise that nobody here is a pension adviser and that I really need to speak to one!

Definitely talk to a professional advisor - in particular as your plan looks a bit unusual in that you seem to be saying you want to take a tax free lump sum out and put it back in again? Something tells me there may be rules against that once you start accessing the pension but TBH I don't know enough about the regs.

The only other thing I would say is that it seems to generally accepted wisdom that you don't transfer a final salary scheme into a normal DC type pension fund as generally you are likely to lose out. But again, ask someone who knows their stuff.

 

[laurentian]

Definitely talk to a professional advisor - in particular as your plan looks a bit unusual in that you seem to be saying you want to take a tax free lump sum out and put it back in again? Something tells me there may be rules against that once you start accessing the pension but TBH I don't know enough about the regs.

The only other thing I would say is that it seems to generally accepted wisdom that you don't transfer a final salary scheme into a normal DC type pension fund as generally you are likely to lose out. But again, ask someone who knows their stuff.

Cheers - not intending to put 25% "back in". The 25% would sit in a bank account and top up the annuity (i.e. paid into my current account along with the annuity) to keep in the "lifestyle to which I am accustomed"

 

[Stevo 666]

Cheers - not intending to put 25% "back in". The 25% would sit in a bank account and top up the annuity (i.e. paid into my current account along with the annuity) to keep in the "lifestyle to which I am accustomed"

Ah - got it, thanks.

In which case I guess its a case of how much you really need that money: one of the points my pension bloke made was that generally the funds are better off invested in the pension until you really need them given the sort of returns that can be expected. This was a relevant point recently when quite a few people panicked at Reeves' plan to re-introduce the lifetime limit, withdrew their 25% lump sum and then when it didn't happen were left sitting with cash outside the pension fund and earning lower returns.

Maybe if you can take more than one tax free lump (up to the 25% limit), maybe take part of it out and see how your finances go before deciding on whether to take another lump?