Soldato
LOL. To be fair, I'm actually really quite fond of her
Plus on balance I think she'd do better knocking me off, but don't tell her.
Pension fund performance - do you monitor yours, how is it doing, do you actively change it?
- Thread starter danlightbulb
- Start date
Plus on balance I think she'd do better knocking me off, but don't tell her.
Soldato
Well for starters
Are you confusing the potential pension with the fund. The fund if she dies should go to her beneficiaries, its her money if its a DC scheme.
If its currently around 10% of the estimate at a future date it makes sense.
The whole point of DC is its an individuals pot, once paid in the only person who should have access is that person, certainly not the company.
Soldato
I think the confusion here is that there pension is made up of two elements. The first is DC, but the second larger is a final salary scheme that was converted into a lump sum about 15 years ago when that scheme was wound up, stopped and became a cash value.
What I do know is that an annuity purchased with the transfer value is very similar to the pension annuity forecast offered within the scheme.
I'll double check my facts, so thanks for the heads up.
What I do know is that an annuity purchased with the transfer value is very similar to the pension annuity forecast offered within the scheme.
I'll double check my facts, so thanks for the heads up.
Check the terms before transferring anything, particularly how the payments will increase in relation to inflation.
Soldato
They should be separate. The DB (the old scheme) has in effect been deferred. At least it sounds like a DB scheme.
That one you need to look at in more detail since generally they had good terms but she needs to check that was preserved, unusual not to.
They are not normally converted to a sum though, they just have the position frozen, so only inflationary increases are applied to the accrued benefit from when it closed.
DB schemes are often given a cash value, but thats just for valuation, eg on divorce. They are not actually a pot of money, the liability still lies with the scheme (and normally backed by the company) to meet the conditions the scheme had previously.
They normally have a spouses element, such as a 50% pension to surviving spouse.
The DC is different as said thats her money, part of her estate.
Just to be clear and I'm sure it's just your wording, but a DC scheme value is normally NOT part of someone's estate on death - Your pension isn't legally part of your estate, so is not covered by your Will.
Soldato
Is that just because it isn’t part of the consideration for inheritance tax which the estate is considered for? You can pass on the DC pension to others.
yes - you can pass it to whom you wish but it doesn't need to wait for "probate" (scotland) or winding up of an estate which can take months sometimes - It can be passed to the spouse for example in a very short space of time after the date of death of the individual.
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Associate
The larger final salary (DB) bit may be sitting in the overall fund, but it's very likely that this has extra benefits attached to it, such as a minimum guaranteed value, enhanced conversion to an annuity etc. Make sure you have a full picture before transferring out elsewhere. If there is a large difference between value and transfer value, that may be a good indicator
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Soldato
The term estate is not reserved for on death only, but a good point.
Soldato
When it's passed on to a spouse, what happens if that spouse is not yet 55? Do they get it as a cash payment or does it have to go in to another pension wrapper until they are?
not that simple a question to answer - too many factors to consider.
Firstly depends on the pension pot status at the date of death (has anything been taken or not by the deceased)....And also the age of the deceased individual. Different tax rules apply to the rules when inheriting a defined contribution pension depending on under/over 75
Lot of options for "under 55 spouse or dependent" - take as lump sum / leave in a pension etc etc
So in short - all very much dependant on the circumstances of the situation.
Soldato
Well this all makes a lot more sense. The information I was using was direct from my wife who doesn't really take much interest in these things. She has finally managed to get her login details reset so I've been able to see the real information.
What she thought was the final salary scheme conversion to a DC pension pot is not the case. The final salary scheme was converted into a CARE scheme so DB NOT DC.
This explains why the lump sum paid to her estate in the event of death is so small.
What I've done in any case is to take the transfer value and looked at annuities. Her DB annual pension goes up by RPI up to a max of 5% p.a.
Looking at comparison sites for lifetime annuity rates with a 3% uplift the going rate seems to be about £3,900 per £100,000 or purchase - this would give her an annuity about 25% below the DB scheme prediction. So quite a hit.
In the event of death before 75 a cash sum of 5 years of pension would be made. In the event of death before 75 I would receive half the pension that would be payable to her.
So in conclusion it looks like we would be far better off sticking, rather than taking a transfer value which is much smaller than would be required to match the benefits.
What she thought was the final salary scheme conversion to a DC pension pot is not the case. The final salary scheme was converted into a CARE scheme so DB NOT DC.
This explains why the lump sum paid to her estate in the event of death is so small.
What I've done in any case is to take the transfer value and looked at annuities. Her DB annual pension goes up by RPI up to a max of 5% p.a.
Looking at comparison sites for lifetime annuity rates with a 3% uplift the going rate seems to be about £3,900 per £100,000 or purchase - this would give her an annuity about 25% below the DB scheme prediction. So quite a hit.
In the event of death before 75 a cash sum of 5 years of pension would be made. In the event of death before 75 I would receive half the pension that would be payable to her.
So in conclusion it looks like we would be far better off sticking, rather than taking a transfer value which is much smaller than would be required to match the benefits.
100% stay put...
She may be able to take a lump sum from the DB scheme though if she wishes. Personal circumstances will determine if its viable or not.
On the performance point, it's frustrating how poor the tools provided by some investment platforms are for this.
Aviva has a simple graph that compares total portfolio value to total contributions over time. Perfect to see in a glance what your returns have been. Fidelity? Pretty much nothing. You can see the total return and annualized return a % is since you opened your account/a fund, but nothing that will show you contribution vs value over time. I can't even see total value at a given historical point in time - that seems to be just basic.
Shockingly poor from what is supposed to be a top of the range provider. Tempts me to just move everything somewhere cheaper but I don't want to lose the 55 retirement age protection.
Aviva has a simple graph that compares total portfolio value to total contributions over time. Perfect to see in a glance what your returns have been. Fidelity? Pretty much nothing. You can see the total return and annualized return a % is since you opened your account/a fund, but nothing that will show you contribution vs value over time. I can't even see total value at a given historical point in time - that seems to be just basic.
Shockingly poor from what is supposed to be a top of the range provider. Tempts me to just move everything somewhere cheaper but I don't want to lose the 55 retirement age protection.
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Trustnet if you can find the funds on there.
I thought I'd found the two I wanted to compare but the figures for 6m 1y and 5y don't match what are on the vanguard site.
Specifically Lifestrategy 100% and the FTSE Global All Cap Fund.
Make sure you are comparing the correct funds, e.g not mixing the accumulation and income versions.