Pensions

theone8181 · 27 Oct 2023 at 10:54

Hi guys, I'm looking for a but of advise (I suspect all responses will be see an advisor). I am currently 37, aiming to retire at 55. I have an old final salary pension from my first job which has a transfer value of about 50k (was at the job around a decade). My current workplace pension is not final salary, but it's worth around 100k. Am I stupid for even considering transferring my final salary into my current scheme? My assumption is that the compound interest will benefit me more.

theone8181 · 27 Oct 2023 at 11:17

CapitalOne said:
£50k transfer value for DB scheme? What's that supposed to pay out? £1.5k per year or something? Sounds very low!

It will pay out 4k a year.

^tbh I posted just incase someone came out with a "don't bother changing".

theone8181 · 27 Oct 2023 at 11:22

CapitalOne said:
Do you know if it's inflation linked? At your age it may be worth keeping it especially bearing in mind your age. Certainly worth some formal advice though.

Not advice, rough guidance is that you'll get 4% of your total pot per year as income, so 4k on 50k is excellent value (8%)!

It is, but iirc its limited to 3% which is a shame as inflation has been mental for the last year or 2.
Just for reference it's an aerospace scheme so possibly why it's pretty good. I'm tempted to leave it as is really.

theone8181 · 27 Oct 2023 at 11:28

EvilRob said:
Not from 55 though, right?
Have you used any of the pension calculators to determine if you are on track for retiring at 55 based in the income you'd need and your current pot and expected future payments?

Sorry no, that was from 66ish (the company managing it changed recently, and I'm still getting to grips with their website). I couldn't find an option to change when I want to retire, but it isn't going to be 66. I have, and I've got an excel spreadsheet. With my current aviva, it's going to be worth about 400k at 55 (not including that bae part).

theone8181 · 27 Oct 2023 at 11:31

Just found it on the site, £3300 at 55 so might just leave it at that. What I couldn't work out was why my current pension is worth double (compared to the transfer value), despite me having worked a similar length of time. The poster above has answered that though.

^ interesting that you need to pay somebody. Didn't know that (assumed places would give out free advice).

theone8181 · 27 Oct 2023 at 11:45

200sols said:
The pension age is increasing to 57 in 2028 and it may well go higher before you are 55.

How much income do you think you will need at 57? Because say your pot is worth 450k on a DC scheme, the per annum return will be lower than you think. Especially as in 18 years time the value of 450k in real terms will be significantly less than it is today.

I had heard the same. Imo it shouldn't be changing for people and it should be an individuals choice, but it is what it is. I had factored in either a salary of 15k or 25k for my spreadsheet, but it's a tricky question really. An extra 2 years would also increase my contributions/ reduce penalties for the FS bit. I realise the 'how much its worth bit is tricky, even over 29 years as essentially its going to be a guess.

theone8181 · 27 Oct 2023 at 12:10

200sols said:
£15-25k. Its not going to be much money in 20 years time. I would try and increase pension contributions now as much as you can.

That's the dilemma. I'm not single though, so there'll be some contribution from the wife (nhs pension so even more of a rabbit hole). I guess ultimately its a case of deciding closer to the time how much to draw out. I'm assuming the amount withdrawn can be changed throughout the retirement but that's just a guess.

theone8181 · 27 Oct 2023 at 13:05

Hagar said:
I have a bit over 25k now and it is comfortable, my wife has just begun drawing her state pension now as well. It depends what you really want but yes 25k in twenty years will be halved in value at least. Will you have paid your mortgage off by then.

Oh yea, there's only about 15 years on it. The other thing (which is going to sound morbid), is that my parents aren't likely to be around in 20 years (my mum is 74).

theone8181 · 27 Oct 2023 at 13:17

I've found the responses pretty informative on here, it's difficult to try and plan for the future. I'm doing what I can by paying in a decent amount to my pension now. I just hope it's OK, but only time will tell. The parents one is interesting, as none of my grandparents needed care, but obviously there's no hard rules on what will happen.

theone8181 · 27 Oct 2023 at 13:25

throwaway4372 said:
I wish predicting the future was easier.

I need mystic meg :cry:

. I'm trying to ignore state pension as that's about 40 years for me (untill they change it again), and I'm not sure it will even exist at that point.

theone8181 · 27 Oct 2023 at 13:27

Mr Jack said:
This is the kind of thing you should go to an actual financial advisor about instead of listening to idiots on the internet.

Personally, I think you should sell it and buy a pig.

Are you sure? I heard there were some magic beans for sale

.

theone8181 · 27 Oct 2023 at 13:46

throwaway4372 said:
kind of ridic that 55/57 limit even exists, should be able to take it whenever you've got enough

That's my thoughts. Should be on the individual if they don't budget accordingly.

theone8181 · 27 Oct 2023 at 14:16

Pipe & Slippers said:
The question is, what's enough?
You'd have folks retiring and then falling back on State provision 'cos they'd blown it all
As Mr Jack alludes to above, you get the Tax relief on contributions in an attempt to prevent this

We're back to trying to predict the future

. My contravention opinion is that if you've been on benefits all your life, should the state fund that person's retirement as they've not contributed :eek:

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