I would have thought that your scheme would index the whole of the pension according to the Scheme rules, at least until age 65.Īfter that, while they would have no obligation to index link pre 88 GMP ( and under New State pension,this will no longer be index linked by the state either) they would have to index link post 88 GMP up to 3%? Just look into the prices of the various options and see which offers the best deal. Really intended to pay off a repayment mortgage balance, it happens that the decreased payout is also what you need for this situation as investments gradually take over. You could also look into decreasing term life insurance. The specified terms tend to make these policies cheaper than whole of life and you don't actually want the whole of life cover because investments will cover the end. You can cover the short term death risk to inheritance by purchasing term life insurance, perhaps more than one policy with different terms to allow for anticipated investment growth. The risk-reward tradeoff doesn't favour doing this. But the cost is, if those don't happen it would leave significantly less. If they arrive that would leave higher inheritance. ![]() ![]() By far the way that will get you the least sleepless nights for the least work and risk.įor true maximum you could take the lump sum and hope for average or better returns. It's safer for you and likely to meet your inheritance objective as well. You'll also be well placed to defer your state pensions for say five years, to maximise likely return on that.įrom those numbers I suggest that you take the maximum work pension income and invest. You also have state pension and wife's work and state pensions that may provide additional income that can be invested. That isn't strictly fair vs Firecalc because I'm assuming normal returns and Firecalc is looking to cover worst case years, so reduces its income level. A regular savings calculator using 4.5k a year and 4.5% growth plus 4.5k a year and 2.5% growth (assumed 2.5% inflation, 4.5% after fees equity return) gives a final pot size of £284k + £200k = £484k in today's money. £20k of income is comfortable and the pension would pay 29k so that's 9k a year to invest over say 30 years, 4.5% inflation-linked, 4.5k not. ![]() Initially it would seem that the likely answer is yes.īut lets look at an alternative. Given that I am not absolutely dependent upon the monthly income that my DB pension would bring, would a transfer out give me a better chance of leaving more money to my family? I have friends who have already gone for drawdown invested on a 'cautious' basis and seen returns of +4% in recent years this would give me a comfortable income in excess of £20kpa. Half of my pension was earned pre-1997 and will not be index-linked. I have friends who have already gone for drawdown invested on a 'cautious' basis and seen returns of +4% in recent years this would give me a comfortable income in excess of £20kpa and I have other savings that would allow me to endure several lean years without drawing funds. On the other hand, I have been given a CETV of £600k which appears to be loosely based upon pension accrued at the time I left the Company multiplied by expected longevity (£23k x 26yrs). I am due to retire this year, age 60 and I have a deferred DB pension that is worth £29kpa or £125k lump sum & £19kpa (I believe that the commutation rate is poor). Previous advice was to take the DB every time and do not transfer out. ![]() I have posted previously on this topic and wondered whether attitudes have changed in the light of George Osborne's recent pension reforms.
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