Barclays pension fund options - what am I missing?
Posted: January 3rd, 2018, 11:16 am
I've just received a letter from Barclays telling me about my Defined Benefit pension options with them from age 60, and am confused, because it seems like the transfer value is far more than the pension options - I must be missing something, can someone tell me what I'm missing?
Option 1 - £2,500 per year
Option 2 - Tax-free lump sum of £12,395 then pension of £1,859 per year
Option 3 - Transfer £100k to another pension provider.
This means I'll have to live to be 100 before it's better to take Option 1 rather than Option 3.
I don't think I've missed the effect of inflation, because if I put the £100k in a share-based pension, that should take care of that.
Possible that part of the difference could be about my spouse's pension after I die, probably 50% of the value (and women generally live a few years longer than men), but even that doesn't seem to account for the difference.
It just seems odd, because historically, it's normally a bad idea to convert a DB into a DC scheme, but in this case, the numbers don't seem to stack up.
(Comparing Options 1 and 2 show that the cross-over point at which Option 1 becomes better is around age 82, which is roughly what I'd expect, but the other figure seems out of line.
Obviously important I make the right decision, as there's a fair bit of money here, and I want to pick the best option.
Thanks in advance for any help and advice you can provide.
Option 1 - £2,500 per year
Option 2 - Tax-free lump sum of £12,395 then pension of £1,859 per year
Option 3 - Transfer £100k to another pension provider.
This means I'll have to live to be 100 before it's better to take Option 1 rather than Option 3.
I don't think I've missed the effect of inflation, because if I put the £100k in a share-based pension, that should take care of that.
Possible that part of the difference could be about my spouse's pension after I die, probably 50% of the value (and women generally live a few years longer than men), but even that doesn't seem to account for the difference.
It just seems odd, because historically, it's normally a bad idea to convert a DB into a DC scheme, but in this case, the numbers don't seem to stack up.
(Comparing Options 1 and 2 show that the cross-over point at which Option 1 becomes better is around age 82, which is roughly what I'd expect, but the other figure seems out of line.
Obviously important I make the right decision, as there's a fair bit of money here, and I want to pick the best option.
Thanks in advance for any help and advice you can provide.