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Transfer-in offer from public sector pension

Including Financial Independence and Retiring Early (FIRE)
Snorvey
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Re: Transfer-in offer from public sector pension

#262717

Postby Snorvey » November 7th, 2019, 9:41 am

If the answer is a resounding "NO" then putting her money into the DB scheme is almost certainly a good idea, or at least one likely to meet her requirements.

Yes, absolutely. It takes the risk away from her and put it on to the rest of us.

strowger
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Re: Transfer-in offer from public sector pension

#262721

Postby strowger » November 7th, 2019, 9:49 am

Snorvey wrote: If the answer is a resounding "NO" then putting her money into the DB scheme is almost certainly a good idea, or at least one likely to meet her requirements.

Yes, absolutely. It takes the risk away from her and put it on to the rest of us.


Agreed. As a matter of public policy, the existence of the schemes in their current form is highly questionable. The burden on future taxpayers is potentially crushing, and yet many members of the schemes do not value them at all - there is certainly no need to pay for a DB pension based on 60ths with survivors pension etc etc in order to be able to recruit £9/hr arsch wiping staff for the special school. Bonkers use of resources.

What makes us ponder a bit [but not enough to change course] is - HOW will the DB scheme benefits be stolen from her?

Obviously the CPI by which it's indexed understates the true rate of inflation for people with small incomes who pay council tax and don't wish to 'substitute' dogfood for beef when prices rise - so that's one method, which is powerful indeed over decades.

Current politics doesn't seem likely to support explicit haircuts of the schemes, but differential taxation for their benefits might well appear eventually.

OLTB
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Re: Transfer-in offer from public sector pension

#262723

Postby OLTB » November 7th, 2019, 9:53 am

Morning.

I transferred out of my DB scheme a few years ago - I thought about the consequences for a long time and the decision was made based on the estimated income. The income that had accrued to date from the scheme was £4,300 p.a. (about £360 a month) and in my view, that was not going to make a huge difference to my lifestyle in retirement. In addition, the income would have started at age 62 and I'm not really looking to retire that early. The transfer value I was given from the trustees meant that in order to equal my estimated income at 62 (the £4,300 increased at an assumed 3% p.a.) I would have to achieve an average annual growth rate of approximately 3% p.a.. My future income calculation was based on drawing down 3% of the transferred assets at 62. I don't know if this will be achieved (I am no fortune teller), but I don't think it's that much of a challenge historically - if I'm not successful then again, it won't make a huge difference to my lifestyle and I like the flexibility my SIPP gives me.

Mrs OLTB has a public sector DB scheme so I suppose we're hedging our bets in some ways.

Cheers, OLTB.


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