I will not be detailing how the charges are being paid, and some of the figures may have artistic license.
Bob
Bob’s a widower aged 60 who is looking to retire.
He has two DB schemes, one has just gone into payment giving him £12,000 a year, after taking a Pension Commencement Lump Sum (PCLS) of £80,000.
He has existing Cash Isas worth £50,000, a house worth £400,000 and no mortgage.
He has slight angina, but during fact-finding his adviser discovered that both his parents and grandparents died before 75 of heart problems. His GP is aware and monitoring it, but there are no indications that Bob will follow suit.
His other DB scheme offers an annual pension at age 65 of £9,334 a year (no PCLS), or £5,600 a year and a PCLS of £37,000.
The scheme has punitive early retirement factors. He is also due a state pension of £4,000 a year (in today’s terms) when he reaches age 66.
He has two adult children who are married with their own children. They are in good jobs and Bob is “proud that they are doing well for themselves”.
The DB scheme is offering a transfer value of 30 times the non-commuted pension (£280,000)and Bob’s keen to seek advice on this.
He’s not had much investment experience, and is generally quite wary of investments and the idea of them falling in value.
He has also seen a lot of bad press on DB transfers and is wary of taking that risk.
During his meeting with his adviser it is determined that to meet his essential needs in retirement, Bob would need £14,000 gross a year.
Bob wants ongoing access to capital to do anything that takes his fancy before he is too old to enjoy life or dies relatively young as his parents and grandparents did.
If anything is left then that can pass to his children. He has no specific amount he wants to leave as they will be inheriting a house which is more than his parents were able to leave for him.
After the rest of the process is followed, Bob’s advised to transfer his DB scheme to a personal pension and invest in a suitable fund for his medium to long-term needs.
Betty
Betty, a 66 year old widow has decided now is the time to retire.
Her state pension of £3,900 a year is already in payment and she has a widow's pension from her late husband’s scheme of £2,500 a year.
She is considering how best to take her benefits from her DB scheme, they are offering £11,500 a year (no PCLS), or £7,393 a year and a PCLS of £49,000.
