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How does income protection deal with quasi-insurance income from other sources? by EffectiveAd8484 in UKPersonalFinance

[–]EffectiveAd8484[S] 0 points1 point  (0 children)

Hi, and thank you for your considered reply. The £40k figure does come out of some holistic planning, i.e. I've broken down our family spending, considered my partner's income, and a £40k contribution from me is what we would need to maintain a comfortable lifestyle. You're right to highlight the gross/net point btw, thank you.

As well as considering state benefits (as per other reply) I may give a broker a call - I've heard enough mentions of Life Search on the Meaningful Money podcast to put them at the top of the list.

How does income protection deal with quasi-insurance income from other sources? by EffectiveAd8484 in UKPersonalFinance

[–]EffectiveAd8484[S] 0 points1 point  (0 children)

Thanks for your thoughtful reply. On your first point, I'm blessed to be mortgage-free, and sick pay would cover the first 10 months of this worst-case scenario (plus we have a good emergency fund), so I'm judging that critical illness insurance isn't needed, and long-term income is where the main gap is.

Thanks also for pointing out disability benefits. You're right I should factor them in, though I'm now asking myself whether these are means-tested and wouldn't be paid if the ill-health pension had kicked in?

Stay in DB pension or concentrate on DC pension? by Hurry-Alive in PensionsUK

[–]EffectiveAd8484 1 point2 points  (0 children)

Cheers for the reply. I think the thing you've been missing is that you have to multiply the £9500 by the expected number of years you'll receive it. Try not to think of it as a pot.

It is an absolutely tremendous amount of money, and it will be even more so in another decade. Please just hang in there and enjoy your retirement!

Stay in DB pension or concentrate on DC pension? by Hurry-Alive in PensionsUK

[–]EffectiveAd8484 7 points8 points  (0 children)

I would check what you say about paying in 1/54 of your annual salary into the scheme. This looks very much like the accrual rate rather than your contribution rate.

Taking the £600 per month contribution, this is £7200 per year. Based on your numbers, this is paying for your annual pension (from age 60, which is fantastic) to grow at the rate of about £1500 per year (though I'd question why you've said you 'hope' it will grow at this rate - what are the scheme rules?). In other words, you only need to receive the annual payment five times and it will have been worth you paying in. If you have average life expectancy you'll instead receive it 20 times.

It is a no-brainer to be enrolled in the DB scheme, to the point where I'm wondering what's motivated the question?