Logistics of early retirement?

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  • thepurplepixie
    thepurplepixie Posts: 3,602 Forumite
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    seven-day-weekend wrote: »
    Sorry, I forgot the rules had changed. OP, please ignore what I have said!!

    To be honest I think alot of people don't understand that not everyone will get the new pension or that some people would be better off under the old scheme. Lots of people have said to me that although I have had to wait longer for my pension at least I will benefit from the higher pension and they are then quite surprised when I say the new pension would lose me money.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    thepurplepixie wrote: »
    To be honest I think alot of people don't understand that not everyone will get the new pension or that some people would be better off under the old scheme. Lots of people have said to me that although I have had to wait longer for my pension at least I will benefit from the higher pension and they are then quite surprised when I say the new pension would lose me money.

    No one will lose out, let's be clear on that.

    People will have been better off under the new scheme or the old scheme dependent on their circumstances, but anyone currently will get the higher pension when calculated under the new and old rules.
  • thepurplepixie
    thepurplepixie Posts: 3,602 Forumite
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    bigadaj wrote: »
    No one will lose out, let's be clear on that.

    People will have been better off under the new scheme or the old scheme dependent on their circumstances, but anyone currently will get the higher pension when calculated under the new and old rules.

    But some people will get less than the new pension although lots of people think everyone will get the full amount.
  • seven-day-weekend
    seven-day-weekend Posts: 36,755 Forumite
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    I did know not everyone would get the £145 a week, or whatever it is, I had just forgotten.
    (AKA HRH_MUngo)
    Member #10 of £2 savers club
    Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton
  • The_stingemeister
    The_stingemeister Posts: 374 Forumite
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    Forgive my ignorance, what is contracted out mean? Some of the replies (thanks) say they still didn't qualify after many years for a full pension. Is that because of being part time or on a low wage?
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    The_stingemeister wrote: »
    Forgive my ignorance, what is contracted out mean? Some of the replies (thanks) say they still didn't qualify after many years for a full pension. Is that because of being part time or on a low wage?

    No it's usually because part of their National Insurance went effectively to buy them a higher Defined Benefit pension (e.g. Final Salary) than they would otherwise have got.

    Some people seem to feel that they ought to get both a higher DB pension and a full state pension. Others understand the trade-off.
    Free the dunston one next time too.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    thepurplepixie wrote: »
    But some people will get less than the new pension although lots of people think everyone will get the full amount.

    Well they shouldn't do.

    Far more people will get the expected amount than was the case for the old system, and the range of potential pension is also less than the old system.

    If you pay in for the defined period under the new system you get the pension amount. Under the old system then people could get £119 or much less, and I think some people were pushing £300 with s2p, SERPS, graduated pension etc depending on their historic level of earnings.

    It will get simpler but it's a long process because it was so complicated.
  • seven-day-weekend
    seven-day-weekend Posts: 36,755 Forumite
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    edited 14 November 2017 at 8:14AM
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    There always has been a trade-off, hasn't there? I get less State Pension than my friend, who never contracted-out, but my Local Government Pension more than makes up the difference.

    She gets about £150 per week (from State Pensions) and I get about £160 (from State Pension and LG Pension).

    We both qualified under the old scheme in 2010.
    (AKA HRH_MUngo)
    Member #10 of £2 savers club
    Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    edited 14 November 2017 at 2:57PM
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    I have 30 years of voluntary Class 2 NI and 4 years of NI from when I was in Sixth Form College and university. One more year and I'll have 35 years of NI and I'll stop making payments. Under the old system I would have only got the Basic State Pension of around £116/week, but under the new scheme that jumps to new flat rate which is £155/week today. The best thing to do is to get a pension forecast...just google it. That's what I did and it helped in my planning. That will let you know your situation contracted out years and whetehr you can make top up contributions. With that in had you can have a stab at working out how to span the gap between ER and the SP starting. The starting point for that is a detailed budget and list of all your income sources and when they come online....in this Excel is your friend.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • thepurplepixie
    thepurplepixie Posts: 3,602 Forumite
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    edited 14 November 2017 at 3:22PM
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    bigadaj wrote: »
    Well they shouldn't do.

    Far more people will get the expected amount than was the case for the old system, and the range of potential pension is also less than the old system.

    If you pay in for the defined period under the new system you get the pension amount. Under the old system then people could get £119 or much less, and I think some people were pushing £300 with s2p, SERPS, graduated pension etc depending on their historic level of earnings.

    It will get simpler but it's a long process because it was so complicated.



    Maybe they shouldn't but they will. If I had stayed in my old job and pension scheme my entitlement under the old scheme would have been £119 and under the new system ninety something, I can't remember the exact figure. Because I left my old job and didn't join a new pension scheme I get the £119 plus enough S2P to get roughtly £160 a week. Of course that would have been balanced by the increase in my private pension. I am basing this on my forecast and I only have a few months to wait.

    I don't get what you mean about paying in for the defined time and getting less than £119 under the old scheme, if you paid in for the defined time you did get the £119 but under the new scheme people like me who have paid for much longer than the defined period, say over 40 years, they might not get the full pension because they have been contracted out for a considerable period.

    Just realised I am wrong as the £90 something a week would have been less if I had continued in my old pension scheme.

    It will change over time but it is very confusing at the moment.
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