Voluntary Redundancy aged 59 (and a half!)

fiisch · 27 May 2017 at 8:07PM

My father has worked for a well-known, stable and large airline for the past 20 years. He earns approximately the national average wage (due to shift pay etc., exact salary is not simple to calculate, but amounts to around £30k / year). He's 59 years of age, and had planned to retire at 65 having paid in sufficient contributions to qualify for a two thirds salary pension.

He has been offered voluntary redundancy - a payment of just over £30k, which would largely be tax free, and could effectively double their current savings towards retirement (pensions excepted). He has a fairly lengthy commute of around 30-35 miles, and my parents have two cars because of this. His job is being made redundant, and ultimately the job he performs will cease to exist, although given the size of the company there will likely be options to move into another similarly paid job within the company if he does elect to stick it out.

For me, it seems a no-brainer - getting paid to leave a job where you already have one eye on retirement (assuming that the pension wouldn't be unduly affected), however my parents who are risk adverse are both inclined that he continue to tough it out. He loves his job, and in a former life spent a lot of time out of work (when working in B2B sales), so the security of his job is very important to him. My mother is semi-retired, and does a few hours a week, so his income is the primary household income, which they top up by renting out a couple of rooms now us pesky kids have left home.

What would you do in this scenario? He is obviously concerned about finding another job - especially due to his age - however, I'm of the opinion these thoughts are out-dated and he'd walk into a similar job with his experience. Has anyone been in a similar position where a final salary pension is at stake? Although I like to think I'm pretty clued up on pensions and investments, I must confess I'm not particularly au fete with these schemes - mainly because they were long gone by the time I started working...!

And then of course, if they do take retirement, there's the question of what to do with the lump sum. They are extremely risk adverse, so I'm thinking a longish (3-5 year) government bond or similar, although personally I'd be tempted to stick at least a proportion into a stocks & shares ISA....

Nebulous2 · 28 May 2017 at 9:45AM

It's not clear from your post what he is being offered pensionwise.

He needs all the facts and figures and to make up his own mind.

For example, if they are adding extra years - possibly 5.5 to take him to 65 and putting his pension into payment straight away then it might certainly be worth taking that. No extra years and pension not paid until 65 is much less attractive.

Another thing to look out for is how the pension is calculated. Is it on basic salary only or does it include everything?

I'd try posting on the pension section of this forum, but he needs to get all the figures and compare the situation for him carrying on working or taking the offer.

sangie595 · 28 May 2017 at 9:54AM

Unless you have already accrued the full pension entitlement, walking away from a final pension scheme is seldom a good idea. But in my view this has nothing to do with money - or what you think is better for them! If he loves his job and loves working, then what is to be gained by him giving up, on the chance that someone else will employ him? Being "older" never got outdated - employers are often generally still loathe to employ older people. And you already know the biggest risk - that you are wrong and he doesn't get another job. Do you have any idea of the mortality rate amongst recently retired men? It is still very difficult for men to adjust to a non-working life, and the physical stresses of trying to do so, when what they really want to do is work, can be a killer. Quite literally.

Let your dad decide for himself. He mustn't feel that he is doing something because you, or even his wife, think it's best for him. He must do what he thinks is best for him.

And as someone your dad's age, please stop making long term plans for him! 60 is still young these days, but it is also true that by this age ones health and well-being turn on a sixpence. As I know only too well. In 3-5 years time he may not be able to enjoy his accumulated wealth the way he would want to. In the last 14 months I have gone from being a super fit and active 58 year old, to barely mobile. On a good day I can get to the bottom of the street on my feet, and that is 319 feet! Now that may, or may not be "temporary" - and I'm not telling you this so you can feel sorry for me, as I'm not letting it stop me - but the truth is that I did not expect it. Nobody did. Nobody ever does. But if you want to help, encourage him to get started on working through the bucket list while he is still fit and young. I consider myself fortunate - my dad was just like yours. Risk averse to a fault. As a consequence he died with lots of "security" in the bank, and none of those dreams fulfilled. So I am steadily working through my third bucket list. If there comes a day when I have no choice but to "give up" I will have the greatest of memories and experiences. And if I get any notice at all of my last breath, my nephew had already been told to expect to inherit not a penny! That isn't being morbid - it's living life to the full.

If you want to help your dad be less risk averse, make it for something memorable!

London50 · 28 May 2017 at 4:10PM

It is not just about the money/pension your dad enjoys his job it gives him a sense of purpose and also the "family" he has around him during those hours.
Don't try to take that away from him, too many people I have known when I was working reached retirement and even having a good pension and loving family at home did not last long after receiving the "retirement clock" after 40/50+ years of loyal service.People NEED a reason to get up in the morning and having the money to do what you want when you want for many is not enough so let him choose his life like he did for you.

lincroft1710 · 28 May 2017 at 4:28PM

sangie595 wrote: »

Do you have any idea of the mortality rate amongst recently retired men? It is still very difficult for men to adjust to a non-working life, and the physical stresses of trying to do so, when what they really want to do is work, can be a killer. Quite literally.

Took early retirement 11 years ago.

Yes I really miss having to get up early, put on smart clothes, make the journey to work, deal with the general public (many of whom appeared to have little concept of logic), meet challenging deadlines, appear at tribunals, deal with changing legislation, work processes, difficult colleagues etc, etc.

Hang on a sec!! Actually I don't miss any of it!!!!

sangie595 · 28 May 2017 at 10:22PM

lincroft1710 wrote: »

Took early retirement 11 years ago.

Yes I really miss having to get up early, put on smart clothes, make the journey to work, deal with the general public (many of whom appeared to have little concept of logic), meet challenging deadlines, appear at tribunals, deal with changing legislation, work processes, difficult colleagues etc, etc.

Hang on a sec!! Actually I don't miss any of it!!!!

That may be the case for you. But this isn't about you. And it is also not about the poster! This is "child" seeking advice to persuade their parents to do something they have said they do not wish to do. You are obviously very happy with retirement. But all the evidence is that dad does not want to retire and would not be happy.

lincroft1710 · 29 May 2017 at 3:37PM

sangie595 wrote: »

That may be the case for you. But this isn't about you. And it is also not about the poster! This is "child" seeking advice to persuade their parents to do something they have said they do not wish to do. You are obviously very happy with retirement. But all the evidence is that dad does not want to retire and would not be happy.

My post was in response to the part of your post I quoted. Your post intimated that as soon as they retire, men who liked their job will crumble and die. My father quite liked his job and probably would have continued if he had the opportunity, but at the age of 65 work was finished and he settled down to live his remaining 23 years in happy retirement.

silverwhistle · 29 May 2017 at 6:09PM

As has been mentioned everyone is so different it's difficult to give advice. I "volunteered" for redundancy at 45 due to boredom in my IT job, did bits and pieces including teaching English until the reduced pension kicked in at 50 and then pootled off abroad on my own to an EU country for a number of years. I'd say I'm pretty risk adverse and a bit of a worrier about some things. Back in the UK now but still do some language teaching, and I don't seem to have issues about what to do with my time.

As for the pension, it would be good to know what the reduction might be, and what the retirement budget would be. My budget includes a skiing holiday but I make do without things which others might consider essential. Get all the facts before mulling them over!

Voluntary Redundancy aged 59 (and a half!)

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