Taking pension at 55

Hi

Any idea please is it worth me taking my pension at 55 i know i will lose 25% for taking it early but i am confused as to what i wil get. My ilistration is this


If i retire at 60

Final salary pension £8.698
CSDB pesion £ 4.510
Total pension £ 13,208
maximum lump sum £ 72.592
Pension after taking lump sum £ 9,603
Pension supplement £ 1,284

Any help please as to what this means and what i will get minus the 25%

cheers:j
«1

Comments

  • mania112
    mania112 Posts: 1,981
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    Am I right in thinking you have a Royal Mail pension?

    Here's their comments on early retirement:
    The current early retirement reduction is around 5% a year; this is a matter for Trustee and is reviewed from time to time by the Plan Actuary. Therefore, it is not possible for an individual to reduce the standard reduction factor since it is considered fair to reduce a pension paid early to compensate for the fact that it will be paid for longer. One way to offset the effect of the reduction is to pay Additional Voluntary Contributions to build up extra pension to cushion the effect of the early retirement reduction. Please note that if you retire at age 60, it is only the pension earned after April 2010 pension that will be reduced.

    The only way to be sure what you'll get is to ask them for a retirement quote at age 55.

    It's better, obviously, to hold on.
  • mangrego
    mangrego Posts: 18 Forumite
    Hi

    Mannia


    Yes thats right but i took ill health retirement 3 years ago at the age of 48 so i dont work there anymore and that was the illistration they sent me so was wondering how much i would get on that figure.

    regards
  • you should check if any reduction factor applies in the event of ill-health, the pension administrators should be aware of the situation,
    a quick phone call stating ill health and that you are considering drawing the pension know will see the relevant forms sent to you
  • mangrego
    mangrego Posts: 18 Forumite
    Hi Money doctor

    I think i still lose 25 % as i will be taking it 5 years early

    regards
  • mangrego
    mangrego Posts: 18 Forumite
    Thoughts please

    I did telephone my pension office and was told although i was ill health retired i would if i too my pension at 55 lose 25% of it.
    Ok i know most people say not to take the pension early at 55 instead of 60 but a scenario here, My pension at 55 will be about £8-9,000 a year and about £ 12,000 at 60 but if i am not working and i take the pension at 55 surely if the worse happened and i died early at least i will have had my pension paid to me say if i die at 65 i would have had 10 years pension.

    I know this sounds dramatic but i know of many people that have worked for
    got to retirement age then died shortly after that so this is my thoughts. Ok i live very long after taking my pension at 55 i will have had £45,000 in payments before i reach 60 then i will get my state pension at 66 so that including my works pension will be enough to live on as i am currently living abroad and intend to stay abroad.

    thoughts please

    regards

    :T
  • mania112
    mania112 Posts: 1,981
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    mangrego wrote: »
    Thoughts please

    I did telephone my pension office and was told although i was ill health retired i would if i too my pension at 55 lose 25% of it.
    Ok i know most people say not to take the pension early at 55 instead of 60 but a scenario here, My pension at 55 will be about £8-9,000 a year and about £ 12,000 at 60 but if i am not working and i take the pension at 55 surely if the worse happened and i died early at least i will have had my pension paid to me say if i die at 65 i would have had 10 years pension.

    I know this sounds dramatic but i know of many people that have worked for
    got to retirement age then died shortly after that so this is my thoughts. Ok i live very long after taking my pension at 55 i will have had £45,000 in payments before i reach 60 then i will get my state pension at 66 so that including my works pension will be enough to live on as i am currently living abroad and intend to stay abroad.

    thoughts please

    regards

    :T

    If you can afford to live on £9k pa @ 55, that's fine.

    If it's not enough, then you should wait until more is available @ age 60.

    Second consideration is death benefits, your surviving spouse will be getting (probably) 50% of your pension when you die. So clearly she will get half of a lesser amount if you take benefits at age 55.

    If you understand that, and are happy to do it - then you should. It's your retirement and your money.
  • mangrego
    mangrego Posts: 18 Forumite
    mania112 wrote: »
    If you can afford to live on £9k pa @ 55, that's fine.

    If it's not enough, then you should wait until more is available @ age 60.

    Second consideration is death benefits, your surviving spouse will be getting (probably) 50% of your pension when you die. So clearly she will get half of a lesser amount if you take benefits at age 55.

    If you understand that, and are happy to do it - then you should. It's your retirement and your money.

    Hi Mania

    Thanks for your reply i am single so i am asumming i will lose the pension if i die

    regards
  • mark55man
    mark55man Posts: 7,905
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    edited 8 January 2013 at 11:01AM
    I am not sure if your ill health means you will become progressively less able to do stuff you enjoy, or even if it means you may die earlier, but my rough calculations (9k at 55 vs 12k at 60) inidicate that it would take until 75 (ie 15 years after 60) to catch up. [I haven't considered inflation increases but that would only make 1-2 years at most]

    So when you are 75 the general concensus is that you will be spending less than you are now - so if you feel you can survive on £9k now you should be more than all right later especially as you will have state pension from your state retirement age 65/66/...)

    I don't know what other benefits you might be getting (or even that you might be losing if you receive this income). That's part of the bigger calculation

    EDIT - One other point you have a sizeable lump sum there - if you split that between the 10 years between now and 65 that would double you effective income - and maybe let you do more fun stuff while you are relatively fitter. Its a difficult choice between how much of the lump sum to spend vs how much to save (ie how quickly to run it down) - but plenty of options for getting income from it
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
  • mania112
    mania112 Posts: 1,981
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    mangrego wrote: »
    Thanks for your reply i am single so i am asumming i will lose the pension if i die

    Unfortunately you WILL die... one day :)

    Yeah, in a final salary plan - the pension dies with you if you're single.

    If part of the pension is AVC or some other 'money purchase' type, this will be paid into your estate, so your family will be able to receive some, I'm not sure if that applies to you.
  • mangrego
    mangrego Posts: 18 Forumite
    mark88man wrote: »
    I am not sure if your ill health means you will become progressively less able to do stuff you enjoy, or even if it means you may die earlier, but my rough calculations (9k at 55 vs 12k at 60) inidicate that it would take until 75 (ie 15 years after 60) to catch up. [I haven't considered inflation increases but that would only make 1-2 years at most]

    So when you are 75 the general concensus is that you will be spending less than you are now - so if you feel you can survive on £9k now you should be more than all right later especially as you will have state pension from your state retirement age 65/66/...)

    I don't know what other benefits you might be getting (or even that you might be losing if you receive this income). That's part of the bigger calculation

    EDIT - One other point you have a sizeable lump sum there - if you split that between the 10 years between now and 65 that would double you effective income - and maybe let you do more fun stuff while you are relatively fitter. Its a difficult choice between how much of the lump sum to spend vs how much to save (ie how quickly to run it down) - but plenty of options for getting income from it

    Hi Mark

    Thanks for your reply I am not ill i took ill health retirement from a stressfull job with stress and i currently live abroad so as long as i am aware i am healthy, I am not sure what my lump sum would be yet and wont know how much i will lose from my pension if i take it, all i know at present at 60 my pension will be about 12K at 55 about 9K. If i stay living abroad i will be able to live on 9K If i take a lump sum i will invest it and wont need to spend it though not sure how much it will go down from the 9K. Then at 66 i will have my state pension, will i pay tax on any of the pensions? as my allowance will be higher than the 8K ish now. My logic is if anything did happen to me in my 60's o 70's i would have at least had 5 yrs pension payments from 55? instead of waiting until i am 60. My reason for thinking like this is my mother retired at 65 and then was told she had incurable cancer and died at 70 so i said i was going to retire early in life at least if the worse happened i would have at least had some retirement. Bleak thinking i know but this is the worse scenario.

    regards:eek:
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