Almost 60, delay pension to 65?

terry-stoke

Hi, I've no real idea of pensions and I need some advice please.
I'm 60 in November, past employer (local authority) has written to say I can take my pension now, or wait to 2012. I'm still working, as is my wife- joint income only £310/wk, no kids to support, no mortgage now (thanks to Martin's advice!). I worked for them from 12/11/1990 to 14/8/1998. Offer is £1934 pa plus £5800 lump sum later, or £1547 pa & £5280 lump sum now.
1- I assume that if I take the pension now it will be taxed as income?
2- Their statement shows the authority has increased all the sums (Current annual pension payable, lump sum retiring grant, contingent spouse's pension) by 24% April 08, by 1.9% in April 2005, 13.4% in April 2004. Although this is a tiny pension I can't see any other investment increasing by those figures. So, should I leave it until I'm 65?

I /we have- Friends Prov PEP, with a pension date of 2009, only worth £10,700 approx on 3/08.
Axa Sun Life Flexible Bond worth ££18,000 @1/08
Virgin PEP worth £2,500
various small amounts of shares
B& Bingley Isa's ,£2,500 & £3,00
Icesave Isa, just started, £1,250

I would be really grateful for any advice.

EdInvestor

How much state pension are you due?When will your wife get her state pension and how much will it be?

Forecasts here: https://www.thepensionservice.gov.uk

What is your own current income?

MikeJones_2

Hi terry,

terry-stoke wrote: »

... Their statement shows the authority has increased all the sums (Current annual pension payable, lump sum retiring grant, contingent spouse's pension) by 24% April 08, by 1.9% in April 2005, 13.4% in April 2004. Although this is a tiny pension I can't see any other investment increasing by those figures.

The Local Government Pension Scheme is a defined benefit type pension scheme. As you left the scheme some years ago your preserved benefits will have been calculated using the data at your date of leaving service.

This will have included a pension, a lump sum (usually 3 times the value of your pension) and a widow(er)'s pension (usually 50% of your pension).

All of these figures are index-linked from your date of leaving service to your Normal Retirement Date.

When you draw your pension benefits, the pension (and contingent spouse's pension) continue to receive annual increases which match inflation (index-linked).

The annual increase used by most public sector schemes is normally the published RPI figure in September.

The increases of 24% that you describe may be the culmulative increase of RPI from your date of leaving service to April 2008, and similarly the 13.4% could be the culmulative increase of RPI from your date of leaving service to April 2004. If in doubt ask the pensions dept.

I've explained this simply so that you don't confuse index-linked increases to your pension with investment returns. They are two totally different issues.

I hope you enjoy your retirement, whenever you choose to begin.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

terry-stoke

Hi EdInvestor,
At last have details of pension forecasts- me £136 /wk from Nov 2013, my wife £97/wk from July 2011. There won't be anything else, apart from those things previously listed. It seemed to me that taking approx £1,000 pa (taxable no doubt) and investing in an Isa or similar would provide more than waiting another 5 years and having just £1,900 pa in 2013. What do you think? I did try to send an earlier response with details of my income, but it isn't shown, so I guess I messed it up. My income this year will be just £17000. My wife's around £2000. My first figures were wrong. Sorry
Terry