Pension rules change

alfonso

Hello kind people, hope someone can advise here.
I want to know if I can still claim my pension at 50 even though I dont reach 50 until after the new changes in April 2010.

It looks like I will be redundant in March 2010 and if I can claim my full final salary pension at 50 (in the august) and have my redundancy pay out I might just be able to manage without the need to move house etc.
Thanks in advance

Debt_Free_Chick

No - afraid not. You have to be 50 AND claim your pension before 6 April 2010.

If you don't reach 50 until after that date, you'll have to wait until you're 55 - sorry

alfonso

Would this not change if for example I was serving my 90 days notice on the 6 th April?

Debt_Free_Chick

It makes no difference as you won't be age 50 before 6 April - sorry

alfonso

Thanks for the replies. It looks like I have a worrying few years in front of me.
Worked for same co for 33 years, will go from 45k/pa to zero. Redundancy would be approx 1 year salary, no prospects at all of getting another job at 49+ in an area with high unemployment, no savings as such and mortgage to complete by 2014.
Ironically, if I died whilst still working, my spouse would get x4 annual salary lump sum and 25k/pa for 5 yr and motgage etc paid off via policies.

Nice to know I'm worth more dead eh ?
rant over

Debt_Free_Chick

I assume you're getting one year's salary gross, with no deductions? The first £30k will be tax free, so a year's salary gross is probably equal to 15-18 months of your current net pay. With some modest cutbacks, you might make your lump sum stretch to two years.

Could you do some work for a few years, even if only part-time or unskilled?

Downsize your property to pay off the current mortgage and buy a smaller property with no mortgage? Or extend the term and go interest only, so you can pay it off with the lump sum from your pension in August 2015?

I think you have more options than you can see, at the moment

alfonso

Got the following reply from an e-mail I sent to our HR people
I am more confused than ever now
comments most welcome


This change increases the earliest date at which a pension can be paid from age 50 to age 55. However, there will be a window of five year’s, between 6 April 2010 and the member’s 55th birthday, during which the member will be able to retire only if they have a protected pension age. From our reading of the Pension Fund rules, and confirmed by our actuaries , there is an unfettered right to standard early retirement terms from age 50. Consequently age 50 is a “protected pension age” for members under the legislation and those aged between 50 and 54 will be able to retire before reaching the new minimum age of 55 subject to the usual rules regarding actuarial reduction. However, it is not clear whether or not the special early retirement terms for those with at least ten year’s service are included or excluded from the protection provisions of the legislation.

sleepless_saver

This is a total minefield. Under some circumstances, people can still take early retirement from 50 - "the Finance Act 2004 allows schemes to provide protection of a minimum pension age of 50 for members who had a right to take reduced benefits at that age on 5 April 2006" (source: Scottish NHS pension changes, but this won't just apply to Scottish NHS)

I take that to mean that pension schemes don't have to do this, so some will and some won't. It's a bit surprising that your HR people don't seem to know if it applies for its scheme or not. Plus you would need to meet the other condition about the right to take reduced pension benefits.

tawl_2

Some members of retirement benefits schemes had a right at 5 April 2006 to take pension benefits at their request from an age from 50 onwards. These rights can be protected so that payments below age 55 on or after 6 April 2010 do not incur tax charges.

The age at which the member has the right to take their pension on 5 April 2006 becomes their protected pension age from 6 April 2010.

normally early retirement need trustee or employer consent. i guess if members have the right to early retire without that consent, the earliest age at which they can exercise this option is the protected pension age.