lumpsum

stodgy88

i understand if i take my company pension early (ROYALMAIL) my weekly pension will be reduced by 5% per year -BUT will the lumpsum quoted on my latest statement be cut as well-thanks

Aegis

I'm by no means a pensions expert, least of all with final salary pensions, but I would assume that the trustees will reduce your lump sum by the same proportion if you retire early.

Goldenyears

I think if this follows usual public sector practice the lump sum is reduced, but not quite as much. So you may find that the lum sum is only reduced by say 4% per year. This was the case for my wife's lump sum in a similar scheme, although that was for only 1 year early. Don't know whether it stays linear for extra years.

Andy_L

If it is a compulsary lump sum then it will be a multiple of of your annual pension & thus reduced by the same %age as the weekly pension.

If it is an option lump sum gained by sacraficing pension then it won't be, directly, affected althouhg as you have less pension to exchange it will be less

stodgy88

the pension in question is deferred so obviously the weekly pension will be reduced ,but the lump sum is not a projection but actual real figure so why should that be reduced?

Andy_L

stodgy88 wrote: »

the pension in question is deferred so obviously the weekly pension will be reduced ,but the lump sum is not a projection but actual real figure so why should that be reduced?

because that is what the scheme rules say.

Goldenyears

Andy_L wrote: »

If it is a compulsary lump sum then it will be a multiple of of your annual pension & thus reduced by the same %age as the weekly pension.

I was thinking of the analogy with the Civil Service Classic scheme where the compulsory (I say default, it's not compulsory) lump sum is actuarily reduced less than the pension, so the multiple is about 2% above the standard 3x for example taking it 1 year early. It's not in the published scheme rules. You find out when you get your final quote.

stodgy88

dont understand the 2% above the standard3x bit -sorry

dzug1

stodgy88 wrote: »

the pension in question is deferred so obviously the weekly pension will be reduced ,but the lump sum is not a projection but actual real figure so why should that be reduced?

The logic is that while the lump sum is an actual figure you are getting it n years before you are entitled to it - hence a reduction.

The pension's not 'deferred' - it's being paid early so it's 'actual' as well. If you deferred it you would (eventually) get the full amount that you deferred rather than the reduced amount for immediate payment.

stodgy88

is the lumpsum reduction likely to be 5% p.a as in the actual weekly pension and is the loss of the yearly increase taken into consideration.