What do we need to do to retire early?

EdInvestor

While awaiting the statement from Guardian, why don't you get a state pension forecast for DH, which will tell you about his Serps situation, you should do this anyway:

Apply online here:

http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp

jacquie

Reply from Guardian as follows -

Estimated Open Market Policy Value
Higher 225000
Lower 160000

Estimated Pension Purchased
Member - Higher 16700 Lower 15000
Spouse - Higher 8360 Lower 7510

Escalation Rate % pa - 0.0

Along with some notes - don't want to bore you with them unless they are relevant

EdInvestor

You don't want the "open market" value.

You want the guaranteed pension value.

£2,026.78 a year increased from 1 November 1985 (the date you left that employer's service) until Normal Retirement Date to coorespond with the increase which has taken place in the Retail Prices Index over that period.

This figure sounbds like the GMP (this replaces the SERPS money) .What level is it at now, after being increased for inflation since 1985? For example if it had increased by 5% pa over the 20 years since then, it would now be 5,376 p.a.

When you reach Normal Retirement Date, a guarranteed pension of £8,674.08 a year will be payable.

This sounds like the guaranteed pension (which would AFAIK include the SERPS payment above).

BTW the Guardian would probably like nothing better than for you to transfer this pension out to another company so they didn't have to pay the guarantee. On no account should you do this. If an advisor suggests this route, be very suspicious, as he would earn considerable commission from it, though you would lose out.

jacquie

I quoted the figures they sent us - although in the notes

Quote (is this relevant)

Where the guaranteed benefit exceeds the figures calculated on one or both of the Financial Services Authority bases then the guaranteed benefit will be illustrated. In this situation the guaranteed benefit will be the minimum amount you get back.

end quote

At the time we took out this policy the money purchased a guaranteed pension on retirement of £8,674.08 a year. Each year we get a statement, of which I have all of them showing the bonus gained each year, and this is added together each year. The guaranteed pension of £8,674,08 + each years bonus is then the guaranteed pension. The bonus is only calculated on the original amount.

The yearly bonus now is 0.5% which equals £43.38. (It really can't be reduced any more unless its zero). In the early years though bonuses where very generous.
Just looking at one of the annual statements -

Quote-
Notes
Total Yearly Pension: This is the total of your Basic With Profit Pension, Existing Bonus, New Bonus and Basic Non Profit Pension. It is the amount which is now guaranteed to be paid at the Normal Retirement Date as long as policy premiums, if applicable, continue to be paid. Any future bonus will increase this amount.
unquote

So I think it is looking like the figures I originally quoted are the guaranteed pension.

margaretclare

jacquie wrote:

He was only in the pension scheme 11 years. Never paid a PENNY. All paid for by the firm. Apparently very well invested. He was a maintenance fitter.

Good heavens. What good luck. As my DH often says, it's better to be born lucky than to be born rich.

DH was a mechanical engineer originally and he worked for an entrepreneur called Bill Vaughan back in the 1960s/1970s. Vaughan had several offshoots, and when the whole lot went bust the one that DH was manager of, Vaughan Associates in Nottingham, was the only part that was in profit. Vaughan went bust through having too many fancy cars, private planes etc etc, a bit like the late unlamented Maxwell, and like Maxwell, there was a non-contributory pension scheme which also went bust. Although DH did get about £1K out of it in the late 1990s at the time of his divorce - fortunately his ex never knew about that, otherwise she'd have wanted some!

Margaret

jacquie

Hi Margaret

Thank you for you kind comments. I enjoy reading your posts - down to earth common sense. I very much relate to your posts and the fact you lived 'up north'. I live in a Lancashire town and we have always worked hard. Now the house is paid off etc etc. I do think we are fortunate and it will be nice to be financially secure hopefully for the future but the main thing is to enjoy good health. Like you I appreciate being in a position to pay bills without the worry.

Cheers

Jackie

EdInvestor

Jackie

Suggest you get Guardian to put it in writing what the guaranteed pension is at the relevant retirement date.

Also, you may want to have a chat on the phone to someone at http://www.pensionsadvisoryservice.org.uk to see if you can clarify things a bit.

Their advice is free and impartial.

Try them first, interested to hear what they say.

margaretclare

jacquie wrote:

Hi Margaret

Thank you for you kind comments. I enjoy reading your posts - down to earth common sense. I very much relate to your posts and the fact you lived 'up north'. I live in a Lancashire town and we have always worked hard. Now the house is paid off etc etc. I do think we are fortunate and it will be nice to be financially secure hopefully for the future but the main thing is to enjoy good health. Like you I appreciate being in a position to pay bills without the worry.

Cheers

Jackie

Hi Jackie

Thanks very much! Well, it all goes back to my Yorkshire grandparents who were as poor as the proverbial but never in debt, except when my granny died and my grandad had to pay for her funeral in stages. He growled to my mother 'Get that bairn insured'.

It's all about priorities, isn't it? Although I do feel sorry for the young people nowadays, who - I feel - have been misled in a way that we weren't.

Best wishes

Margaret

jacquie

EdInvestor wrote:

Jackie

Suggest you get Guardian to put it in writing what the guaranteed pension is at the relevant retirement date.

Also, you may want to have a chat on the phone to someone at http://www.pensionsadvisoryservice.org.uk to see if you can clarify things a bit.

Their advice is free and impartial.

Try them first, interested to hear what they say.

Thanks EdInvestor for all your help. I must admit I do feel I can read it and it and it all looks so positive, but is it?

Will write again this time asking for guaranteed figures and I wonder what response I will get to that.

Will look at the site you mentioned.

Thanks

Jackie

jacquie

EdInvestor wrote:

Jackie

Suggest you get Guardian to put it in writing what the guaranteed pension is at the relevant retirement date.

Also, you may want to have a chat on the phone to someone at http://www.pensionsadvisoryservice.org.uk to see if you can clarify things a bit.

Their advice is free and impartial.

Try them first, interested to hear what they say.

Spoke to Pensions Advisory Service. It is one of the old style Buy Out policies which the old Guardian Royal used to do. It is a guaranteed pension, plus as thought, the bonus each year is then guaranteed and added. They don't do these any more. As long as we claim at normal retirement date then the guaranteed pension as to be paid regardless of how much the policy is worth.